Mortgage interest rates sunk on all loan terms from a week ago, according to data compiled by Bankrate. Rates for 30-year fixed, 15-year fixed, 5/1 ARMs and jumbo loans all dropped.
The Federal Reserve has lifted rates 10 times in a row, most recently at its May 3 meeting. Rates now are at a 15-year high, but the consensus is that inflation is finally cooling and the central bank might halt raising rates.
”Mortgage rates have settled into a new normal of around 6.5 percent on a 30-year fixed-rate loan,” says Lisa Sturtevant, chief economist at Bright MLS, a large multiple listing service in the Middle Atlantic region. ”With growing recession risks, we could see mortgage rates dip lower, but we will not be returning to the 3 percent level seen during the height of the pandemic.”
Rates as of May 9, 2023.
These rates are marketplace averages based on the assumptions indicated here. Actual rates displayed across the site may vary. This story has been reviewed by Suzanne De Vita. All rate data accurate as of Tuesday, May 9th, 2023 at 7:30 a.m.
>>See historical mortgage rate trends, from the 70s to today
You can save thousands of dollars over the life of your mortgage by getting at least three rate quotes. Comparing mortgage offers from multiple lenders is always a smart move, but shopping around grew especially critical during the interest rate run-up of 2022, according to research by mortgage giant Freddie Mac. It found the payoff for bargain-huntng borrowers doubled last year.
“All too often, some homeowners take the path of least resistance when seeking a mortgage, in part because the process of buying a home can be stressful, complicated and time-consuming,” says Mark Hamrick, senior economic analyst for Bankrate. “But when we’re talking about the potential of saving a lot of money, seeking the best deal on a mortgage has an excellent return on investment. Why leave that money on the table when all it takes is a bit more effort to shop around for the best rate, or lowest cost, on a mortgage?”
Mortgage rates
Today’s 30-year mortgage rate dips, -0.01%
The average rate for a 30-year fixed mortgage is 6.87 percent, down 1 basis point over the last week. This time a month ago, the average rate on a 30-year fixed mortgage was unchanged, at 6.87 percent.
At the current average rate, you’ll pay principal and interest of $656.59 for every $100k you borrow. That’s $0.67 lower, compared with last week.
How do I view personalized 30-year mortgage rates?
Use the loan widgets on this page or head to our primary rates page to see what kind of rates are available in your situation. You just need to give us a little information about your finances and where you live. With that data, Bankrate can show you real-time estimates of mortgages available to you from a number of providers.
15-year mortgage falls,-0.03%
The average rate for the benchmark 15-year fixed mortgage is 6.23 percent, down 3 basis points over the last seven days.
Monthly payments on a 15-year fixed mortgage at that rate will cost roughly $856 per $100k borrowed. Yes, that payment is much bigger than it would be on a 30-year mortgage, but it comes with some big advantages: You’ll come out several thousand dollars ahead over the life of the loan in total interest paid and build equity much more rapidly.
5/1 ARM rate eases, -0.01%
The average rate on a 5/1 adjustable rate mortgage is 5.79 percent, sliding 1 basis point since the same time last week.
Adjustable-rate mortgages, or ARMs, are mortgage terms that come with a floating interest rate. In other words, the interest rate can change periodically throughout the life of the loan, unlike fixed-rate loans. These types of loans are best for those who expect to refinance or sell before the first or second adjustment. Rates could be considerably higher when the loan first adjusts, and thereafter.
While borrowers shunned ARMs during the pandemic days of super-low rates, this type of loan has made a comeback as mortgage rates have risen.
Monthly payments on a 5/1 ARM at 5.79 percent would cost about $586 for each $100,000 borrowed over the initial five years, but could climb hundreds of dollars higher afterward, depending on the loan’s terms.
Current jumbo mortgage rate moves lower, -0.02%
The average jumbo mortgage rate today is 6.94 percent, a decrease of 2 basis points over the last seven days. This time a month ago, the average rate on a jumbo mortgage was unchanged, at 6.94 percent.
At the average rate today for a jumbo loan, you’ll pay $661.28 per month in principal and interest for every $100,000 you borrow. That’s a decline of $1.34 from last week.
Summary: How interest rates have shifted over the past week
- 30-year fixed mortgage rate: 6.87%, down from 6.88% last week, -0.01
- 15-year fixed mortgage rate: 6.23%, down from 6.26% last week, -0.03
- 5/1 ARM mortgage rate: 5.79%, down from 5.80% last week, -0.01
- Jumbo mortgage rate: 6.94%, down from 6.96% last week, -0.02
Interested in refinancing? See rates for home refinance
Today’s 30-year mortgage refinance rate goes up, +0.02%
The average 30-year fixed-refinance rate is 7.01 percent, up 2 basis points over the last seven days. A month ago, the average rate on a 30-year fixed refinance was lower, at 6.97 percent.
At the current average rate, you’ll pay $665.97 per month in principal and interest for every $100,000 you borrow. That’s an increase of $1.34 over what you would have paid last week.
Where are mortgage rates headed?
The days of sub-3 percent mortgage interest on the 30-year fixed are behind us, and rates have so far risen beyond 7 percent in 2022.
“Low interest rates were the medicine for economic recovery following the financial crisis, but it was a slow recovery so rates never went up very far,” says McBride. “The rebound in the economy, and especially inflation, in the late pandemic stages has been very pronounced, and we now have a backdrop of mortgage rates rising at the fastest pace in decades.”
Comparing different mortgage terms
The 30-year fixed mortgage is the most popular loan for homeowners. This type of loan has a number of advantages, including:
- Lower monthly payment: Compared to a shorter term, such as 15 years, the 30-year mortgage offers lower payments spread over time.
- Stability: With a 30-year mortgage, you lock in a consistent principal and interest payment. Because of the predictability, you can plan your housing expenses for the long term. Remember: Your monthly housing payment can change if your homeowners insurance and property taxes go up or, less likely, down.
- Buying power: With lower payments, you can qualify for a larger loan amount and a more expensive home.
- Flexibility: Lower monthly payments can free up some of your monthly budget for other goals, like saving for emergencies, retirement, college tuition or home repairs and maintenance.
- Strategic use of debt: Some argue that Americans focus too much on paying down their mortgages rather than adding to their retirement accounts. A 30-year fixed mortgage with a smaller monthly payment can allow you to save more for retirement.
That said, shorter-term loans have gained popularity as rates have been historically low. Although they have higher monthly payments compared to 30-year mortgages, there are some big benefits if you can afford the upfront costs. Shorter-term loans can help you achieve:
- Greatly reduced interest costs: Because you pay off the loan faster, you’ll be able to pay less interest overall.
- Lower interest rate: On top of less time for that interest to compound, most lenders price shorter-term mortgages with lower rates.
- Build equity faster: The faster you pay off your mortgage, the faster you’ll own value in your home outright. That’s especially handy if you want to borrow against your property to fund other spending.
- Debt-free sooner: A shorter-term mortgage means you’ll own your house free and clear sooner than you would with a longer-term loan.
Are mortgage rates going up?
Throughout 2021, mortgage rates are expected to begin rising again. The National Association of Realtors expects rates to average 3.1% and the Mortgage Bankers Association (MBA) says mortgage rates will average 3.3% in 2021. These rate estimates are both up from the 3.0% mortgage rate average in 2020 but lower than 2019’s average rates. Many experts say it could be years before mortgage rates return to their pre-pandemic levels.
Sources:
- National Association of Real Estate Editors
- Freddie Mac Federal Home Loan Mortgage Corporation
What comes next:
Featured lenders for today, May 9, 2023
Source: bankrate.com