Mortgage rates were mostly lower compared to a week ago, according to rates data collected by Bankrate. Rates for 30-year fixed, 15-year fixed and jumbo mortgages each decreased, while rates for adjustable rate mortgages rose.
The average rate on the popular 30-year fixed-rate mortgage topped 7.5 percent in late September. After a period of record lows, rates climbed in 2022 as inflation spiked and the Federal Reserve responded aggressively. 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 boost to rates at its September meeting, indicating it expects rates to stay high for the foreseeable future. Its next meeting concludes Nov. 1.
“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 prevented more buyers from entering the market. More than half of home purchase mortgages originated in July had a monthly payment greater than $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 last updated October 17, 2023.
These rates are averages based on the assumptions here. Actual rates listed within the site may vary. This story has been reviewed by Suzanne De Vita. All rate data accurate as of Tuesday, October 17th, 2023 at 7:30 a.m.
30-year fixed-rate mortgage drops, -0.03%
The average rate for a 30-year fixed mortgage for today is 7.92 percent, down 3 basis points since the same time last week. Last month on the 17th, the average rate on a 30-year fixed mortgage was lower, at 7.59 percent.
At the current average rate, you’ll pay $728.20 per month in principal and interest for every $100,000 you borrow. Compared with last week, that’s $2.08 lower.
Learn more about 30-year fixed mortgage rates, and compare to a variety of other loan types.
15-year fixed mortgage rate moves lower, -0.02%
The average 15-year fixed-mortgage rate is 7.06 percent, down 2 basis points from a week ago.
Monthly payments on a 15-year fixed mortgage at that rate will cost roughly $902 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 save thousands of dollars over the life of the loan in total interest paid and build equity much faster.
5/1 ARM rate climbs, +0.09%
The average rate on a 5/1 ARM is 6.88 percent, adding 9 basis points over the last 7 days.
Adjustable-rate mortgages, or ARMs, are home 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 those who expect to sell or refinance before the first or second adjustment. Rates could be substantially 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 6.88 percent would cost about $657 for each $100,000 borrowed over the initial five years, but could climb hundreds of dollars higher afterward, depending on the loan’s terms.
Jumbo mortgage declines, -0.03%
The average rate for the benchmark jumbo mortgage is 7.95 percent, a decrease of 3 basis points since the same time last week. A month ago, jumbo mortgages’ average rate was below that, at 7.63 percent.
At the current average rate, you’ll pay a combined $730.28 per month in principal and interest for every $100,000 you borrow. Compared with last week, that’s $2.09 lower.
Mortgage refinance rates
30-year mortgage refinance advances, +0.04%
The average 30-year fixed-refinance rate is 8.08 percent, up 4 basis points compared with a week ago. 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 $739.35 per month in principal and interest for every $100,000 you borrow. Compared with last week, that’s $2.80 higher.
Where are mortgage rates heading?
Economists can’t say for certain where mortgage rates are going from here, according to Bankrate’s latest mortgage rates forecast. Some experts have speculated the 30-year rate could reach 8 percent, while others expect rates to cool down by the end of 2023.
30-year 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 current 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