“Mortgage rates continued to move higher last week, reaching their highest levels since late 2023 and putting a damper on applications activity,” MBA chief economist Joel Kan said in a news release emailed to MPA. “The 30-year fixed rate increased for the third consecutive week to 7.24%, the highest since November 2023.” The refinance index … [Read more…]
For many aspiring homebuyers, the dream of homeownership has become increasingly difficult to attain in recent years. A combination of soaring home prices and rising mortgage rates has made purchasing a property significantly more expensive, stretching budgets to their limits. For example, the median home price nationwide hit $417,700 in Q4 2023 — up from an average of $327,100 in Q4 2019. And, 30-year fixed mortgage rates currently average 7.30%, more than double what they were just a few years ago.
That said, it can still make sense to buy a home right now, even with today’s unique challenges looming. After all, high rates generally mean buyer competition is down, so it could be a good time to make your move. And, while you may be thinking about waiting for rates to fall, there’s no guarantee that will happen in the near future. Plus, you always have the option to refinance your mortgage loan at a lower rate if mortgage rates do eventually decline.
But getting approved for a mortgage in today’s unique landscape can prove challenging even for borrowers with strong credit and stable employment. Lenders have understandably grown more cautious in the face of economic headwinds, making the application process more rigorous. So what should you do if your mortgage loan application is denied by a lender?
Find out how affordable the right mortgage loan could be today.
Was your mortgage loan application denied? 9 steps to take
If your mortgage application has been denied, it’s important not to lose hope. There are steps you can take to improve your chances of approval:
Request the denial reasons in writing
By law, lenders must provide you with the specific reasons for denial in writing upon request. This documentation is essential, as it will allow you to precisely identify and address the problem areas that led to the rejection. Never assume you know the reasons; get them directly from the lender so you know what to focus on instead.
Explore your top mortgage loan options and apply for preapproval now.
Review your credit report
Mistakes and inaccuracies on credit reports are surprisingly common. If your mortgage loan application is denied, obtain your free annual credit reports from all three major bureaus (Experian, Equifax and TransUnion) and scrutinize them carefully. If you find any errors, dispute them with the credit bureaus to have them corrected or removed, as this could significantly boost your approval chances.
Work to improve your credit
For many buyers, a subpar credit score is the roadblock to mortgage approval. If a low credit score causes your mortgage application to be denied, take proactive steps like paying all bills on time each month, reducing outstanding balances on credit cards and other loans and avoiding opening new credit accounts in the short term. Improving your credit profile can rapidly enhance your mortgage eligibility.
Increase your down payment
Many lenders favor borrowers who can make larger down payments upfront. Not only does this lower the overall mortgage loan amount, but it demonstrates your commitment and ability as a borrower. Options to boost your upfront contribution include tapping employment bonuses, tax refunds, gifts from relatives or simply saving more aggressively.
Find a co-signer
If your own income and credit aren’t adequate for mortgage approval, applying jointly with a creditworthy co-signer could be the solution. A spouse, parent or other party with strong finances can boost the overall application through their positive profile. However, it’s imperative that all parties understand and accept the legal obligations before proceeding.
Explore government-backed loans
While conventional mortgages from banks and lenders typically have stringent requirements, loans insured by government agencies tend to have more flexibility. If you meet the eligibility criteria for an FHA, VA or USDA loan based on income limits, military service or rural location, these could represent a pathway to homeownership.
Find ways to increase your income
If you’re denied due to a high debt-to-income (DTI) ratio, finding ways to boost your monthly earnings could be the deciding factor. Options to do this include requesting a raise from your current employer, finding a higher-paying job or establishing steady side income from a second job or freelance work.
Change lenders
Not all mortgage lenders evaluate applications through the same underwriting models or with the same risk appetite. While one bank may deny you, another lender could give you a green light after reviewing the exact same financial information. So, if you’re denied a mortgage loan with one lender, it makes sense to shop around, ask questions and get multiple assessments to find the right fit.
Wait and apply again
Mortgage approvals are based on a specific snapshot of your finances at one point in time. If rejected, sometimes the best recourse is to press pause, work on improving weak areas over several months and then reapply with an updated financial profile for a fresh evaluation.
The bottom line
A denied mortgage can be disheartening, but don’t give up hope. With diligent preparation, an openness to explore alternative pathways and a willingness to make difficult but necessary changes, you may still have options to secure financing and make your homeownership dreams a reality. Ultimately, perseverance and knowledge are key when faced with today’s uniquely challenging housing market.
Angelica Leicht
Angelica Leicht is senior editor for CBS’ Moneywatch: Managing Your Money, where she writes and edits articles on a range of personal finance topics. Angelica previously held editing roles at The Simple Dollar, Interest, HousingWire and other financial publications.
Real estate investments make money through appreciation and rental income. Real estate can diversify a portfolio and act as a hedge against inflation, since landlords can pass rising costs to tenants. But the down payment on multifamily investment properties? At least 20%, or 25% to get a better rate.
It’s true that eligible borrowers may use a 0% down U.S. Department of Veterans Affairs (VA) loan for a property with up to four units as long as they live there. But those loans serve a relative few and are considered residential financing. Properties with more than four units are considered commercial.
So how can a cash-poor but curiosity-rich person tap the potential of multifamily properties? By not footing the entire bill themselves.
Can You Buy a Multifamily Property With No Money?
When you buy real estate, you typically have two options: Buy with cash or finance your purchase with a mortgage loan.
There are various types of mortgages. If you take out a home loan, you’ll likely need to pay a portion of the purchase price in cash in the form of a down payment. The minimum down payment you make will depend on the type of mortgage you choose — the average down payment on a house is well under 20% — and it will help determine what terms and interest rates you’ll be offered by lenders.
This money needs to come from somewhere, but it doesn’t necessarily need to come from your own savings account. When investors buy multifamily properties with “no money down,” it just means they are using little to no personal money to cover the upfront costs.
If you don’t have much cash of your own, there are several ways that you can fund the purchase of a multifamily investment property. 💡 Quick Tip: Jumbo mortgage loans are the answer for borrowers who need to borrow more than the conforming loan limit values set by the Federal Housing Finance Agency ($766,550 in most places, or $1,149,825 in many high-cost areas). If you have your eye on a pricier property, a jumbo loan could be a good solution.
6 Ways to Pay for a Multifamily Property
Find a Co-Borrower
If you don’t have the money to front the costs of a property yourself, you may be able to partner with a family member, friend, or business partner. They may have the money to cover the down payment, and you might pull your weight by researching properties or managing them.
When you co-borrow with someone, you’ll each be responsible for the monthly mortgage payments. You’ll also share profits in the form of rents or capital gains if you sell the property.
Give an Equity Share
You may give an equity investor a share in the property to cover the down payment. Say a multifamily property costs $750,000, and you need a 20% down payment. An equity investor could give you $150,000 in exchange for 20% of the monthly rental income and 20% of the profit when the property is sold.
Borrow From a Hard Money Lender
Hard money loans are offered by private lenders or investors, not banks. The mortgage underwriting process tends to be less strict than that of traditional mortgages. Depending on the property you want to buy, no down payment may be required.
These loans (also called bridge loans) have high interest rates and short terms — one to three years is typical — with interest-only payments the norm. For this reason, they may be used by investors who may be looking to flip the property in short order, allowing them to make a profit and pay off the loan quickly.
First-time homebuyers can prequalify for a SoFi mortgage loan, with as little as 3% down.
House Hack
House hacking refers to leveraging property you already own to generate income. For example, you might rent out an in-law suite or list your property on Airbnb.
Another option: You could rent out your primary residence and move into one of the units in a multifamily property you buy. This way, you’d probably generate more income than if you had rented out the unit to a tenant.
Finally, you could hop on the ADU bandwagon if you own a single-family home. Accessory dwelling units can take the form of a converted garage, an attached or detached unit, or an interior conversion. The rental income can be sizable. To fund a new ADU, homeowners may tap home equity, look into cash-out refinancing, or even use a personal loan.
Seek Seller Financing
If you don’t have the cash for a down payment on a property, you may be able to forgo financing from a lending institution and get help instead from the seller.
With owner financing, there are no minimum down payment requirements. Several types of seller financing arrangements exist:
• All-inclusive mortgage: The seller extends credit for the entire purchase price of the home, less any down payment.
• Junior mortgage: The buyer finances a portion of the sales price through a lending institution, while the seller finances the difference.
• Land contracts: The buyer and seller share ownership until the buyer makes the final payment on the property and receives the deed.
• Lease purchase: The buyer leases the property from the seller for a set period of time, after which the owner agrees to sell the property at previously agreed-upon terms. Lease payments may count toward the purchase price.
• Assumable mortgage: A buyer may be able to take over a seller’s mortgage if the lender approves and the buyer qualifies. FHA, VA, and USDA loans are assumable mortgages.
Invest Indirectly
Not everyone wants to become a landlord in order to add real estate to their portfolio. Luckily, they can invest indirectly, including through crowdfunding sites and real estate investment trusts (REITs).
The Jumpstart Our Business Startups Act of 2013 allows real estate investors to pool their money through online real estate crowdfunding platforms to buy multifamily and other types of properties. The platforms give average investors access to real estate options that were once only available to the very wealthy.
REITs are companies that own various types of real estate, including apartment buildings. Investors can buy shares on the open market, and the company passes along the profits generated by rent. To qualify as a REIT, the company must pass along at least 90% of its taxable income to shareholders each year.
As investment opportunities go, REITs can be a good choice for passive-income investors. 💡 Quick Tip: To see a house in person, particularly in a tight or expensive market, you may need to show the real estate agent proof that you’re preapproved for a mortgage. SoFi’s online application makes the process simple.
The Takeaway
Buying a multifamily property with no money down is possible if you take the roads less traveled, including leveraging other people’s money. And if you have the means to make a down payment on a property, your first step is to research possible home mortgage loans.
Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% – 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It’s online, with access to one-on-one help.
SoFi Mortgages: simple, smart, and so affordable.
FAQ
Can I buy a multifamily home with an FHA loan?
It is possible to buy a property with up to four units with a standard mortgage backed by the Federal Housing Administration (FHA) if the buyer plans to live in one of the units for at least a year. The FHA considers homes with up to four units single-family housing. The down payment could be as low as 3.5%. There are loan limits.
A rarer product, an FHA multifamily loan, may be used to buy a property with five or more units. The down payment is higher. You’ll pay mortgage insurance premiums upfront and annually for any FHA loan.
Is a multifamily property considered a commercial property?
Properties with five or more units are generally considered commercial real estate. Commercial real estate loans usually have shorter terms, and higher interest rates and down payment requirements than residential loans. They almost always include a prepayment penalty.
Photo credit: iStock/jsmith
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SoFi Mortgages Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility for more information.
*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.
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¹FHA loans are subject to unique terms and conditions established by FHA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. FHA loans require an Upfront Mortgage Insurance Premium (UFMIP), which may be financed or paid at closing, in addition to monthly Mortgage Insurance Premiums (MIP). Maximum loan amounts vary by county. The minimum FHA mortgage down payment is 3.5% for those who qualify financially for a primary purchase. SoFi is not affiliated with any government agency.
†Veterans, Service members, and members of the National Guard or Reserve may be eligible for a loan guaranteed by the U.S. Department of Veterans Affairs. VA loans are subject to unique terms and conditions established by VA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. VA loans typically require a one-time funding fee except as may be exempted by VA guidelines. The fee may be financed or paid at closing. The amount of the fee depends on the type of loan, the total amount of the loan, and, depending on loan type, prior use of VA eligibility and down payment amount. The VA funding fee is typically non-refundable. SoFi is not affiliated with any government agency.
Is it any surprise to see a strong reaction to economic data when the phrase “data dependent” has come to unequivocally rule all other approaches to understanding the interest rate outlook? Yes, actually, it can sometimes still be a surprise because data dependency depends on the data being depended upon. In today’s case, we have a report that has been inconsequential more often than not over the past decade, but increasingly relevant in the last 2 years. There could be some debate as to whether that’s due to the gradual increase of acceptance for S&P’s PMI data in a country where ISM has long been the dominant source of PMI data or whether it’s simply due to the bond market’s strong desire for econ data. Either way, it’s a market mover today.
The reaction is so blatantly obvious that it begs the question as to how the underlaying data justifies the move. After all, there wasn’t a huge departure in Indices themselves. We’ll focus on the services side of the economy here, just to keep the chart simple, but the takeaway from Manufacturing is no different.
Broader context is helpful. Today’s move in yields is well within the weekly range and not-at-all meaningful in the bigger picture. In other words, it becomes less impressive the more we zoom out.
Mohtashami kicked off the sessions by talking about the differences between the current mortgage rate environment and some of what was seen in the early days of the financial crisis of the 2000s, saying that Americans generally are in a much better position than they were back then.
The Fed has recently indicated that it is not likely to reduce interest rates anytime soon due to economic indicators, and Mohtashami revived a 2022 prediction about what it will take to get the Fed to “break” on rates.
“In 2022, I brought up the premise that the Fed will not pivot until the labor market breaks,” he said. “So, if all of you are looking for a sustained lower move in mortgage rates, that’s what you’re going to see.”
While a lot of the oxygen in the discussion is taken up by inflation, Mohtashami asserts that’s not what the Fed is primarily focused on.
“What the Fed wants to see is the labor market get very soft and to the point that it’s breaking, and then they will find all the confidence in the world to do rate cuts and talk about making sure we have a soft landing,” he said.
Reading the data, he said, might tell a different story about the situation as opposed to strictly paying attention to what Fed officials are saying.
Illuminating data points include wage growth, job openings, the number of people quitting to find higher-paying work, and jobless claims on a weekly or monthly basis. These help observers to monitor changes in the labor market similarly to the Fed, he explained.
From there — and when combined with employment in construction and housing permit data — the thinking around rates will become clearer.
“If the labor market gets softer and the Fed starts getting a little bit more dovish, then not only can the spreads get better, but if the 10-year yield goes down, there’s your 6% [or] sub-6% mortgage rates,” he said. “But this means the labor market has to break. So, we’re all focusing on inflation, but not what really matters.”
Simonsen: More data, less ‘vibes’
A lot of the conversation in the housing market can be focused on “vibes,” or general feelings about the way things are going. Simonsen explained to attendees at The Gathering that focusing instead on real-time data is key to having accurate, predictive indicators about where the market is at and where it will go.
Simonsen began his presentation by talking about an early Altos interaction with both Goldman Sachs and Lehman Brothers. In 2007, right around the time he started Altos Research, he was attending a conference where representatives of both companies were speaking. After they finished speaking, he aimed to pitch both companies on why they might need the kind of data Altos specializes in.
He recalled his pitch.
“I’m Mike Simonsen, my company is Altos Research, and we track every home for sale in the country every week,” he recalled saying. “We check all the pricing, all the supply and demand, and all the changes in that data, and we give that to you because traditional housing data is months behind the curve before you see what’s happening.”
The Lehman representative turned him down flatly, saying, “We’ve got so much more data than you can possibly imagine. We’re making so much money. Don’t even bother,” Simonsen recalled.
The Goldman representative was more open to hearing what he had to say, and 12 weeks later engaged with Altos as a client. A year later, Lehman Brothers went out of business, Simonsen explained.
Simonsen asserted that monitoring changing data points on a daily and weekly basis — including inventory levels, new and pending home sales, and home price data and signals —can help to more efficiently track the impact of mortgage rates.
“I believe that our obligation is to communicate with the data for everybody in the cycle, from the biggest players down to every single homebuyer and seller,” Simonsen said.
He began by looking at fresh inventory data.
“The biggest takeaway from when we’re looking at the inventory numbers is rising rates constitute rising inventory — or put another way, demand slows, inventory grows,” he said. “And that’s actually counterintuitive for a lot of folks who are just casually looking at the data.
“They think, ‘Mortgage rates are higher, nobody’s going to sell, therefore inventory is going to fall when rates fall again. Then we’ll finally get some inventory.’ But the data shows that actually, the opposite is true.”
Multiple years of higher rates will be needed to return inventory to pre-pandemic levels, but inventory growth is rising across the country, particularly in states like Florida and Texas, he explained.
More home sellers are also starting to enter the market. Last year, rising rates depressed seller participation, but higher rates are starting to be seen as more of a norm. A general sense of predictability will allow more sellers to enter the market, he said.
Prices are likely to remain stable due to higher rates, he added.
“More data, less vibes,” Simonsen said.
Fairweather: Less affordability
Daryl Fairweather of Redfin primarily spoke about housing demand; generational participation in the market; the impact of climate events and natural disasters on homebuying activity; and the flexibility that renters might experience, particularly as weather events become more prominent nationwide.
“People are spending more and more of their money on housing, and housing isn’t getting any more affordable,” she said. “We still have this underlying shortage of homes.”
But the presentation was primarily designed to be forward looking, and in that respect, interest rates and inflation are elevated, but the economy is growing. Demographics are also changing, with millennials being the largest generation and Gen Z being smaller but increasingly influential in the economy.
Changing preferences and economic realities are also disrupting long-standing paradigms related to housing in the U.S., she said.
“It used to be that homeownership was the American dream, and now it’s more the American pipe dream,” Fairweather said. “People just feel like it’s a ‘pie in the sky’ thing for them to achieve because housing affordability keeps getting worse and worse.”
Climate is also a very real issue having an impact on the housing market, Fairweather said.
“For a long time I would talk about a changing climate and people would say ‘That’s a problem for the future,’” she said. “But now, we’re seeing insurance costs going up and people are deciding where to live based on the climate. It’s becoming a more and more important issue in the housing market.”
Fairweather shared that Redfin experimented in 2020 to analyze the impacts that climate change can have on homebuying behavior over a three-month period in which users were divided into two pools: one that showed them a view of flood risk and one that did not.
“In the control view, there is no flood risk, and then in the treatment view, you could see flood risk for every single home that’s on Redfin,” she said. “The people that were shown flood risk — if they were previously looking at severely or extremely risky homes for flood risk — they went on to buy homes that had half as much risk when they saw that information,” she said.
This communicates a potential value-add opportunity for mortgage professionals to offer more robust climate information, in addition to where interest rates are projected to go or demographic information.
“[That can help] inform them about how to make the best homebuying decision,” Fairweather said.
Average mortgage rates inched lower yesterday. But all that did was wipe out last Friday’s similarly tiny rise.
Earlier this morning, markets were signaling that mortgage rates today might barely budge. However, these early mini-trends often alter direction or speed as the hours pass.
Current mortgage and refinance rates
Find your lowest rate. Start here
Program
Mortgage Rate
APR*
Change
Conventional 30-year fixed
7.302%
7.353%
+0.01
Conventional 15-year fixed
6.757%
6.836%
+0.01
30-year fixed FHA
7.064%
7.111%
-0.07
5/1 ARM Conventional
6.888%
8.036%
+0.12
Conventional 20-year fixed
7.199%
7.257%
+0.05
Conventional 10-year fixed
6.663%
6.737%
+0.06
30-year fixed VA
7.292%
7.332%
+0.01
Rates are provided by our partner network, and may not reflect the market. Your rate might be different. Click here for a personalized rate quote. See our rate assumptions See our rate assumptions here.
Should you lock your mortgage rate today?
This morning’s Financial Times reports, “While the base case remains a reduction in borrowing costs, the options market shows a 20% probability of an increase.” That means most investors think the Federal Reserve will cut general interest rates this year, but they reckon there’s a 20% chance of the central bank actually hiking them. That’s new and scary.
Although the Fed doesn’t directly determine mortgage rates it has a huge influence on the bond market that does. And I very much doubt mortgage rates will fall consistently before the Fed signals that a cut in general interest rates is imminent. And a Fed rate hike is likely to send mortgage rates much higher: maybe back up to 8% or beyond.
So my personal rate lock recommendations remain:
LOCK if closing in 7 days
LOCK if closing in 15 days
LOCK if closing in 30 days
LOCK if closing in 45 days
LOCKif closing in 60days
However, with so much uncertainty at the moment, your instincts could easily turn out to be as good as mine — or better. So, let your gut and your own tolerance for risk help guide you.
>Related: 7 Tips to get the best refinance rate
Market data affecting today’s mortgage rates
Here’s a snapshot of the state of play this morning at about 9:50 a.m. (ET). The data are mostly compared with roughly the same time the business day before, so much of the movement will often have happened in the previous session. The numbers are:
The yield on 10-year Treasury notes edged down to 4.6% from 4.64%. (Good for mortgage rates.) More than any other market, mortgage rates typically tend to follow these particular Treasury bond yields
Major stock indexes were rising this morning. (Bad for mortgage rates.) When investors buy shares, they’re often selling bonds, which pushes those prices down and increases yields and mortgage rates. The opposite may happen when indexes are lower. But this is an imperfect relationship
Oil prices decreased to $81.59 from $82.06 a barrel. (Good for mortgage rates*.) Energy prices play a prominent role in creating inflation and also point to future economic activity
Goldprices fell to $2,333 from $2,350 an ounce. (Neutral for mortgage rates*.) It is generally better for rates when gold prices rise and worse when they fall. Because gold tends to rise when investors worry about the economy.
CNN Business Fear & Greed index — climbed to 40 from 33 out of 100. (Bad for mortgage rates.) “Greedy” investors push bond prices down (and interest rates up) as they leave the bond market and move into stocks, while “fearful” investors do the opposite. So, lower readings are often better than higher ones
*A movement of less than $20 on gold prices or 40 cents on oil ones is a change of 1% or less. So we only count meaningful differences as good or bad for mortgage rates.
Caveats about markets and rates
Before the pandemic, post-pandemic upheavals, and war in Ukraine, you could look at the above figures and make a pretty good guess about what would happen to mortgage rates that day. But that’s no longer the case. We still make daily calls. And are usually right. But our record for accuracy won’t achieve its former high levels until things settle down.
So, use markets only as a rough guide. Because they have to be exceptionally strong or weak to rely on them. But, with that caveat, mortgage rates today look likely to be unchanged or close to unchanged. However, be aware that “intraday swings” (when rates change speed or direction during the day) are a common feature right now.
Find your lowest rate. Start here
What’s driving mortgage rates today?
Today
This morning’s two April purchasing managers’ indexes (PMIs) will likely be good for mortgage rates. These “flashes” (initial readings and subject to revision) are both from S&P.
Here are this morning’s actual numbers in bold, alongside the prepublication consensus forecasts, according to MarketWatch, together with the March actual figures:
Services PMI — 50.9 actual; 52 expected; 51.7 in March
Manufacturing PMI — 51.1 actual; 52 expected; 51.9 in March
You can see that the PMIs were worse than expected, which is typically good news for mortgage rates.
Tomorrow
Tomorrow’s durable goods orders for March rarely affect mortgage rates. And they’d need to contain some pretty shocking data to do so tomorrow.
Markets are expecting those orders to have risen by 2.6% in March compared to a 1.3% increase in February. They’ll probably need to be significantly higher than 2.% to exert upward pressure on mortgage rates and appreciably lower to push them downward.
The rest of this week
Nothing has changed since yesterday concerning economic reports due on Thursday and Friday. So, I’ll repeat what I wrote yesterday:
We’re due the first reading of gross domestic product (GDP) for the January-March quarter on Thursday. And that could have a larger effect than PMIs and durable goods orders, depending on the gap between expectations and actuals.
But Friday’s personal consumption expenditures (PCE) price index for March is this week’s star report. That’s the Federal Reserve’s favorite gauge of inflation. And it could certainly affect mortgage rates, possibly appreciably.
The next meeting of the Fed’s rate-setting committee is scheduled to start on Apr. 30 and last two days. So, the PCE price index will be the last inflation report it sees before making decisions.
And index that shows inflation cooling could change the mood at that meeting. True, it’s vanishingly unlikely that a cut to general interest rates will be unveiled on May 1 no matter what.
But a PCE price index that shows inflation cooling could help the Fed to move forward with cuts earlier than expected, which should cause mortgage rates to fall. Unfortunately, one that suggests inflation remains hot or is getting hotter could send those rates higher.
I’ll brief you more fully on each potentially significant report on the day before it’s published.
Don’t forget you can always learn more about what’s driving mortgage rates in the most recent weekend edition of this daily report. These provide a more detailed analysis of what’s happening. They are published each Saturday morning soon after 10 a.m. (ET) and include a preview of the following week.
Recent trends
According to Freddie Mac’s archives, the weekly all-time lowest rate for 30-year, fixed-rate mortgages was set on Jan. 7, 2021, when it stood at 2.65%. The weekly all-time high was 18.63% on Sep. 10, 1981.
Freddie’s Apr. 18 report put that same weekly average at 7.1%, up from the previous week’s 6.88%. But note that Freddie’s data are almost always out of date by the time it announces its weekly figures.
Expert forecasts for mortgage rates
Looking further ahead, Fannie Mae and the Mortgage Bankers Association (MBA) each has a team of economists dedicated to monitoring and forecasting what will happen to the economy, the housing sector and mortgage rates.
And here are their rate forecasts for the four quarters of 2024 (Q1/24, Q2/24 Q3/24 and Q4/24).
The numbers in the table below are for 30-year, fixed-rate mortgages. Fannie’s were updated on Mar. 19 and the MBA’s on Apr. 18.
Forecaster
Q1/24
Q2/24
Q3/24
Q4/24
Fannie Mae
6.7%
6.7%
6.6%
6.4%
MBA
6.8%
6.7%
6.6%
6.4%
Of course, given so many unknowables, both these forecasts might be even more speculative than usual. And their past record for accuracy hasn’t been wildly impressive.
Important notes on today’s mortgage rates
Here are some things you need to know:
Typically, mortgage rates go up when the economy’s doing well and down when it’s in trouble. But there are exceptions. Read ‘How mortgage rates are determined and why you should care’
Only “top-tier” borrowers (with stellar credit scores, big down payments, and very healthy finances) get the ultralow mortgage rates you’ll see advertised
Lenders vary. Yours may or may not follow the crowd when it comes to daily rate movements — though they all usually follow the broader trend over time
When daily rate changes are small, some lenders will adjust closing costs and leave their rate cards the same
Refinance rates are typically close to those for purchases.
A lot is going on at the moment. And nobody can claim to know with certainty what will happen to mortgage rates in the coming hours, days, weeks or months.
Find your lowest mortgage rate today
You should comparison shop widely, no matter what sort of mortgage you want. Federal regulator the Consumer Financial Protection Bureau found in May 2023:
“Mortgage borrowers are paying around $100 a month more depending on which lender they choose, for the same type of loan and the same consumer characteristics (such as credit score and down payment).”
In other words, over the lifetime of a 30-year loan, homebuyers who don’t bother to get quotes from multiple lenders risk losing an average of $36,000. What could you do with that sort of money?
Verify your new rate
Mortgage rate methodology
The Mortgage Reports receives rates based on selected criteria from multiple lending partners each day. We arrive at an average rate and APR for each loan type to display in our chart. Because we average an array of rates, it gives you a better idea of what you might find in the marketplace. Furthermore, we average rates for the same loan types. For example, FHA fixed with FHA fixed. The end result is a good snapshot of daily rates and how they change over time.
How your mortgage interest rate is determined
Mortgage and refinance rates vary a lot depending on each borrower’s unique situation.
Factors that determine your mortgage interest rate include:
Overall strength of the economy — A strong economy usually means higher rates, while a weaker one can push current mortgage rates down to promote borrowing
Lender capacity — When a lender is very busy, it will increase rates to deter new business and give its loan officers some breathing room
Property type (condo, single-family, town house, etc.) — A primary residence, meaning a home you plan to live in full time, will have a lower interest rate. Investment properties, second homes, and vacation homes have higher mortgage rates
Loan-to-value ratio (determined by your down payment) — Your loan-to-value ratio (LTV) compares your loan amount to the value of the home. A lower LTV, meaning a bigger down payment, gets you a lower mortgage rate
Debt-To-Income ratio — This number compares your total monthly debts to your pretax income. The more debt you currently have, the less room you’ll have in your budget for a mortgage payment
Loan term — Loans with a shorter term (like a 15-year mortgage) typically have lower rates than a 30-year loan term
Borrower’s credit score — Typically the higher your credit score is, the lower your mortgage rate, and vice versa
Mortgage discount points — Borrowers have the option to buy discount points or ‘mortgage points’ at closing. These let you pay money upfront to lower your interest rate
Remember, every mortgage lender weighs these factors a little differently.
To find the best rate for your situation, you’ll want to get personalized estimates from a few different lenders.
Verify your new rate. Start here
Are refinance rates the same as mortgage rates?
Rates for a home purchase and mortgage refinance are often similar.
However, some lenders will charge more for a refinance under certain circumstances.
Typically when rates fall, homeowners rush to refinance. They see an opportunity to lock in a lower rate and payment for the rest of their loan.
This creates a tidal wave of new work for mortgage lenders.
Unfortunately, some lenders don’t have the capacity or crew to process a large number of refinance loan applications.
In this case, a lender might raise its rates to deter new business and give loan officers time to process loans currently in the pipeline.
Also, cashing out equity can result in a higher rate when refinancing.
Cash-out refinances pose a greater risk for mortgage lenders, so they’re often priced higher than new home purchases and rate-term refinances.
Check your refinance rates today. Start here
How to get the lowest mortgage or refinance rate
Since rates can vary, always shop around when buying a house or refinancing a mortgage.
Comparison shopping can potentially save thousands, even tens of thousands of dollars over the life of your loan.
Here are a few tips to keep in mind:
1. Get multiple quotes
Many borrowers make the mistake of accepting the first mortgage or refinance offer they receive.
Some simply go with the bank they use for checking and savings since that can seem easiest.
However, your bank might not offer the best mortgage deal for you. And if you’re refinancing, your financial situation may have changed enough that your current lender is no longer your best bet.
So get multiple quotes from at least three different lenders to find the right one for you.
2. Compare Loan Estimates
When shopping for a mortgage or refinance, lenders will provide a Loan Estimate that breaks down important costs associated with the loan.
You’ll want to read these Loan Estimates carefully and compare costs and fees line-by-line, including:
Interest rate
Annual percentage rate (APR)
Monthly mortgage payment
Loan origination fees
Rate lock fees
Closing costs
Remember, the lowest interest rate isn’t always the best deal.
Annual percentage rate (APR) can help you compare the ‘real’ cost of two loans. It estimates your total yearly cost including interest and fees.
Also, pay close attention to your closing costs.
Some lenders may bring their rates down by charging more upfront via discount points. These can add thousands to your out-of-pocket costs.
3. Negotiate your mortgage rate
You can also negotiate your mortgage rate to get a better deal.
Let’s say you get loan estimates from two lenders. Lender A offers the better rate, but you prefer your loan terms from Lender B. Talk to Lender B and see if they can beat the former’s pricing.
You might be surprised to find that a lender is willing to give you a lower interest rate in order to keep your business.
And if they’re not, keep shopping — there’s a good chance someone will.
Fixed-rate mortgage vs. adjustable-rate mortgage: Which is right for you?
Mortgage borrowers can choose between a fixed-rate mortgage and an adjustable-rate mortgage (ARM).
Fixed-rate mortgages (FRMs) have interest rates that never change unless you decide to refinance. This results in predictable monthly payments and stability over the life of your loan.
Adjustable-rate loans have a low interest rate that’s fixed for a set number of years (typically five or seven). After the initial fixed-rate period, the interest rate adjusts every year based on market conditions.
With each rate adjustment, a borrower’s mortgage rate can either increase, decrease, or stay the same. These loans are unpredictable since monthly payments can change each year.
Adjustable-rate mortgages are fitting for borrowers who expect to move before their first rate adjustment, or who can afford a higher future payment.
In most other cases, a fixed-rate mortgage is typically the safer and better choice.
Remember, if rates drop sharply, you are free to refinance and lock in a lower rate and payment later on.
How your credit score affects your mortgage rate
You don’t need a high credit score to qualify for a home purchase or refinance, but your credit score will affect your rate.
This is because credit history determines risk level.
Historically speaking, borrowers with higher credit scores are less likely to default on their mortgages, so they qualify for lower rates.
So, for the best rate, aim for a credit score of 720 or higher.
Mortgage programs that don’t require a high score include:
Conventional home loans — minimum 620 credit score
FHA loans — minimum 500 credit score (with a 10% down payment) or 580 (with a 3.5% down payment)
VA loans — no minimum credit score, but 620 is common
USDA loans — minimum 640 credit score
Ideally, you want to check your credit report and score at least 6 months before applying for a mortgage. This gives you time to sort out any errors and make sure your score is as high as possible.
If you’re ready to apply now, it’s still worth checking so you have a good idea of what loan programs you might qualify for and how your score will affect your rate.
You can get your credit report from AnnualCreditReport.com and your score from MyFico.com.
How big of a down payment do I need?
Nowadays, mortgage programs don’t require the conventional 20 percent down.
Indeed, first-time home buyers put only 6 percent down on average.
Down payment minimums vary depending on the loan program. For example:
Conventional home loans require a down payment between 3% and 5%
FHA loans require 3.5% down
VA and USDA loans allow zero down payment
Jumbo loans typically require at least 5% to 10% down
Keep in mind, a higher down payment reduces your risk as a borrower and helps you negotiate a better mortgage rate.
If you are able to make a 20 percent down payment, you can avoid paying for mortgage insurance.
This is an added cost paid by the borrower, which protects their lender in case of default or foreclosure.
But a big down payment is not required.
For many people, it makes sense to make a smaller down payment in order to buy a house sooner and start building home equity.
Verify your new rate. Start here
Choosing the right type of home loan
No two mortgage loans are alike, so it’s important to know your options and choose the right type of mortgage.
The five main types of mortgages include:
Fixed-rate mortgage (FRM)
Your interest rate remains the same over the life of the loan. This is a good option for borrowers who expect to live in their homes long-term.
The most popular loan option is the 30-year mortgage, but 15- and 20-year terms are also commonly available.
Adjustable-rate mortgage (ARM)
Adjustable-rate loans have a fixed interest rate for the first few years. Then, your mortgage rate resets every year.
Your rate and payment can rise or fall annually depending on how the broader interest rate trends.
ARMs are ideal for borrowers who expect to move prior to their first rate adjustment (usually in 5 or 7 years).
For those who plan to stay in their home long-term, a fixed-rate mortgage is typically recommended.
Jumbo mortgage
A jumbo loan is a mortgage that exceeds the conforming loan limit set by Fannie Mae and Freddie Mac.
In 2023, the conforming loan limit is $726,200 in most areas.
Jumbo loans are perfect for borrowers who need a larger loan to purchase a high-priced property, especially in big cities with high real estate values.
FHA mortgage
A government loan backed by the Federal Housing Administration for low- to moderate-income borrowers. FHA loans feature low credit score and down payment requirements.
VA mortgage
A government loan backed by the Department of Veterans Affairs. To be eligible, you must be active-duty military, a veteran, a Reservist or National Guard service member, or an eligible spouse.
VA loans allow no down payment and have exceptionally low mortgage rates.
USDA mortgage
USDA loans are a government program backed by the U.S. Department of Agriculture. They offer a no-down-payment solution for borrowers who purchase real estate in an eligible rural area. To qualify, your income must be at or below the local median.
Bank statement loan
Borrowers can qualify for a mortgage without tax returns, using their personal or business bank account as evidence of their financial circumstances. This is an option for self-employed or seasonally-employed borrowers.
Portfolio/Non-QM loan
These are mortgages that lenders don’t sell on the secondary mortgage market. And this gives lenders the flexibility to set their own guidelines.
Non-QM loans may have lower credit score requirements or offer low-down-payment options without mortgage insurance.
Choosing the right mortgage lender
The lender or loan program that’s right for one person might not be right for another.
Explore your options and then pick a loan based on your credit score, down payment, and financial goals, as well as local home prices.
Whether you’re getting a mortgage for a home purchase or a refinance, always shop around and compare rates and terms.
Typically, it only takes a few hours to get quotes from multiple lenders. And it could save you thousands in the long run.
Time to make a move? Let us find the right mortgage for you
Current mortgage rates methodology
We receive current mortgage rates each day from a network of mortgage lenders that offer home purchase and refinance loans. Those mortgage rates shown here are based on sample borrower profiles that vary by loan type. See our full loan assumptions here.
“I’m seeing more [first-time buyers] than we did certainly in 2021, even into kind of ’22,” she said, “just because for the buyers that can get comfortable with where the market is with sales price and rate, we’re able to have this conversation of, ‘How do we get strategic?’” Aspects like the home price and … [Read more…]
“There’s such scarcity that the first thing that matters is finding a home you like,” said Jay Tuli, president of Leader Bank, which sells 90 percent of its home loans in Massachusetts.
Home sales are down year-over-year due to the lack of inventory, said Theresa Hatton, chief executive of Massachusetts Association of Realtors.
Many prospective buyers who were waiting for the Federal Reserve to begin cutting interest rates by now have reason to give up hope. Inflation isn’t coming down quickly enough and, at 3.5 percent, is still well above the Fed’s 2 percent target. So the central bank won’t trim short-term rates fast enough this year, contrary to what most economists had been expecting. Consequently, the 30-year fixed mortgage rate has risen to 7.1 percent, over 1 percentage point higher than this time last year and 0.6 percent more than January 2024, Freddie Mac reported last week.
“Until inflation cools a bit, we can expect mortgage rates to remain elevated,” said Michael Debronzo, a regional sales executive at PNC Bank, which has noted a slight uptick in loan applications.
The market is closely watching the Fed’s every move and the economy is a confounding puzzle even for experts. That will result in a volatile ride for the remainder of the year.
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With that in mind, here are three things for home buyers to consider, according to Berkshire Bank’s Ellen Steinfeld, head of consumer lending and payments:
Expect home listings to remain tight. That’s because those who financed their homes during the low-rate era are staying in their homes for longer. Even those who were looking to downsize are staying put. Financially, it doesn’t make sense to sell if you also have to buy at these rates. Usually, people try and sell their home before bidding on a new one, but right now it’s the other way around, said Steinfeld, who’s based in Long Island, N.Y.
This also means home prices are unlikely to drop. In certain cases people are paying more than the asking price, engaging in bidding wars. “I anticipate during the remainder of this year we’ll continue to see price appreciation,” Steinfeld noted.
Finally, even though interest rates will likely drop a smidge by late 2024, they won’t reverse anywhere as quickly as their speedy rise postpandemic. Meanwhile, buyers can do cheaper 3- or 5-year adjustable rate mortgages and refinance when rates drop.
“The cost of refinancing is reasonable enough,” Steinfeld said.
If you’ve owned your car for several years, it may be a source of cash even if you don’t want to sell it. Enter auto equity loans, which lets you turn the equity you have in your car into a loan you can use for any purpose.
While the risks and interest rates may not be suitable for every borrower, a strategic approach to this loan can quickly get you the cash you need. Here’s how to tell if a car equity loan makes sense for you.
How Auto Equity Loans Work
Vehicle equity loans depend on how much a borrower’s car is worth versus how much they owe on the car. For example, say your car is worth $15,000. You’re almost finished paying off your car loan and only owe $1,000 on it. So, you have $14,000 of equity you can leverage with an auto equity loan.
Your equity in your vehicle is the basis for a loan, and terms vary by lender. For example, some lenders may loan a maximum of 100% of your auto equity, while others loan 125%.
Like any loan, a car equity loan comes with terms and conditions. This includes the interest rate, repayment schedule, and loan fees.
However, the unique aspect of auto equity loans is the vehicle serves as collateral. The advantage is that you can obtain better terms and rates than an unsecured loan. The downside is that the failure to repay the loan gives the lender the right to repossess the vehicle to recoup their losses.
Auto Equity Loan vs. Auto Title Loan
Auto title loans and car equity loans sound similar, but they have stark differences with severe implications for borrowers. Auto equity loans allow you to turn the equity you have in your car into a loan you’ll repay over the coming months or years. Defaulting on the loan can result in repossession, but the loan terms are typically affordable enough for borrowers to avoid this outcome.
Auto title loans also use equity in your car but have harsher terms and rates. Typically, auto title loans give the borrower one month to repay the loan with higher interest rates than auto equity loans.
The sole upside is that these loans have minimal credit requirements, making them accessible to more borrowers. The downside is that the loan terms are so stringent that borrowers often fail to repay the loan within 30 days, default, and lose their vehicle. 💡 Quick Tip: Before choosing a personal loan, ask about the lender’s fees: origination, prepayment, late fees, etc. SoFi personal loans come with no-fee options, and no surprises.
How to Get an Auto Equity Loan
Getting an auto equity loan means assessing your equity, finding a lender, and applying. Here’s the step-by-step guide:
Check Your Equity Level
Get an accurate estimate of your car’s current market value. An online tool, such as Kelley Blue or Edmunds, can help. Once you know the value, subtract any outstanding loan balance on your car from it. The result is your equity. Remember, lenders use the equity amount to determine the maximum loan amount you can receive.
Shop for a Lender
Look for reputable lenders that offer auto equity loans. Specifically, auto lenders, credit unions, and online lenders offer these loans. Peruse customer reviews and gather offer information, including interest rates and loan fees. In addition, lenders have different eligibility requirements, such as equity amount and credit score standards.
Apply for the Loan
Once you choose your lender, prepare the required documentation for the application, including proof of income, identification, vehicle title, and proof of insurance. Then, you can apply using your lender’s website, visiting a physical location, or contacting the lender by phone.
If approved, carefully review the loan terms before accepting. Pay attention to interest rates, repayment schedules, and any fees associated with the loan.
Pros and Cons of an Auto Equity Loan
Like any financial decision, getting a car equity loan has advantages and disadvantages. Here are some potential pros of auto equity loans:
• Competitive interest rates: Because you secure the loan with your vehicle, you’ll likely get a lower interest rate than an unsecured loan or credit card.
• Less-stringent approval: Because a car secures the loan, borrowers with lower credit scores or a less-than-perfect credit history are more likely to qualify.
• Quick funding: Auto equity loans often provide a faster funding process than traditional loans. In some cases, borrowers can receive funds within a day of approval.
• Customizable terms: Some auto equity lenders may offer flexibility in repayment schedules, allowing borrowers to customize the loan terms to better suit their financial situation. For example, you can shorten the term to reduce how long the loan lasts, reducing total interest costs.
However, consider the following cons as well:
• Risk of losing your car auto equity: Auto equity loans are secured loans, meaning the vehicle serves as collateral. If you fail to repay the loan according to the agreed-upon terms, the lender can repossess and sell your car.
• Full-coverage insurance requirements: Many auto equity lenders require borrowers to maintain full-coverage insurance on the vehicle throughout the loan period. This coverage costs more than minimum liability insurance.
• Uncommon among lenders: While auto equity loans are available, they might not be as common or widely offered as other types of loans. This drawback can limit the options available to borrowers. In addition, your current auto lender might not offer this loan, meaning you’ll end up having auto loans with multiple lenders.
Auto Equity Loan Alternatives
A vehicle equity loan is just one way to get the financial assistance you need. Other loan tools are available. Here are some to consider.
Personal Loans
Personal loans can be used for various purposes, including financing a car or covering regular expenses. Unlike car equity loans, personal loans are unsecured, meaning they do not require collateral like your vehicle.
Interest rates on personal loans can vary based on your creditworthiness and may be higher because they don’t have collateral. However, borrowers with higher credit scores generally qualify for lower interest rates. Personal loans usually have fixed monthly payments over a predetermined term.
New Credit Card
Credit card companies frequently offer credit cards with low or no APR to draw new customers. So, you can apply for a new card and take advantage of the promotional interest rate. For example, if you get a new card with 0% APR for one year, you only have to make the minimum payment on the balance each month for the first 12 months.
This feature allows you to accrue debt without paying it back immediately. Just remember that when the promo period ends, any balance will start accruing the card’s regular APR.
In addition, credit cards are unsecured, so no collateral is needed.
Home Equity Loan
A home equity loan is like a car equity loan, but it uses the equity in your home instead of your vehicle. It is a secured loan because your home serves as collateral, and the debt becomes a second mortgage.
Home equity loans typically have fixed interest rates and fixed monthly payments over a specific term. The loan amounts can be larger because homeowners can build up hundreds of thousands of dollars of equity to tap.
Plus, interest rates on home equity loans are often lower than those on unsecured loans. However, you could lose your home if you default on the loan.
Auto Loan Refinance
Car loan refinancing involves replacing your existing auto loan with a new one, usually with better terms such as a lower interest rate or an extended repayment period. Doing so usually lowers your monthly payment, making your loan more affordable. 💡 Quick Tip: In a climate where interest rates are rising, you’re likely better off with a fixed interest rate than a variable rate, even though the variable rate is initially lower. On the flip side, if rates are falling, you may be better off with a variable interest rate.
The Takeaway
Car equity loans leverage a vehicle’s equity for access to cash with low waiting times. While offering advantages such as potentially lower interest rates and quick funding, they can also pose significant risks, including possibly losing the car. Full-coverage insurance requirements and the relative uncommonness of these loans among lenders add to their drawbacks.
Individuals considering auto equity loans should carefully assess their financial situation and alternatives, exploring options like personal loans, credit cards, home equity loans, or auto loan refinancing. Thorough research into reputable lenders is crucial to making an informed decision that aligns with their financial needs and goals.
Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. Checking your rate takes just a minute.
SoFi’s Personal Loan was named NerdWallet’s 2024 winner for Best Personal Loan overall.
FAQ
Is it good to have equity in your car?
It’s good to have equity in your car because you can use it as collateral to get an auto equity loan or sell your car for a profit.
Can you cash out auto equity?
You can turn the equity you have in your car into cash with a cash-out refinance from a lender. Doing so will provide you with a lump sum equal to your equity amount and replace your current auto loan with a new loan with an accordingly larger balance.
Is it a good idea to get an auto equity loan?
If you have thousands of dollars in equity and can’t access other forms of debt, a vehicle equity loan can provide a quick solution. However, it’s crucial to carefully evaluate if you can afford the monthly payments before deciding. Otherwise, you may lose your car if you fail to repay the loan.
Photo credit; iStock/sturti
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Mortgage rates kept climbing on the back of a string of market-moving news. Notably, Federal Reserve Chair Jerome Powell said last week at the Washington Forum that there will be no rate cuts anytime soon because of the strength of the U.S. economy.
As a result, HousingWire’s Mortgage Rates Center showed the average 30-year fixed rate for conventional loans at 7.48% on Tuesday, up from 7.26% one week earlier. At the same time one year ago, the 30-year fixed rate averaged 6.54%. Meanwhile, the 15-year fixed rate averaged 6.72% on Tuesday, up from 6.66% one week earlier.
“I always believe that with higher rates, inventory should grow more; last week was the first week where I hit my target weekly inventory growth model that I set out for myself last year if rates got above 7.25%,” HousingWire lead analyst Logan Mohtashami said. “Last year, it never happened once, even with rates heading toward 8%, but this year, we have more sellers than last year. If rates go higher, it will impact sales, but I am hoping it doesn’t prevent more sellers coming into the marketplace”
Even after several weeks of mortgage rate increases, the housing market remains strong. For instance, the demand for new homes grew at an annualized sales rate of 8.8% from February to March. As of April 19, there were 543,000 single-family homes on the market, up 3% from the week prior and 31% above year-ago levels. There are 130,000 more homes on the market now compared to last year at this time.
“The available inventory of unsold homes on the market is building quickly due to the most recent mortgage rate jumps,” Mike Simonsen, founder and president of Altos Research, wrote on Monday.
One of the positive pieces of news about mortgage rates is that the spread between mortgage rates and the 10-year Treasury yield is narrowing, Mohtashami noted on Saturday.
The Personal Consumption Expenditures Price Index (PCE) for March will be released on Friday, providing valuable insights into the Fed’s next steps regarding benchmark interest rates.