Mortgage interest rates were mixed this week, according to data compiled by Bankrate. See below for a breakdown of how each loan type moved.
After surpassing 8 percent in late October, mortgage rates have somewhat moved lower. One big driver: Inflation has cooled, which means the Federal Reserve might end its rate increases. 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 held firm at its November meeting, indicating it expects rates to stay on the higher side for the foreseeable future.
“Expectations of slower economic growth, moderating inflation and no more Fed interest rate hikes have been a downward influence on mortgage rates,” says Greg McBride, CFA, chief financial analyst for Bankrate.
After bottoming at the beginning of 2023, home prices have steadily risen this year, appreciating for eight consecutive months, according to the S&P CoreLogic Case-Shiller index for September 2023.
Rates accurate as of December 11, 2023.
The rates listed here are marketplace averages based on the assumptions shown here. Actual rates displayed within the site may vary. This story has been reviewed by Suzanne De Vita. All rate data accurate as of Monday, December 11th, 2023 at 7:30 a.m.
30-year fixed-rate mortgage moves down, -0.03%
The average rate you’ll pay for a 30-year fixed mortgage today is 7.45 percent, down 3 basis points since the same time last week. Last month on the 11th, the average rate on a 30-year fixed mortgage was higher, at 7.88 percent.
At the current average rate, you’ll pay principal and interest of $695.79 for every $100,000 you borrow. That represents a decline of $2.06 over what it would have been last week.
There are several advantages to choosing a fixed-rate mortgage when buying new house, including predictable mortgage payments.
Read more: What is a fixed-rate mortgage and how does it work?
15-year mortgage rate increases, +0.07%
The average rate for a 15-year fixed mortgage is 6.78 percent, up 7 basis points since the same time last week.
Monthly payments on a 15-year fixed mortgage at that rate will cost around $887 per $100,000 borrowed. The bigger payment may be a little harder to find room for in your monthly budget than a 30-year mortgage payment, 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 faster.
5/1 adjustable rate mortgage slides, -0.09%
The average rate on a 5/1 ARM is 6.70 percent, ticking down 9 basis points over the last 7 days.
Adjustable-rate mortgages, or ARMs, are mortgage loans that come with a floating interest rate. In other words, the interest rate will change at regular intervals, unlike fixed-rate mortgages. These loan types are best for people who expect to sell or refinance 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 6.70 percent would cost about $645 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 rate flat for the week
The average rate for the benchmark jumbo mortgage is 7.53 percent, unchanged from a week ago. This time a month ago, jumbo mortgages’ average rate was greater than 7.53, at 7.92 percent.
At the current average rate, you’ll pay a combined $701.27 per month in principal and interest for every $100,000 you borrow.
Refinance rates
Today’s 30-year mortgage refinance rate eases, –0.01%
The average 30-year fixed-refinance rate is 7.57 percent, down 1 basis point over the last week. A month ago, the average rate on a 30-year fixed refinance was higher, at 8.01 percent.
At the current average rate, you’ll pay $704.01 per month in principal and interest for every $100,000 you borrow. That’s down $0.69 from what it would have been last week.
Where are mortgage rates heading?
Mortgage rates have done a 180 as of late, falling back under 8 percent. With inflation cooling and 10-year Treasury yields declining, the 30-year fixed mortgage could head into the 6 percent range by next year, said Lawrence Yun, chief economist of the National Association of Realtors, at the group’s conference in November.
“I believe we’ve already reached the peak in terms of interest rates,” said Yun.
The rates on 30-year mortgages mostly follow the 10-year Treasury, which shifts continuously as economic conditions dictate, while the cost of variable-rate home loans mirror the Fed’s moves. These broader factors influence overall rate movement. As a borrower, you could be quoted a higher or lower rate compared to the trend.
What these rates mean for your mortgage
While mortgage rates fluctuate considerably,, there is some consensus that we won’t see rates return to 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.
Learn more about Bankrate’s rate averages, editorial guidelines and how we make money.
Source: bankrate.com