Average mortgage rates sunk across the board 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 receded.
While it’s expected that rates will gradually come down this year, the path might be bumpy.
At its Jan. 31 meeting, the Federal Reserve announced it would hold off changing rates, but could cut rates in the future. At their March 20th meeting, the Fed will update their outlook on rates. Rate fluctuations affect many areas of the economy, including the 10-year Treasury, a key benchmark for fixed-rate mortgages.
“Where the 10-Year Treasury yield goes, mortgage rates will follow,” says Ken Johnson of Florida Atlantic University. “In roughly the last two months, the 10-year Treasury yield is up 50 basis points. Depending on the source, the 30-year mortgage rate is up 48 basis points. Treasurys’ path remains a coin toss at this point.”
Rates accurate as of March 8, 2024.
These rates are Bankrate’s overnight average rates and are 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 Friday, March 8th, 2024 at 7:30 a.m.
30-year mortgage trends down, -0.15%
Today’s average rate for the benchmark 30-year fixed mortgage is 7.03 percent, down 15 basis points from a week ago. A month ago, the average rate on a 30-year fixed mortgage was higher, at 7.17 percent.
At the current average rate, you’ll pay a combined $667.32 per month in principal and interest for every $100,000 you borrow. That’s down $10.11 from what it would have been last week.
Standard lending practices defer to the 30-year, fixed-rate mortgage as the go-to for most borrowers buying a home as it allows the borrower to spread payments out over 30 years, keeping their monthly payment lower.
15-year fixed mortgage rate retreats, -0.12%
The average rate for a 15-year fixed mortgage is 6.52 percent, down 12 basis points over the last week.
Monthly payments on a 15-year fixed mortgage at that rate will cost $872 per $100,000 borrowed. That may squeeze 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 more rapidly.
5/1 ARM dips, -0.04%
The average rate on a 5/1 ARM is 6.31 percent, ticking down 4 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 types of loans are best for people who expect to refinance or sell before the first or second adjustment. Rates could be much 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 6.31 percent would cost about $620 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 loan interest rate moves lower, -0.07%
The average rate for a jumbo mortgage is 7.04 percent, a decrease of 7 basis points from a week ago. Last month on the 8th, the average rate was greater than 7.04 at 7.23 percent.
At the average rate today for a jumbo loan, you’ll pay $667.99 per month in principal and interest for every $100,000 you borrow. That’s $4.72 lower, compared with last week.
Refinance rates
30-year mortgage refinance moves down, -0.14%
The average 30-year fixed-refinance rate is 7.05 percent, down 14 basis points over the last week. A month ago, the average rate on a 30-year fixed refinance was higher at 7.18 percent.
At the current average rate, you’ll pay $668.66 per month in principal and interest for every $100,000 you borrow. That’s down $9.45 from what it would have been last week.
Where are mortgage rates going?
With inflation still above the Fed’s 2 percent goal and the job market holding strong, the Fed isn’t likely to cut rates at its March meeting.
“The Federal Reserve will not cut interest rates in the first half of this year, in my view,” says Lawrence Yun, chief economist of the National Association of Realtors, “but rate cuts of three, four or even five rounds will be possible in the second half of the year as rent measures will be much more well-behaved.”
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 change daily, it’s unlikely we’ll see rates back at 3 percent anytime soon. 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 anticipated, revisit your budget so you’ll know exactly how much house you can afford at prevailing market rates.
You could save serious money on interest 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