National mortgage rates rose for all loan terms compared to a week ago, according to data compiled by Bankrate. Rates for 30-year fixed, 15-year fixed, 5/1 ARMs and jumbo loans increased.
The average rate on the popular 30-year fixed-rate mortgage broke through 7.5 percent in late September. After a stretch of record lows, rates climbed in 2022 as inflation spiked and the Federal Reserve worked to tame it. The Fed last hiked its key interest rate in July, which brought up borrowing costs on a variety of financial products, including mortgages.
The central bank decided to hold firm on another increase in rates at its September meeting, indicating it expects rates to stay on the higher side for the foreseeable future. It meets next at the end of October.
“The Fed has made it clear that rates will remain higher for longer with the expectation that there will be another rate hike this year,” says Melissa Cohn, regional vice president for William Raveis Mortgage. “In their dot plot, the Fed also reduced the number of rate cuts by half for 2024, implying that the fed funds rate will remain at its high level for a good part of 2024.”
The rise in mortgage rates comes alongside appreciating home prices, both of which have kept homebuyers on the sidelines. Over half of home purchase mortgages originated in July had a monthly payment over $2,000, according to Black Knight. Twenty-three percent of originations in July had a payment over $3,000. The affordability squeeze is stretching budgets, and keeping many first-time homebuyers out of the market altogether.
Rates as of October 9, 2023.
The rates listed above are averages based on the assumptions shown here. Actual rates available within the site may vary. This story has been reviewed by Suzanne De Vita. All rate data accurate as of Monday, October 9th, 2023 at 7:30 a.m.
30-year mortgage rate advances, +0.19%
Today’s average rate for the benchmark 30-year fixed mortgage is 7.93 percent, up 19 basis points since the same time last week. A month ago, the average rate on a 30-year fixed mortgage was lower, at 7.59 percent.
At the current average rate, you’ll pay principal and interest of $728.89 for every $100,000 you borrow. That’s $13.17 higher compared with last week.
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 rate moves up, +0.18%
The average rate you’ll pay for a 15-year fixed mortgage is 7.08 percent, up 18 basis points over the last week.
Monthly payments on a 15-year fixed mortgage at that rate will cost $903 per $100,000 borrowed. That may put more pressure on your monthly budget than a 30-year mortgage would, 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 quickly.
5/1 ARM rate rises, +0.13%
The average rate on a 5/1 ARM is 6.78 percent, ticking up 13 basis points from a week ago.
Adjustable-rate mortgages, or ARMs, are mortgage terms that come with a floating interest rate. To put it another way, the interest rate will change at regular intervals, unlike fixed-rate mortgages. These loan types are best for those who expect to sell or refinance before the first or second adjustment. Rates could be materially 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 6.78 percent would cost about $651 for each $100,000 borrowed over the initial five years, but could increase by hundreds of dollars afterward, depending on the loan’s terms.
Jumbo mortgage increases, +0.20%
The average rate for the benchmark jumbo mortgage is 7.96 percent, an increase of 20 basis points since the same time last week. This time a month ago, the average rate for jumbo mortgages was below that, at 7.62 percent.
At the current average rate, you’ll pay $730.98 per month in principal and interest for every $100,000 you borrow. That’s an increase of $13.88 over what you would have paid last week.
Interested in refinancing? See mortgage refinance rates
30-year mortgage refinance rate advances, +0.17%
The average 30-year fixed-refinance rate is 8.12 percent, up 17 basis points since the same time last week. A month ago, the average rate on a 30-year fixed refinance was lower, at 7.78 percent.
At the current average rate, you’ll pay $742.15 per month in principal and interest for every $100,000 you borrow. That’s an additional $11.87 per $100,000 compared with last week.
Where are mortgage rates heading?
Economist are having a hard time pinning down a path for mortgage rates, according to Bankrate’s latest mortgage rates forecast. Some experts have speculated the 30-year rate could increase to 8 percent, while others expect rates to cool down by the end of the year.
30-year fixed mortgage rates mostly follow the 10-year Treasury yield, which shifts continuously as economic conditions dictate, while the cost of variable-rate home loans mirror the Fed’s moves.
“Economic data that is not too hot and not too cold would be helpful to mortgage rates and could get rates back down below 7 percent,” says Greg McBride, chief financial analyst for Bankrate, adding, “but that has to be true for inflation, job growth, wages and consumer spending.”
What these rates mean for you and your mortgage
While mortgage rates are notoriously volatile, there is some consensus that we won’t see rates back at 3 percent for some time. If you’re shopping for a mortgage now, it might be wise to lock your rate when you find an affordable loan. If your house-hunt is taking longer than expected, revisit your budget so you’ll know exactly how much house you can afford at prevailing market rates.
Keep in mind: You could save thousands over the life of your mortgage by getting at least three loan offers, according to Freddie Mac research. You don’t have to stick with your bank or credit union, either. There are many types of mortgage lenders, including online-only and local, smaller shops.
“All too often, some [homebuyers] 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?”
More on current mortgage rates
Methodology
Bankrate displays two sets of rate averages that are produced from two surveys we conduct: one daily (“overnight averages”) and the other weekly (“Bankrate Monitor averages”).
The rates on this page represent our overnight averages. For these averages, APRs and rates are based on no existing relationship or automatic payments.
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Source: bankrate.com