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Average 30-year mortgage rates are hovering in the high 6% range this week after spiking close to 7% in the wake of the latest inflation report last Wednesday, according to Zillow data.
March’s Consumer Price Index data came in hotter than expected, causing mortgage rates to rise. Until inflation slows further and the Federal Reserve is able to start lowering the federal funds rate, mortgage rates are likely to remain elevated.
Depending on what incoming data shows, we could even see rates tick above 7% for the first time since November 2023.
Next week, the US Bureau of Economic Analysis will release the latest personal consumption expenditures price index. The PCE price index is the Fed’s preferred measure of inflation.
If the latest PCE numbers support the narrative that inflation is remaining stubbornly high, mortgage rates could inch up further. But the PCE price index tracks a broader range of good and services than the CPI, so it’s possible this index could show some softening that didn’t appear in the CPI report.
Ultimately, it may take a few more months of data before we see inflation cool enough for the Fed to start cutting rates. Though they were initially pricing in a rate cut at the Fed’s meeting in June, investors are now betting that we won’t get the first cut until September, according to the CME FedWatch Tool. This will likely keep mortgage rates elevated throughout the spring and summer. But we could still see them go down later in 2024.
Mortgage type | Average rate today |
Real Estate on Zillow
Mortgage type | Average rate today |
Real Estate on Zillow
Use our free mortgage calculator to see how today’s mortgage rates would impact your monthly payments. By plugging in different rates and term lengths, you’ll also understand how much you’ll pay over the entire length of your mortgage.
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The current average 30-year fixed mortgage rate is 6.89%, up 28 points from where it was this time last week, according to Zillow data. This rate is also up compared to a month ago, when it was 6.53%.
At 6.89%, you’ll pay $658 monthly toward principal and interest for every $100,000 you borrow.
The 30-year fixed-rate mortgage is the most common type of home loan. With this type of mortgage, you’ll pay back what you borrowed over 30 years, and your interest rate won’t change for the life of the loan.
The average 20-year fixed mortgage rate is 34 points up from where it was last week, and is sitting at 6.64%. This time last month, the rate was 6.22%.
With a 6.64% rate on a 20-year term, your monthly payment will be $754 toward principal and interest for every $100,000 borrowed.
A 20-year term isn’t as common as a 30-year or 15-year term, but plenty of mortgage lenders still offer this option.
The average 15-year mortgage rate is 6.12%, just a single basis point higher than last week. It’s up slightly compared to this time last month, when it was 6.03%.
With a 6.12% rate on a 15-year term, you’ll pay $850 each month toward principal and interest for every $100,000 borrowed.
If you want the predictability that comes with a fixed rate but are looking to spend less on interest over the life of your loan, a 15-year fixed-rate mortgage might be a good fit for you. Because these terms are shorter and have lower rates than 30-year fixed-rate mortgages, you could potentially save tens of thousands of dollars in interest. However, you’ll have a higher monthly payment than you would with a longer term.
The 7/1 adjustable mortgage rate is up 11 basis points from a week ago, currently at 6.80%. It’s down from a month ago, when it was at 7.02%.
At 6.80%, your monthly payment would be $652 toward principal and interest for every $100,000 borrowed — but only for the first seven years. After that, your payment would increase or decrease annually depending on the new rate.
The average 5/1 ARM rate is 6.87%, a three-point increase from last week. It’s lower compared to where it was a month ago, when it was 7.06%.
Here’s how a 6.87% rate would affect you for the first five years: You’d pay $657 per month toward principal and interest for every $100,000 you borrow.
The average 30-year FHA interest rate is 5.93% today, which is 19 basis points up from last week. This rate was 6.09% a month ago.
At 5.93%, you would pay $595 monthly toward principal and interest for every $100,000 borrowed.
FHA mortgages are good choices if you don’t qualify for a conforming mortgage. You’ll need a 3.5% down payment and 580 credit score to qualify.
The current VA mortgage rate is 6.25%, 42 basis points higher than this time last week. This rate was 5.95% a month ago.
With a 6.25% rate, your monthly payment would be $616 toward principal and interest for every $100,000 you borrow.
The average 30-year refinance rate is 6.98%, eight basis points lower than last week. It’s also down slightly compared to a month ago, when it was 7.08%.
Here’s how a 6.98% rate would affect your monthly payments: You’d pay $664 toward principal and interest for every $100,000 borrowed.
Refinancing into a 30-year term can land you lower monthly payments, but you’ll ultimately pay more by refinancing into a longer term.
The current 20-year fixed refinance rate is 7.69%, which is up 131 basis points compared to a week ago. This rate was 6.53% this time last month.
A 7.69% rate on a 20-year term will result in a $817 monthly payment toward principal and interest for every $100,000 you borrow.
The average 15-year fixed refinance rate is 6.59%, which is 15 points higher compared to last week. It’s also up compared to this time a month ago, when it was at 6.34%.
A 6.59% rate on a 15-year term means you’ll pay $876 each month toward principal and interest for every $100,000 borrowed.
Refinancing into a 15-year term can save you money in the long run, because you’ll get a lower rate and pay off your mortgage faster than you would with a 30-year term. But it could result in higher monthly payments.
The average 7/1 ARM refinance rate is 6.49%, down 112 points from where it was last week. It’s also down a bit from a month ago, when it was 7.94%.
Refinancing into a 7/1 ARM with a 6.49% rate means your monthly payment toward principal and interest will be $631 for every $100,000 you borrow. This will be the payment for the first seven years, then your rate will change annually unless you refinance again.
The 5/1 ARM refinance rate is 6.41%, which is lower than it was this time last week. It’s also down a lot compared to this time last month, when it was 7.59%.
A 6.41% rate will result in a monthly payment of $626 toward principal and interest for every $100,000 borrowed. You’ll pay this amount for the first five years of your new mortgage.
The 30-year FHA refinance rate is 5.95%, which is 19 points higher than last week. This rate was 5.49% this time last month.
A 5.95% refinance rate would lead to a $596 monthly payment toward the principal and interest per $100,000 borrowed.
The average 30-year VA refinance rate is 5.91%, which is up 12 points compared to where it was was last week. This rate was 5.82% a month ago.
At 5.91%, your new monthly payment would be $594 toward principal and interest for every $100,000 you borrow.
Mortgage rates started ticking up from historic lows in the second half of 2021 and increased over three percentage points in 2022. Mortgage rates also rose dramatically in 2023, though they started trending back down toward the end of the year. Though rates have been somewhat elevated recently, they should go down by the end of 2024.
For homeowners looking to leverage their home’s value to cover a big purchase — such as a home renovation — a home equity line of credit (HELOC) may be a good option while we wait for mortgage rates to ease further. Check out some of our best HELOC lenders to start your search for the right loan for you.
A HELOC is a line of credit that lets you borrow against the equity in your home. It works similarly to a credit card in that you borrow what you need rather than getting the full amount you’re borrowing in a lump sum. It also lets you tap into the money you have in your home without replacing your entire mortgage, like you’d do with a cash-out refinance.
Current HELOC rates are relatively low compared to other loan options, including credit cards and personal loans.
Source: businessinsider.com
Editorial Note: We earn a commission from partner links on Forbes Advisor. Commissions do not affect our editors’ opinions or evaluations.
As we head into peak home-buying season, signs of life have begun to spring up in the housing market.
Even so, still-high mortgage rates and home prices amid historically low housing stock continue to put homeownership out of reach for many.
Moreover, the National Association of Realtors agreed to a monumental $418 million settlement on March 15 following a verdict favoring home sellers in a class action lawsuit. Still subject to court approval, the settlement requires changes to broker commissions that will upend the buying and selling model that has been in place for years.
Elevated mortgage rates, out-of-reach home prices and record-low housing stock are the perennial weeds that experts say hopeful home buyers can expect to contend with this spring—and beyond.
“The housing market is likely to continue to face the dual affordability constraints of high home prices and elevated interest rates in 2024,” said Doug Duncan, senior vice president and chief economist at Fannie Mae, in an emailed statement. “Hotter-than-expected inflation data and strong payroll numbers are likely to apply more upward pressure to mortgage rates this year than we’d previously forecast.”
Despite ongoing affordability hurdles, Fannie Mae forecasts an increase in home sales transactions compared to last year. Experts also anticipate a slower rise in home prices this year compared to recent years, but price fluctuations will continue to vary regionally and depend strongly on local market supply.
U.S. home prices declined in January for the third consecutive month due to high borrowing costs, according to the latest S&P CoreLogic Case-Shiller Home Price Index. But prices year-over-year jumped 6%—the fastest annual rate since 2022.
Chief economist at First American Financial Corporation Mark Fleming predicts a “flat stretch” ahead.
“If the 2020-2021 housing market was too hot, then the 2023 market was probably too cold, but 2024 won’t yet be just right,” Fleming said in his 2024 forecast.
For a housing recovery to occur, several conditions must unfold.
“For the best possible outcome, we’d first need to see inventories of homes for sale turn considerably higher,” says Keith Gumbinger, vice president at online mortgage company HSH.com. “This additional inventory, in turn, would ease the upward pressure on home prices, leveling them off or perhaps helping them to settle back somewhat from peak or near-peak levels.”
And, of course, mortgage rates would need to cool off—which experts say is imminent despite rates edging back up toward 7%. For the week ending April 11, the 30-year fixed mortgage rate stood at 6.88%, according to Freddie Mac.
However, when mortgage rates finally go on the descent, Gumbinger says don’t hope they cool too quickly. Rapidly falling rates could create a surge of demand that wipes away any inventory gains, causing home prices to rebound.
“Better that rate reductions happen at a metered pace, incrementally improving buyer opportunities over a stretch of time, rather than all at once,” Gumbinger says.
He adds that mortgage rates returning to a more “normal” upper 4% to lower 5% range would also help the housing market, over time, return to 2014-2019 levels. Yet, Gumbinger predicts it could be a while before we return to those rates.
Nonetheless, Kuba Jewgieniew, CEO of Realty ONE Group, a real estate brokerage company, is optimistic about a recovery this year.
“[W]e’re definitely looking forward to a better housing market in 2024 as interest rates start to settle around 6% or even lower,” says Jewgieniew.
Following years of litigation, the National Association of Realtors (NAR) has agreed to pay $418 million to settle a series of antitrust lawsuits filed in 2019 on behalf of home sellers.
The plaintiffs claimed that the leading national trade association for real estate brokers and agents “conspired to require home sellers to pay the broker representing the buyer of their homes in violation of federal antitrust law.”
Though the landmark settlement is subject to court approval, most consider it a done deal.
The settlement requires NAR to enact new rules, including prohibiting offers of broker compensation on multiple listing services (MLS), the private databases that allow local real estate brokers to publish and share information about residential property listings. The rule is set to take effect in mid-July, once the settlement receives judge approval.
Moreover, sellers will no longer be required to pay buyer broker commissions and real estate agents participating in the MLS must establish written representation agreements with their buyer clients.
NAR denies any wrongdoing and maintains that its current policies benefit buyers and sellers. The organization believes it’s not liable for seller claims related to broker commissions, stating that it has never set commissions and that commissions have always been negotiable.
Per the settlement’s terms, the costs associated with buying and selling a home are set to change dramatically.
“The primary things that will change are the decoupling of the seller commission and the buyer commission in the MLS,” says Rita Gibbs, a Realtor at Realty One Group Integrity in Tucson. “It’s gonna cause some chaos.”
While sellers will no longer be able to offer broker compensation in the MLS, there’s no rule prohibiting off-MLS negotiations. Because of this, Gibbs suspects buyers and sellers will continue offering broker compensation off the MLS.
The Department of Justice confirmed it will permit listing brokers to display compensation details on their websites. However, buyer agents will need to undergo the tedious task of visiting countless broker websites to find who’s offering what.
Michael Gorkowski, a Virginia-based real estate agent with Compass, is also trying to figure out how to manage the potential ruling.
“We often work with buyers for many months and sometimes years before they find exactly what they’re looking for,” Gorkowski says. “So in a case where a seller isn’t offering a co-broker commission, we will have to negotiate that the buyer pays an agreed-upon commission prior to starting their search.”
“In the short term, it is absolutely going to injure buyers, especially FHA and VA buyers,” Gibbs says. “With rare exception, these buyers are not in a position to pay for their own agent.”
Gibbs says that if sellers don’t offer compensation, many buyers who can’t otherwise afford to pay a broker will choose to go unrepresented.
Gorkowski notes that veterans taking out VA loans face a unique challenge under the new rules. “[P]er the VA requirements, buyers cannot pay so it must be negotiated with the seller for now.”
As a result, NAR is calling on the U.S. Department of Veterans Affairs to revise its policies prohibiting VA buyers from paying broker commissions. Even so, there’s skepticism that the federal government will be able to implement changes in time for the July deadline.
Gibbs and Gorkowski are among the many agents especially concerned about first-time home buyers. After July, first-time and VA buyers will be required to sign a buyer-broker agreement stating that they will compensate their broker—but Gibbs says many won’t have the means to do so.
In this situation, agents would likely only show buyers homes where sellers are offering compensation.
“This is a very troubling situation,” Gorkowski says.
With many homeowners “locked in” at ultra-low interest rates or unwilling to sell due to high home prices, demand continues to outpace housing supply—and likely will for a while—even as some homeowners may finally be forced to sell due to major life events such as divorce, job changes or a growing family.
“I don’t expect to see a meaningful increase in the supply of existing homes for sale until mortgage rates are back down in the low 5% range, so probably not in 2024,” says Rick Sharga, founder and CEO of CJ Patrick Company, a market intelligence and business advisory firm.
Housing stock remains near historic lows—especially entry-level supply—which has propped up demand and sustained ultra-high home prices. Here’s what the latest home values look like around the country.
Yet, some hopeful housing stock signs have begun to sprout:
The most recent National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI), which tracks builder sentiment, saw a fourth consecutive monthly rise, surpassing a crucial threshold with an increase from 48 to 51 in March. A reading of 50 or above means more builders see good conditions ahead for new construction.
At the same time, new single-family building permits ticked up 1% in February—the 13th consecutive monthly increase—according to the latest data from the U.S. Census Bureau and U.S. Department of Housing and Urban Development (HUD).
Though some housing market data indicates signs of growth are in store this spring home-buying season, persistently high mortgage rates may hinder activity from fully flourishing.
Here’s what the latest home sales data has to say.
Existing-home sales came to life in February, shooting up 9.5% from the month before, according to the latest data from the NAR. Sales dipped 3.3% from a year ago.
Experts attribute the monthly jump to a bump in inventory.
“Additional housing supply is helping to satisfy market demand,” said Lawrence Yun, chief economist at NAR, in the report.
Existing inventory rose 5.9%—logging 1.07 million unsold homes at the end of February. However, there are still only 2.9 months of inventory at the current sales pace. Most experts consider a balanced market falling between four and six months.
Meanwhile, existing home prices continue to soar to unprecedented heights, reaching $384,500, which marks the eighth consecutive month of yearly price increases and a February median home price record.
Sales of newly constructed single-family houses ticked down by a nominal 0.3% compared to January, but outpaced February 2023 sales by 5.9%, according to the latest U.S. Census Bureau and HUD data.
Amid a high percentage of homeowners still locked in to low mortgage rates, home builders have been picking up the slack.
“New construction continues to be an outsized share of the housing inventory,” said Dr. Lisa Sturtevant, chief economist at Bright MLS, in an emailed statement.
Sturtevant notes that declining new home prices are coming amid a recent trend of builders introducing smaller and more affordable homes to the market.
The median price for a new home in February was $400,500, down 7.6% from a year ago.
Source: U.S. Census Bureau and U.S. Department of Housing and Urban Development
NAR’s Pending Homes Sales Index rose 1.6% in February from the month prior even as mortgage rates approached 7% by the end of the month. Pending transactions declined 7% year-over-year.
A pending home sale marks the point in the home sales transaction when the buyer and seller agree on price and terms. Pending home sales are considered a leading indicator of future closed sales.
The Midwest and South saw monthly transaction gains while the Northeast and West saw declines due to affordability challenges in those higher-cost regions.
“While modest sales growth might not stir excitement, it shows slow and steady progress from the lows of late last year,” said Yun, in the report.
Though down from its 2023 high of 7.79%, the average 30-year fixed mortgage rate in 2024 remains well over 6% amid rising home values. As a result, home buyers continue to face affordability challenges.
According to data from its first-quarter 2024 U.S. Home Affordability Report, property data provider Attom found that median-priced single-family homes remain less affordable than the historical average in over 95% of U.S. counties.
For one, the data uncovered that expenses are eating up more than 32% of the average national wage. Common lending guidelines require monthly mortgage payments, property taxes and homeowners insurance to comprise 28% or less of your gross income.
At the same time, home prices and homeownership expenses continue to outpace wage growth.
Consequently, the latest expense-to-wage ratio is hovering at one of the highest points over the past decade, according to the Attom report, despite some slight affordability improvements over the last two quarters.
“Affording a home remains a financial stretch, or a pipe dream, for so many households,” said Rob Barber, CEO at Attom.
Here are some expert tips to increase your chances for an optimal outcome in this tight housing market.
Hannah Jones, a senior economic research analyst at Realtor.com, offers this expert advice to aspiring buyers:
Gary Ashton, founder of The Ashton Real Estate Group of RE/MAX Advantage, has this expert advice for sellers:
Despite some areas of the country experiencing monthly price declines, the likelihood of a housing market crash—a rapid drop in unsustainably high home prices due to waning demand—remains low for 2024.
“[T]he record low supply of houses on the market protects against a market crash,” says Tom Hutchens, executive vice president of production at Angel Oak Mortgage Solutions, a non-QM lender.
Moreover, experts point out that today’s homeowners stand on much more secure footing than those coming out of the 2008 financial crisis, with many borrowers having substantial home equity.
“In 2024, I expect we’ll see home appreciation take a step back but not plummet,” says Orphe Divounguy, senior macroeconomist at Zillow Home Loans.
This outlook aligns with what other housing market watchers expect.
“Comerica forecasts that national house prices will rise 2.9% in 2024,” said Bill Adams, chief economist at Comerica Bank, in an emailed statement.
Divounguy also notes that several factors, including Millennials entering their prime home-buying years, wage growth and financial wealth are tailwinds that will sustain housing demand in 2024.
Even so, with fewer homes selling, Dan Hnatkovskyy, co-founder and CEO of NewHomesMate, a marketplace for new construction homes, sees a price collapse within the realm of possibility, especially in markets where real estate investors scooped up numerous properties.
“If something pushes that over the edge, the consequences could be severe,” said Hnatkovskyy, in an emailed statement.
In February, total foreclosure filings were down 1% from the previous month but up 8% from a year ago, according to Attom.
“These trends could signify evolving financial landscapes for homeowners, prompting adjustments in market strategies and lending practices,” said Barber, in a report.
Lenders began foreclosure on 22,575 properties in February, up 4% from the previous month and 11% from a year ago. Meanwhile, real estate-owned properties, or REOs, which are homes unsold at foreclosure auctions and taken over by lenders, spiked year-over-year in three states: South Carolina (up 51%), Missouri (up 50%) and Pennsylvania (up 46%).
Despite foreclosure activity trending up nationally and certain areas of the country seeing notable annual increases in REOs, experts generally don’t expect to see a wave of foreclosures in 2024.
“Foreclosure activity is still only at about 60% of pre-pandemic levels … and isn’t likely to be back to 2019 numbers until sometime in mid-to-late 2024,” says Sharga.
The biggest reasons for this, Sharga explains, are the strength of the economy—we’re still seeing low unemployment and steady wage growth—along with excellent loan quality.
Massive home price growth in homeowner equity over the past few years has also helped reduce foreclosures.
Sharga says that some 80% of today’s homeowners have more than 20% equity in their property. So, while there may be more foreclosure starts in 2024—due in part to Covid-era mortgage relief programs phasing out—foreclosure auctions and lender repossessions should remain below 2019 levels.
Buying a house—in any market—is a highly personal decision. Because homes represent the largest single purchase most people will make in their lifetime, it’s crucial to be in a solid financial position before diving in.
Use a mortgage calculator to estimate your monthly housing costs based on your down. But if you’re trying to predict what might happen next year, experts say this is probably not the best home-buying strategy.
“The housing market—like so many other markets—is almost impossible to time,“ Divounguy says. “The best time for prospective buyers is when they find a home that they like, that meets their family’s current and foreseeable needs and that they can afford.”
Gumbinger agrees it’s hard to tell would-be homeowners to wait for better conditions.
“More often, it seems the case that home prices generally keep rising, so the goalposts for amassing a down payment keep moving, and there’s no guarantee that tomorrow’s conditions will be all that much better in the aggregate than today’s.”
Divounguy says “getting on the housing ladder” is worthwhile to begin building equity and net worth.
Declining mortgage rates will likely incentivize would-be buyers anxious to own a home to jump into the market. Expect this increased demand amid today’s tight housing supply to put upward pressure on home prices.
Most experts do not expect a housing market crash in 2024 since many homeowners have built up significant equity in their homes. The issue is primarily an affordability crisis. High interest rates and inflated home values have made purchasing a home challenging for first-time homebuyers.
If you’re in a financial position to buy a home you plan to live in for the long term, it won’t matter when you buy it because you will live in it through economic highs and lows. However, if you are looking to buy real estate as a short-term investment, it will come with more risk if you buy at the height before a recession.
Source: forbes.com
“I would say that there is still some unease because of rates fluctuating,” she said. “I think when we kind of settle into a range, then it’s like, ‘OK, this is the new normal – this is what we’re doing.’ But weeks like this week, when it goes a little bonkers, really rattle everyone – … [Read more…]
Reverse mortgage industry professionals have spoken for months about the consequences of high interest rates on their ability to pursue business, and now AARP has taken a closer look at the impacts.
While higher rates are bad news for the mortgage industry in a broad sense, the impact on reverse lending is more nuanced, Bruce Simmons of American Liberty Mortgage in the Denver area explained to AARP.
“If a reverse mortgage can help your situation, it still makes sense for a lot of people,” Simmons told the organization. “There are so many people who can benefit from this today, even with the rates the way they are.”
These sentiments echo what Simmons shared with RMD at the beginning of this year when asked about how business is progressing after the general tumult observed in 2023. Inconsistent interest rate forecasts have made things challenging in his business, but different kinds of marketing — including a refocusing exercise on his existing marketing efforts — have helped to improve things, Simmons told RMD in February.
But a rise in interest rates also impacts the amount of money owed on the negatively amortizing loan, observed Stephanie Moulton, a longtime reverse mortgage academic researcher from Ohio State University.
“It might accelerate the growth of the balance and reduce, potentially, the equity when your heirs go to sell the home, because your balance is going to grow faster,” she told AARP.
But the utility of eliminating a forward mortgage payment still has the potential to add value for reverse mortgage borrowers, along with a raft of disbursement options such as a standby line of credit or monthly term payments, Simmons added.
Bruce McClary, senior vice president of the National Foundation for Credit Counseling (NFCC) also shared that while reverse mortgages can add value for borrowers in certain situations, the fee structure of a home equity line of credit (HELOC) could potentially make more sense for some seniors. But certain situations may make a reverse mortgage a better idea for some individual borrowers.
“[It] depends on an individual’s capacity to borrow, the reasons for borrowing and what they’re going to use the money for,” McClary told AARP. “The answers will be different depending on people’s financial circumstances and their goals.”
Source: housingwire.com
If you’re in the market for a home, here are today’s mortgage rates compared to last week’s.
Loan term | Today’s Rate | Last week | Change |
---|---|---|---|
30-year mortgage rate | 7.01% | 6.95% | +0.07 |
15-year fixed rate | 6.46% | 6.34% | +0.12 |
10-year fixed | 6.31% | 6.20% | +0.11 |
5/1 ARM | 6.33% | 6.45% | -0.12 |
30-year jumbo mortgage rate | 7.15% | 7.04% | +0.11 |
30-year mortgage refinance rate | 7.03% | 6.98% | +0.05 |
Average rates offered by lenders nationwide as of April 11, 2024. We use rates collected by Bankrate to track daily mortgage rate trends.
Mortgage rates change every day. Experts recommend shopping around to make sure you’re getting the lowest rate. By entering your information below, you can get a custom quote from one of CNET’s partner lenders.
About these rates: Like CNET, Bankrate is owned by Red Ventures. This tool features partner rates from lenders that you can use when comparing multiple mortgage rates.
Over the last few years, high inflation and the Federal Reserve’s aggressive interest rate hikes pushed up mortgage rates from their record lows around the pandemic. Since last summer, the Fed has consistently kept the federal funds rate at 5.25% to 5.5%. Though the central bank doesn’t directly set the rates for mortgages, a high federal funds rate makes borrowing more expensive, including for home loans.
Mortgage rates change daily, but average rates have been moving between 6.5% and 7.5% since late last fall. Today’s homebuyers have less room in their budget to afford the cost of a home due to elevated mortgage rates and steep home prices. Limited housing inventory and low wage growth are also contributing to the affordability crisis and keeping mortgage demand down.
Mortgage forecasters base their projections on different data, but most housing market experts predict rates will move toward 6% by the end of 2024. Ultimately, a more affordable mortgage market will depend on how quickly the Fed begins cutting interest rates. Most economists predict that the Fed will start lowering interest rates later this summer.
Since mortgage rates fluctuate for many reasons — supply, demand, inflation, monetary policy and jobs data — homebuyers won’t see lower rates overnight, and it’s unlikely they’ll find rates in the 2% range again.
“We are expecting mortgage rates to fall to around 6.5% by the end of this year, but there’s still a lot of volatility I think we might see,” said Daryl Fairweather, chief economist at Redfin.
Every month brings a new set of inflation and labor data that can change how investors and the market respond and what direction mortgage rates go, said Odeta Kushi, deputy chief economist at First American Financial Corporation. “Ongoing inflation deceleration, a slowing economy and even geopolitical uncertainty can contribute to lower mortgage rates. On the other hand, data that signals upside risk to inflation may result in higher rates,” Kushi said.
Here’s a look at where some major housing authorities expect average mortgage rates to land.
When picking a mortgage, consider the loan term, or payment schedule. The most common mortgage terms are 15 and 30 years, although 10-, 20- and 40-year mortgages also exist. You’ll also need to choose between a fixed-rate mortgage, where the interest rate is set for the duration of the loan, and an adjustable-rate mortgage. With an adjustable-rate mortgage, the interest rate is only fixed for a certain amount of time (commonly five, seven or 10 years), after which the rate adjusts annually based on the market’s current interest rate. Fixed-rate mortgages offer more stability and are a better option if you plan to live in a home in the long term, but adjustable-rate mortgages may offer lower interest rates upfront.
The average 30-year fixed mortgage interest rate is 7.01%, which is an increase of 7 basis points from seven days ago. (A basis point is equivalent to 0.01%.) A 30-year fixed mortgage is the most common loan term. It will often have a higher interest rate than a 15-year mortgage, but you’ll have a lower monthly payment.
The average rate for a 15-year, fixed mortgage is 6.46%, which is an increase of 12 basis points from the same time last week. Though you’ll have a bigger monthly payment than a 30-year fixed mortgage, a 15-year loan usually comes with a lower interest rate, allowing you to pay less interest in the long run and pay off your mortgage sooner.
A 5/1 adjustable-rate mortgage has an average rate of 6.33%, a decrease of 12 basis points from the same time last week. You’ll typically get a lower introductory interest rate with a 5/1 ARM in the first five years of the mortgage. But you could pay more after that period, depending on how the rate adjusts annually. If you plan to sell or refinance your house within five years, an ARM could be a good option.
While it’s important to monitor mortgage rates if you’re shopping for a home, remember that no one has a crystal ball. It’s impossible to time the mortgage market, and rates will always have some level of volatility because so many factors are at play.
“Mortgage rates tend to follow long-date Treasury yields, a function of current inflation and economic growth as well as expectations about future economic conditions,” says Orphe Divounguy, senior macroeconomist at Zillow Home Loans.
Here are the factors that influence the average rates on home loans.
Getting a mortgage should always depend on your financial situation and long-term goals. The most important thing is to make a budget and try to stay within your means. CNET’s mortgage calculator below can help homebuyers prepare for monthly mortgage payments.
Though mortgage rates and home prices are high, the housing market won’t be unaffordable forever. It’s always a good time to save for a down payment and improve your credit score to help you secure a competitive mortgage rate when the time is right.
Source: cnet.com
American renters are fearful that their home-owning aspirations are increasingly getting out of reach, according to a recent survey by the real-estate platform Redfin, amid an environment of high home prices and elevated mortgage rates.
Almost 40 percent of the renters polled told surveyors they did not believe they would own a home of their own, up from 27 percent in a similar survey Redfin conducted in May and June. Part of the struggle for these Americans is that homes are beyond what they can afford. Securing a down payment can prove elusive, and high mortgage rates may discourage them from acquiring property.
Read more: How to Get a Mortgage in 2024
The Redfin survey sampled about 3,000 U.S. residents in February, and its analysis of renters’ expectations came from a 1,000 renters in the poll.
Mortgage rates in particular have stayed elevated over the past six months. After hitting a peak of 8 percent—the highest level since the turn of the century—mortgage rates declined to the mid-6 percent range at the end of the year and into 2024. In recent weeks, however, the cost of home loans have ticked up to above 7 percent, depressing activity in the mortgage market.
On April 11, the 30-year fixed rate rose to almost 7.4 percent, Mortgage News Daily reported, the highest levels since November 2023. The rise follows news that suggests borrowing costs may stay elevated for longer than economists initially anticipated.
High mortgage rates now mean that first-time buyers must earn about $76,000 to afford what the industry describes as a starter home, which is an 8 percent increase from a year ago and almost 100 percent higher than it was before the pandemic, Redfin said. It added that home prices have soared more than 40 percent since 2019, as buyers took advantage of low borrowing costs during the pandemic to acquire houses, increasing demand, escalating competition and pushing up prices.
Read more: Compare Top Mortgage Lenders
“Buying a home has become increasingly out of reach for many Americans due to the one-two punch of high home prices and high mortgage rates,” Redfin wrote.
Renters being unable to buy homes has in turn contributed to increased competition and price jumps in the rental market. The median asking rent is at $2,000 in the U.S., close to the record high it reached in 2022, Redfin said. Still, despite the elevated cost of rent, renting may be a more affordable option than homeownership.
“Housing costs are high across the board, but renting is a more affordable and realistic option for many Americans right now—especially those who have never owned a home and aren’t able to tap into equity from a previous sale,” said Daryl Fairweather, Redfin’s chief economist. “While owning a home is usually a sound long-term investment, the barriers to entry and upfront costs of buying are higher than renting.”
To purchase a house, a buyer would need about $60,000 as a down payment for a home loan, an amount that is out of reach for many Americans.
Fairweather added, “The sheer expense of purchasing a home is causing the American Dream of homeownership to lose some of its shine.”
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
Source: newsweek.com
As we approach the mid-2020s, the question on many homeowners’ and potential buyers’ minds is: what will mortgage rates look like in 2025? It’s a crucial question, as even a small fluctuation in rates can significantly impact monthly payments and overall affordability.
Looking ahead, experts offer a range of predictions, reflecting the inherent uncertainty in economic forecasting. Factors such as inflation, economic growth, monetary policy, and global market conditions all play a role in shaping the future of mortgage rates.
A conservative estimate suggests that 30-year fixed mortgage rates could be in the range of 5.5% to 7% by 2025. This prediction takes into account potential economic growth, the Federal Reserve’s likely responses to changing conditions, and the broader real estate market’s status.
Other forecasts are slightly more optimistic, with projections of a gradual decrease in mortgage rates over the next 18 months. For instance, Fannie Mae anticipates rates might slide to 6.0%, Wells Fargo expects around 5.8%, and the Mortgage Bankers Association estimates rates could fall to 5.5% by the final quarter of 2025.
However, it’s important to note that these predictions come with a degree of uncertainty. The past few years have shown that unprecedented events, such as the pandemic and geopolitical tensions, can rapidly alter the economic landscape. As a result, forecasters often advise caution and suggest that these projections are best viewed as guidelines rather than guarantees.
The consensus among experts is that while rates are expected to peak soon due to high inflation and policy measures, they will likely remain above historical lows. This means that while we may not see the rock-bottom rates of the early 2020s, there is also little expectation of a return to the double-digit rates of the 1980s.
According to recent analyses and expert predictions, there is a sense of cautious optimism about the potential for mortgage rates to trend downward in 2025. The Mortgage Bankers Association, for instance, has projected that 30-year mortgage rates could fall to around 5.6%. This forecast is based on current market trends and economic indicators, suggesting a silver lining for those hoping for more favorable borrowing conditions.
The current landscape of mortgage rates has been shaped by a variety of factors, including inflation, Federal Reserve policies, and global economic conditions. In the past, rates below 4% were considered competitive, with a historical low point of around 3.75% in 2020 serving as a benchmark for what constitutes a ‘good‘ rate. However, the economic turmoil and policy responses to the COVID-19 pandemic have led to fluctuations that defy simple predictions.
Looking ahead, the expectation of a downward trend is influenced by several factors. Economic recovery, inflation expectations, and the Federal Reserve’s monetary policy are all expected to play a role in shaping mortgage rates in the coming years. The Federal Reserve, in particular, is anticipated to continue its delicate balancing act, adjusting interest rates to maintain economic stability while fostering growth.
It’s important to note, however, that these predictions are not guaranteed. The financial landscape is complex and subject to change due to unforeseen global events and policy shifts. Therefore, while the projections provide a general direction, individuals should remain vigilant and consult with financial advisors to understand how these trends may affect their personal circumstances.
In summary, while there is hope for a decrease in mortgage rates by 2025, it is crucial for potential borrowers to stay informed and prepared for any outcome. By keeping an eye on economic developments and seeking professional advice, one can navigate the mortgage market with greater confidence and make decisions that align with their financial goals.
Source: noradarealestate.com
CHARLOTTE — Inflation continues to overwhelm many families in the Carolinas, keeping the cost high for things like borrowing money to buy a home, and while you might think that would mean a drop in home prices, realtors in the Charlotte area say they’re seeing the exact opposite.
In Charlotte’s hot housing market, prices haven’t really gone down. Channel 9′s Evan Donovan spoke with realtors who say it’s not like the COVID-19 pandemic, but they’re having to get creative with their buyers.
“She sent me tons of properties, locations, we went to visit them but then I just said let’s build a home,” said Ebony Covington.
She got in the market to buy a home in January, but even with the help of her realtor, she couldn’t find the right fit in an existing home.
“We went to the design center, I was able to pick out exactly what I wanted in my home, inside and outside. It was a celebration every step of the way, and I probably asked a million questions,” Covington told Donovan.
But realtor Bre Gaither says it’s still a seller’s market. The Charlotte are has less than two months of inventory, but a balanced market is around six months of inventory. Gaither says the market is almost as hot as it was during the pandemic.
“We are still seeing multiple offers, we are still seeing bidding wars,” Gaither said. “Homes are being on the market and off the market in less than 24 hours. It’s not as crazy as the $50-60,000 over asking, but I’ve seen $15 to 20 thousand, for sure.”
A report from Rocket Mortgage in March showed the average home price in Charlotte is up nearly $15,000 over last year. In surrounding areas like Matthews, Pineville, and Huntersville, it’s even higher.
Covington says she’s happy to finally own a home that’s exactly how she wanted it.
“The outside is going to be blue. Since [we’re the] first house on the cul-de-sac, we get to choose and no one else can have that home color,” Covington said.
Moving into a new home in 2024 costs a lot more than in the past. According to data from Redfin, the average monthly housing payment just hit an all-time high of more than $2,700. The average 30-year fixed mortgage rate as of Thursday is about 6.8%, more than double the rate before the pandemic.
(WATCH: City of Charlotte unveils potential affordable housing developments)
©2024 Cox Media Group
Source: wsoctv.com
Central banks have raised interest rates significantly over the past two
years to combat post-pandemic inflation. Many thought this would lead to a
slowdown in economic activity. Yet, global growth has held broadly steady,
with deceleration only materializing in some countries.
Why are some feeling the pinch from higher rates and not others? The answer
partly lies in differences in mortgage and housing market characteristics.
The effects of rising monetary policy rates on activity partly depend on
housing and mortgage market characteristics, which vary significantly across
countries, as we show in a chapter of our latest World Economic Outlook.
Housing is an important channel of monetary policy transmission. Mortgages
are the largest liability for households, with housing often serving as
their only significant form of wealth. Real estate also accounts for a large
share of consumption, investment, employment, and consumer prices in most
economies.
To assess how key housing characteristics impact the effects of monetary
policy on activity, our research leverages new data on housing and mortgage
markets compiled across countries: we find that those characteristics vary
significantly across countries. For example, the share of fixed-rate
mortgages in all country-level mortgages can vary from close to zero in
South Africa to more than 95 percent in Mexico or the United States.
Our results indicate that monetary policy has greater effects on activity in
countries where the share of fixed-rate mortgages is low. This is due to
homeowners seeing their monthly payments rise with monetary policy rates if
their mortgage rates adjust. By contrast, households with fixed-rate
mortgages will not see any immediate difference in their monthly payments
when policy rates change.
The effects of monetary policy are also stronger in countries where
mortgages are larger compared to home values, and in countries where
household debt is high as a share of GDP. In such settings, more households
will be exposed to changes in mortgage rates, and the effects will be
stronger if their debt is higher relative to their assets.
Housing market characteristics also matter: the transmission of monetary
policy is stronger where housing supply is more restricted. For example,
lower rates will decrease borrowing costs for first-time home buyers and
increase demand. Where supply is restricted, this will lead to home price
appreciation. Existing owners will see their wealth increase as a result,
leading them to consume more, including if they can use their home as
collateral to borrow more.
The same holds true where home prices have recently been overvalued. Sharp
price increases are often driven by overly optimistic views about future
house prices. These are typically accompanied by excessive leverage,
prompting spirals of falling home prices and foreclosures when monetary
policy tightens, which can lead to starker income and consumption declines.
Weaker housing transmission
Mortgage and real estate markets have undergone several shifts since the
global financial crisis and the pandemic. At the beginning of the recent
hiking cycle and after a long period of low interest rates, mortgage
interest payments were historically low, the average maturity was long, and
the average share of fixed-rate mortgages was high in many countries. In
addition, the pandemic led to population shifts away from city centers and
to relatively less-supply-constrained areas.
As a result, the housing channels of monetary policy may have weakened, or
at least been delayed, in several countries.
Country experiences vary widely. Changes in mortgage market characteristics
in countries such as Canada and Japan suggest a strengthening of the
transmission of monetary policy through housing. This is driven mainly by a
declining share of fixed-rate mortgages, an increase in debt, and more
constrained housing supply. By contrast, transmission seems to have weakened
in countries such as Hungary, Ireland, Portugal, and the United States,
where characteristics have moved in the opposite direction.
Calibrating policy
Our findings suggest that a deep, country-specific understanding of housing
channels is important to help calibrate and adjust monetary policy. In
countries where the housing channels are strong, monitoring housing market
developments and changes in household debt service can help identify early
signs of overtightening. Where monetary policy transmission is weak, more
forceful early action can be taken when signs of overheating and
inflationary pressures first emerge.
What about now? Most central banks have made significant progress toward
their inflation target. It could follow from the discussion that, if
transmission is weak, erring on the side of too much tightening is always
less costly. However, overtightening, or leaving rates higher for longer,
could nevertheless be a greater risk now.
While fixed-rate mortgages have indeed become more common in many countries,
fixation periods are often short. Over time, and as rates on these mortgages
reset, monetary policy transmission could suddenly become more effective and
so depress consumption, especially where households are heavily indebted.
The longer time rates are kept high, the greater the likelihood that
households will feel the pinch, even where they have so far been relatively
sheltered.
—This blog is based on Chapter 2 of the April 2024 World Economic
Outlook, “Feeling the pinch? Tracing the effects of monetary policy
through housing markets.” The authors of the chapter are Mehdi Benatiya
Andaloussi, Nina Biljanovska, Alessia De Stefani, and Rui Mano with
support from Ariadne Checo de los Santos, Eduardo Espuny Diaz, Pedro
Gagliardi, Gianluca Yong, and Jiaqi Zhao. Amir Kermani was an external
consultant and Jesper Lindé consulted on the modeling.
Source: imf.org
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