As the 30-year, fixed-rate mortgage hit 7.67% for the week ending Oct. 6, mortgage applications remained near historic lows. However, an uptick in adjustable-rate mortgage (ARM) applications edged total applications up slightly.
Mortgage applications picked up 0.6% for the week ending Oct. 6, compared to the week prior, according to weekly mortgage application data from the Mortgage Bankers Association (MBA).
“Application activity remains depressed and close to multi-decade lows, with purchase applications still almost 20% behind last year’s pace,” Joel Kan, MBA’s vice president and deputy chief economist, said in a news release.
”Refinance applications also continue to be limited, and the average loan size has fallen to its lowest level since 2017.”
On an unadjusted basis, purchase applications inched up 1% from the week prior and were 19% lower than the same week a year ago.
Meanwhile, refinance applications rose 0.3% week over week and were 9% lower than the same week the prior year.The refinance share of all mortgage applications fell to 31.6% from 31.7% the previous week.
Meanwhile, as homebuyers shop around for lower mortgage payments, the share of ARM applications jumped 15% over the week, Kan noted.
As a result, ARM applications represented 9.2% of all loan applications, the highest share since November 2022. The uptick in ARM volume was mainly driven by a decline in ARM rates even as fixed mortgage rates surged.
The share of Federal Housing Administration (FHA) loan activity inched down to 14.4% from 14.5% for the week ending Oct. 6. The share of Department of Veterans Affairs (VA) loan activity was 10.2%, up from 10.1% the week prior while the share of Department of Agriculture(USDA) loan activity held steady at 0.5%.
Average mortgage rates jumped 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 moved higher.
Mortgage rates have been increasing for some time, with the popular 30-year fixed rate loan breaking through 7 percent this summer. After a stretch of record lows, rates climbed in 2022 thanks to inflation and the Federal Reserve’s response. The Fed last hiked its key interest rate in July, the latest in a tightening cycle that began last year.
The central bank decided to hold firm on another hike at its September meeting, indicating it expects rates to remain elevated in the near term and that it’s not done battling inflation just yet. “Until inflation goes down to the Fed’s target of 2 to 2.5 percent, do not expect rates to move lower,” says Derek Egeberg, a branch manager for Academy Mortgage in Yuma, Arizona.
The increase in mortgage rates comes alongside appreciating home prices, both of which have prevented more homebuyers from entering the market. More than 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.
Rates as of September 28, 2023.
The rates listed here are averages based on the assumptions here. Actual rates available on-site may vary. This story has been reviewed by Suzanne De Vita. All rate data accurate as of Thursday, September 28th, 2023 at 7:30 a.m.
30-year mortgage rate trends higher, +0.24%
Today’s average 30-year fixed-mortgage rate is 7.83 percent, up 24 basis points since the same time last week. A month ago, the average rate on a 30-year fixed mortgage was lower, at 7.53 percent.
At the current average rate, you’ll pay a combined $721.95 per month in principal and interest for every $100,000 you borrow. That’s $16.56 higher compared with last week.
Standard lending practices defer to the 30-year, fixed-rate mortgage as the go-to for most borrowers buying a home because it allows the borrower to spread payments out over 30 years, keeping their monthly payment lower.
15-year fixed mortgage rate goes up, +0.08%
The average rate for a 15-year fixed mortgage is 6.90 percent, up 8 basis points over the last seven days.
Monthly payments on a 15-year fixed mortgage at that rate will cost around $893 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 adjustable rate mortgage moves up, +0.12%
The average rate on a 5/1 ARM is 6.63 percent, climbing 12 basis points since the same time last week.
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 people 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 6.63 percent would cost about $641 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 interest rate moves higher, +0.24%
The average rate for a jumbo mortgage is 7.86 percent, up 24 basis points from a week ago. A month ago, the average rate was below that, at 7.55 percent.
At today’s average rate, you’ll pay a combined $724.03 per month in principal and interest for every $100,000 you borrow. That’s $16.58 higher compared with last week.
Interested in refinancing? See rates for home refinance
Current 30 year mortgage refinance rate trends upward, +0.20%
The average 30-year fixed-refinance rate is 7.98 percent, up 20 basis points since the same time last week. A month ago, the average rate on a 30-year fixed refinance was lower, at 7.66 percent.
At the current average rate, you’ll pay $732.37 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.
Where are mortgage rates going?
Economists can’t say for certain where mortgage rates are going from here, according to Bankrate’s latest forecast. Some have speculated the 30-year rate could increase to 8 percent, while others expect rates to cool down by the end of 2023.
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 current rates mean for you and your mortgage
While mortgage rates move up and down on a daily basis,, 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.
Yesterday, President Obama gave a speech on homeownership at Desert Vista High School in Phoenix, Arizona, one of the hardest hit cities in the nation.
While it was mostly fluff many of us have heard before, there were some nice little takeaways. I’ve listed what I feel are the top 10 quotes, based on their impact, candor, and humor, in the order in which they were said.
1. I think about my grandparents’ generation…in that earlier generation, houses weren’t for flipping around, they weren’t for speculation — houses were to live in, and to build a life with.
Housing needs to be perceived as shelter again, not solely as an investment, according to the President.
2. We cracked down on the bad practices that led to the crisis in the first place. I mean, you had some loans back there in the bubble that were called “liar’s loan.” Now, something that’s called a liar’s loan is probably a bad idea.
Obama knows stated income loans are bad news, though it’s unclear if he knows they’ve already begun to resurface.
3. Congress should pass a good, bipartisan idea to allow every homeowner the chance to save thousands of dollars a year by refinancing their mortgage at today’s rates. We need to get that done. We’ve been talking about it for a year and a half, two years, three years. There’s no reason not to do it.
He continues to push for HARP3 or MyRefi, though such a program looks dead in the water because he’s asking Congress to get it done. And rates have risen substantially.
4. Housing prices generally don’t just keep on going up forever at the kind of pace it was going up. It was crazy. So what we want to do is something stable and steady. And that’s why I want to lay a rock-solid foundation to make sure the kind of crisis we went through never happens again. We’ve got to make sure it doesn’t happen again.
Here comes major housing reform…
5. …one of the key things to make sure it doesn’t happen again is to wind down these companies that are not really government, but not really private sector — they’re known as Freddie Mac and Fannie Mae. For too long, these companies were allowed to make huge profits buying mortgages, knowing that if their bets went bad, taxpayers would be left holding the bag. It was “heads we win, tails you lose.” And it was wrong.
Yes, Fannie Mae and Freddie Mac were responsible for the housing crisis, though many other organizations were as well. To be frank, the entire system is broken.
6. …private capital should take a bigger role in the mortgage market. I know that sounds confusing to folks who call me a socialist — I think I saw some posters there on the way in.
A little bit of humor mixed in with a very serious point about the housing market being far too reliant on the government, with pretty much every loan backed by Fannie, Freddie, or the FHA these days.
7. …we should preserve access to safe and simple mortgage products like the 30-year, fixed-rate mortgage. That’s something families should be able to rely on when they’re making the most important purchase of their lives.
The good news is the 30-year mortgage isn’t going anywhere, regardless of the reform that takes place, or is it?
8. They’re designing a new, simple mortgage form that will be in plain English, so you can actually read it without a lawyer — although, you may still want a lawyer obviously. I’m not saying you don’t. I’m just saying you’ll be able to read it. There won’t be a lot of fine print.
This pretty much sums up the ongoing cluster that is the mortgage industry. Perhaps the concept of mortgage reform is more elusive than we think.
9. So I want to be honest with you. No program or policy is going to solve all the problems in a multi-trillion dollar housing market. The housing bubble went up so high, the heights it reached before it burst were so unsustainable, that we knew it was going to take some time for us to fully recover.
It’s going to take a while folks…be patient.
10. More Americans will know the joy of scratching the child’s height on the door of their new home — with pencil, of course.
Translation: The American Dream is still alive and well.
US mortgage rates surged this week, rising to their highest level in 21 years.
The 30-year fixed-rate mortgage averaged 7.09% in the week ending August 17, up from 6.96% the week before, according to data from Freddie Mac released Thursday. A year ago, the 30-year fixed-rate was 5.13%.
Rates have been above 6.5% since the end of May and climbing higher since mid-July. The last time rates were over 7% was in November of last year when they hit 7.08%. This week’s average rate is the highest the 30-year, fixed-rate mortgage has been since April 2002 when it was 7.13%.
Mortgage rates have spiked during the Federal Reserve’s historic rate-hiking campaign sending home affordability to its lowest level in several decades. Buying a home is more expensive because of the added cost of financing the mortgage, and homeowners who previously locked in lower rates are reluctant to sell. The combination of low inventory and high costs has squeezed would-be homebuyers, sending home sales about 20% lower than a year ago.
“The economy continues to do better than expected and the 10-year Treasury yield has moved up, causing mortgage rates to climb,” said Sam Khater, Freddie Mac’s chief economist. “Demand has been impacted by affordability headwinds, but low inventory remains the root cause of stalling home sales.”
The average mortgage rate is based on mortgage applications that Freddie Mac receives from thousands of lenders across the country. The survey includes only borrowers who put 20% down and have excellent credit.
Inflation concerns remain
The rising average rate for a 30-year, fixed rate loan is mirroring the trend of 10-year treasury yields, which recently hit their highest level since the summer of 2007.
Treasuries moved higher as investors reacted to the release of the Federal Reserve’s meeting minutes on Wednesday, which said members are worried that inflation will linger longer than expected at an elevated level, said George Ratiu, Chief Economist at Keeping Current Matters, a real estate market insights and content company.
“Coming out of a three-year pandemic, the economy continues to expand, boosted by solid consumer spending and business investment,” said Ratiu. “For most Americans, the economic growth means job security and better pay checks.”
The downside however, he said, to the strong wage gains is that the Fed remains hawkish on the outlook for taming inflation this year.
“With the view of the late 1970s’ twin inflation peaks firmly in its monetary lens, the central bank remains determined to bring price growth to the 2.0% target,” he said. “Measures of core inflation are still north of 4.0%, which means that additional rate hikes are on the Fed’s monetary agenda.”
While the Fed does not set the interest rates that borrowers pay on mortgages directly, its actions influence them. Mortgage rates tend to track the yield on 10-year US Treasuries, which move based on a combination of anticipation about the Fed’s actions, what the Fed actually does and investors’ reactions. When Treasury yields go up, so do mortgage rates; when they go down, mortgage rates tend to follow.
“Despite still high prices and elevated interest rates, July’s retail sales data showed consumer spending continues to increase solidly as demand is being boosted by high wage growth,” said Jiayi Xu, an economist at Realtor.com.
While this strong economic data might cool worries about an imminent recession, it could give rise to concerns that interest rates might stay elevated for an extended period, she said.
Meanwhile, it is worth noting that the Fed is moving cautiously to ensure that the effects of earlier rate hikes are fully revealed.
“As a result, the Fed may opt to take another ‘wait-and-see’ strategy in its upcoming meeting, which may help potentially mitigate the recent upward trajectory of mortgage rates,” Xu said.
Rates and home prices expected to stay elevated
With inflation still a concern for the Fed, home buyers can expect borrowing costs to stay elevated, said Ratiu.
The bottom line for home buyers is that it will continue to be difficult to find affordable homes as rising mortgage rates are tacked onto already elevated home prices.
This year home buyers have seen rates rise a whole percentage point from the lowest point of 2023, 6.09% in February, to this week’s 7.09%. Compared to a year ago, rates are nearly 2 percentage points higher.
Today’s mortgage rate is 196 basis points higher than a year ago when rates were 5.13%, which means that for the buyer of a median-priced home, the monthly mortgage payment is 17% higher, according to Ratiu.
More than 90% of homeowners with mortgages currently have a rate of 6% or lower, according to a recent Redfin study, meaning they are staying in their current home, not selling and trading up, which would come with higher borrowing costs. This is making the number of already built homes available to buy extraordinarily low — keeping prices elevated for those looking to buy.
A homeowner who bought a median-priced home with a 20% down payment in January 2022 with a 3.1% mortgage rate is paying about $1,300 a month. That same home at today’s rate would mean a $2,300 monthly mortgage payment, excluding taxes and insurance, Ratiu said.
For current homeowners who decide to sell, high home prices can help ease the blow of higher mortgage rates. “It is not surprising that with equity near all-time high, over one-in-four buyers is paying all cash for their next home,” Ratiu said.
But unlike existing home owners who can leverage home equity – which is near all time high – to reduce the size of mortgage loans, first-time home buyers are facing much more challenging market conditions.
Plus, with asking rents dipping for two consecutive months, according to Realtor.com, potential first-time home buyers may not feel the same urgency to expedite their home purchase as they did when rents were escalating at a double-digit pace.
“This may result in slower sales churn, but it also provides potential home shoppers with an extended timeframe to carefully consider crucial decisions during the home buying journey,” said Xu.
A handful of closely followed mortgage rates grew over the last seven days. The average 15-year fixed and 30-year fixed mortgage rates both increased. The average rate of the most common type of variable-rate mortgage, the 5/1 adjustable-rate mortgage, also increased.
As inflation surged in 2022, so too did mortgage rates. To rein in price growth, the Federal Reserve began bumping up its federal funds rate — a short term interest rate that determines what banks charge each other to borrow money. By making it more expensive to borrow, the central bank’s goal is to reduce prices by curtailing consumer spending.
During its July 26 meeting, the Fed initiated a 25-basis point (or 0.25%) hike to its federal funds rate, marking its 11th increase in the current rate hiking cycle. The most recent increase could have an impact on mortgage rates, but experts say the markets may have already factored it into rates.
Current mortgage rates for August 2023
The Federal Reserve just increased interest rates. That might cause a change in mortgage rates. Shop around and find a rate you can afford now. By entering your information below, you can get a custom quote from one of CNET’S partner lenders.
About these rates: Like CNET, Bankrate is owned by Red Ventures. This tool features partner rates from lenders that you can use when comparing multiple mortgage rates.
The Fed doesn’t set mortgage rates directly, but it does play an influential role. Mortgage rates move around on a daily basis in response to a range of economic factors, including inflation, employment and the broader outlook for the economy. A lower inflation rate is good news for mortgage rates, but the potential for additional hikes from the central bank this year will keep upward pressure on already high rates.
Rather than worrying about mortgage rates, though, homebuyers should focus on what they can control: getting the best rate they can for their financial situation.
30-year fixed-rate mortgages
For a 30-year, fixed-rate mortgage, the average rate you’ll pay is 7.39%, which is a growth of 5 basis points from one week ago. (A basis point is equivalent to 0.01%.) The most frequently used loan term is a 30-year fixed mortgage. A 30-year fixed mortgage will often have a higher interest rate than a 15-year fixed rate mortgage — but also a lower monthly payment. You won’t be able to pay off your house as quickly and you’ll pay more interest over time, but a 30-year fixed mortgage is a good option if you’re looking to minimize your monthly payment.
15-year fixed-rate mortgages
The average rate for a 15-year, fixed mortgage is 6.65%, which is an increase of 6 basis points from the same time last week. Compared to a 30-year fixed mortgage, a 15-year fixed mortgage with the same loan value and interest rate will have a larger monthly payment. But a 15-year loan will usually be the better deal, if you can afford the monthly payments. These include usually being able to get a lower interest rate, paying off your mortgage sooner, and paying less total interest in the long run.
“Mortgage rates have hovered in the 6% to 7% range for the past 10 months. Though home prices have softened slightly nationally, the still-high cost of borrowing means hopeful home buyers have felt little relief,” said Hannah Jones, economic research analyst at Realtor.com.
U.S. mortgage rates fell yet again this week. Data from Freddie Mac on May 4 showed that 30-year, fixed-rate mortgage rates dipped to 6.39%. And according to Bankrate data, which looked at overnight averages of advertisers on its site, 30-year fixed-rate loans are now hovering around 6.85% after sliding 7 percentage points to 6.93% last week, according to Bankrate data. (See the best mortgage rates you can get now here.) One mortgage expert says much of the reason for the consecutive declines has to do with the latest benchmark rate hike from the Federal Reserve and the overall outlook for the year ahead.
Although the Fed raised rates for the 10th consecutive time this week, Jeff Ostrowski, senior mortgage reporter at Bankrate, says signs are largely pointing to a changing tide when it comes to the housing market. “The consensus is that the Federal Reserve is done raising interest rates, and that mortgage rates will drift lower from here,” Ostrowski suggests, adding however that “just when you think you know where rates are going, the market gets a surprise, such as Friday’s strong jobs report.”
Nevertheless, Ostrowski says most experts predict mortgage rates will indeed fall when the economy slows down. And although there were many predictions last year that we would surely hit a recession in 2023, “as the Fed’s tightening finally has its effect, mortgage rates are likely to fall below 6% by the end of the year,” he predicts.
See the best mortgage rates you can get now here.
For house hunters worried about high rates, Ostrowski says mortgage rates should not dictate your decision to buy a home or not. “Rates are unlikely to return to the record-low levels seen during the depths of the pandemic,” he says, adding that while “mortgage rates are incredibly difficult to predict,” you can still provide some “protection against increases by locking in a rate. And if rates fall before you close, you still can take advantage of a better deal.”
Here’s what rates have done in the week ending on May 5, 2023, according to overnight average data from Bankrate:
30-year fixed-rate loans
The average daily rate for 30-year, fixed-rate mortgages was 6.85%, down 12 basis points from last week (each 1% of a mortgage rate is made up of 100 basis points). The refinance rate for 30-year, fixed-rate loans was 7.02%, declining 15 basis points from the previous week.
15-year fixed-rate loans
Mortgages with a 15-year fixed rate averaged 6.18%, a decline of 9 basis points from the prior week.
Jumbo mortgages
For jumbo loans, which cover properties that are more expensive than those under a conventional conforming loan — about $647,000 in most areas — the rate was 6.94%, a decrease of 14 basis points from the same day last week.
See the best mortgage rates you can get now here.
ARMs
As for 5/1 adjustable-rate mortgages, which carry a fixed rate for five years that can then rise or fall each year after, the average was 5.75%, unchanged from last week.
FHA and VA loans
The average rate for 30-year Federal Housing Administration-insured mortgages was 6.06%, down 25 basis points from a week ago. Mortgages backed by the Department of Veterans Affairs, meanwhile, reached a rate of 6.02%, a decrease of 22 basis points from the previous week.
Editor’s Note: Parts of this story were auto-generated by Automated Insights, an automation technology provider, using data from Bankrate. See our market data terms of use.
Mortgage rates in this article reflect Bankrate’s average rates. A previous version simply referred to them as average rates.
A couple of closely followed mortgage rates crept upward over the last seven days. The average 15-year fixed and 30-year fixed mortgage rates both climbed higher. For variable rates, the 5/1 adjustable-rate mortgage also advanced.
As inflation surged in 2022, so too did mortgage rates. To rein in price growth, the Federal Reserve began bumping up its federal funds rate — a short term interest rate that determines what banks charge each other to borrow money. By making it more expensive to borrow, the central bank’s goal is to reduce prices by curtailing consumer spending.
During its July 26 meeting, the Fed initiated a 25-basis point (or 0.25%) hike to its federal funds rate, marking its 11th increase in the current rate hiking cycle. The most recent increase could have an impact on mortgage rates, but experts say the markets may have already factored it into rates.
Current Mortgage Rates for August 2023
Mortgage rates change every day. Experts recommend shopping around to make sure you’re getting the lowest rate. By entering your information below, you can get a custom quote from one of CNET’s partner lenders.
About these rates: Like CNET, Bankrate is owned by Red Ventures. This tool features partner rates from lenders that you can use when comparing multiple mortgage rates.
“Mortgage rates will continue to ebb and flow week to week, but ultimately, I think rates will stick to that 6% to 7% range we’re seeing now,” said Jacob Channel, senior economist at loan marketplace LendingTree.
The Fed doesn’t set mortgage rates directly, but it does play an influential role. Mortgage rates move around on a daily basis in response to a range of economic factors, including inflation, employment and the broader outlook for the economy. A lower inflation rate is good news for mortgage rates, but the potential for additional hikes from the central bank this year will keep upward pressure on already high rates.
Rather than worrying about mortgage rates, though, homebuyers should focus on what they can control: getting the best rate they can for their financial situation.
30-year fixed-rate mortgages
For a 30-year, fixed-rate mortgage, the average rate you’ll pay is 7.51%, which is an increase of 9 basis points from seven days ago. (A basis point is equivalent to 0.01%.) Thirty-year fixed mortgages are the most common loan term. A 30-year fixed rate mortgage will usually have a smaller monthly payment than a 15-year one — but often a higher interest rate. Although you’ll pay more interest over time — you’re paying off your loan over a longer timeframe — if you’re looking for a lower monthly payment, a 30-year fixed mortgage may be a good option.
15-year fixed-rate mortgages
The average rate for a 15-year, fixed mortgage is 6.72%, which is an increase of 9 basis points from seven days ago. You’ll definitely have a larger monthly payment with a 15-year fixed mortgage compared to a 30-year fixed mortgage, even if the interest rate and loan amount are the same. But a 15-year loan will usually be the better deal, if you’re able to afford the monthly payments. These include typically being able to get a lower interest rate, paying off your mortgage sooner, and paying less total interest in the long run.
“Mortgage rates have hovered in the 6% to 7% range for the past 10 months. Though home prices have softened slightly nationally, the still-high cost of borrowing means hopeful home buyers have felt little relief,” said Hannah Jones, economic research analyst at Realtor.com.
In August 2020, Taylor Lopez and her husband Joseph bought their home for $180,000 in the fast-growing city of Anna.
They bought the three-bedroom house built in 1966 with a loan carrying a 3.8% mortgage rate. “From an investment standpoint, it felt like a good choice,” said Lopez, 36, a real estate manager for restaurant chain Wingstop.
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Dallas-Fort Worth home sales, prices only take slight hit from higher mortgage rates
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After more than two years in the home, they’ve been thinking about selling. Joseph works in Lewisville and Taylor works in Addison, so they would like to find a place offering a shorter commute.
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But, like many other would-be upsizers in Dallas-Fort Worth, the couple feels locked into their current home.
Although they could get a good return on a sale, they would have to shop in a dramatically more expensive housing market than when they first purchased and sacrifice their current loan for a new one at a much higher rate.
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After a wave of low-rate homebuying and refinancing from 2020 to 2022, more than half of outstanding Texas mortgages have rates of less than 4%, according to Federal Housing Finance Agency data.
Since last fall, the average rate for a 30-year, fixed-rate mortgage has been hovering between 6% and 7%.
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“There are people that want to sell, but that is what is keeping them there at their house,” said Misty Michael, a real estate agent in the Sachse and Plano area.
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The Lopez family said any home they would want to buy, in school districts they want to be in and that wouldn’t require a lot of work, would start in the $400,000 range.
“It doesn’t make sense when you weigh out all the pros and cons, so we’re continuing to drive about an hour each way to work,” Lopez said. “We could always purchase a home at a higher interest rate, then refinance it if the interest rates go down, but that’s an if and when situation.
“When you’re playing with that much money, it doesn’t seem like a risk I’m willing to take right now.”
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Changing math
Since the start of 2020, the median price of a single-family home in Dallas-Fort Worth has risen more than 50%, according to North Texas Real Estate Information Systems and the Texas Real Estate Research Center at Texas A&M University.
On top of that, the Federal Reserve has aggressively increased its federal funds rate for more than a year, indirectly driving up mortgage rates. Freddie Mac recorded an average 30-year mortgage rate of 6.96% on July 13.
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The result: The monthly principal and interest payment for a median-priced Dallas-Fort Worth home at the average rate with a 20% down payment, before insurance or property taxes, was about $980 in January 2020. In June, it was more than $2,100.
For buyers who purchased a $300,000 home at the record low of 2.65% in January 2021, just buying a house at the same price again at today’s average rate would add almost $900 to their monthly payments before taxes and insurance.
Purchasing a bigger or nicer home would add significantly more to that already-elevated payment, so people with job promotions or babies on the way looking to upgrade to bigger homes may not find a good enough deal to justify it financially.
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“It now is significantly more expensive to make these marginal changes that you might have been planning,” said Texas A&M economist Adam Perdue. He and his wife are expecting a baby soon and have considered getting a bigger home, but they too have a low rate on their home in Brazos County and don’t want to take on higher monthly payments.
While prices are declining slightly year to year, Texas A&M economists don’t expect them to return to where they were at the beginning of 2020. Rates are also expected to decline, but not back down to the record lows. Mortgage Bankers Association forecasts rates in the 5% range by 2024.
Still buying and selling
As mortgage rates rose and sellers held back, new single-family home listings in Dallas-Fort Worth dropped 22% between June 2022 to June 2023, limiting options for people looking to buy.
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Buyers with an immediate need to move are still purchasing homes, and people continue to move to Texas from other parts of the country. Local home sales recorded in June were down only slightly from a year before.
“We have a ton of buyers that are wanting to buy a home,” Michael said, adding that buyers may choose to refinance later. “You have people getting married, having babies, kids going to college.”
More casual buyers without an immediate need to move may no longer be shopping, said Drew Kayes, who heads up homebuying company Opendoor’s operations in Dallas-Fort Worth and Houston.
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“A lot of those folks right now are not in the market because they’re locked into a sub-4% rate, and that’s more of a luxury move than a necessity move,” Kayes said.
Jason Dickson, co-owner of North Texas-based Nuwave Lending, said while it may be hard for homeowners to leave their current home, it may be worth it for them to tap into equity they’ve built up during the pandemic to pay off credit card debt or auto loans.
“They’ll gladly sign up for the higher interest rate in the new house if they have the benefit of taking that equity and improving their overall financial position,” he said.
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A silver lining
Nipun Gadhok, 31, doesn’t want to lose his 3% rate but hopes to purchase a new home for him and his girlfriend next year.
Gadhok, a development manager for the Nehemiah Co., a local firm behind residential communities throughout Dallas-Fort Worth, purchased his five-bedroom home in Fort Worth’s Augusta Meadows neighborhood in 2021.
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He’s looking to buy a home along the outskirts of the metro area, potentially in one of his company’s developments on the east end of Mesquite. Knowing he has a rate he may never get again, he’s not planning to sell his Fort Worth house.
He intends to keep it as a rental property and is already renting out rooms to four other tenants. With mortgage rates causing many people to rent, that’s turning out to be a good side hustle.
“People are choosing to rent, they are not as much inclined to buy,” Gadhok said. “The rates really helped me out in the way that I’m not having problems with finding tenants.”
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Apartments set to start construction this fall on Plano’s Haggard farm
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Average mortgage rates tumbled yesterday following a first-class inflation report. In some cases, they are now back below 7% for an excellent borrower wanting a conventional, 30-year, fixed-rate mortgage. Phew!
First thing, markets were signaling that mortgage rates today might fall but perhaps only a little. However, these early mini-trends often switch speed or direction later in the day.
Current mortgage and refinance rates
Program
Mortgage Rate
APR*
Change
Conventional 30-year fixed
7.122%
7.147%
+0.15
Conventional 15-year fixed
6.297%
6.321%
+0.1
Conventional 20-year fixed
7.34%
7.403%
+0.03
Conventional 10-year fixed
6.872%
6.985%
+0.05
30-year fixed FHA
7.065%
7.685%
+0.02
15-year fixed FHA
6.503%
6.972%
+0.16
30-year fixed VA
6.75%
6.959%
+0.25
15-year fixed VA
6.625%
6.965%
Unchanged
5/1 ARM Conventional
6.75%
7.266%
Unchanged
5/1 ARM FHA
6.75%
7.532%
+0.11
5/1 ARM VA
6.75%
7.532%
+0.11
Rates are provided by our partner network, and may not reflect the market. Your rate might be different. Click here for a personalized rate quote. See our rate assumptions See our rate assumptions here.
Should you lock a mortgage rate today?
The chances of mortgage rates falling far and for long later this year improved yesterday. That day’s inflation report helped a lot.
But I reckon we’ll probably need a heap more similarly rate-friendly data in order to bring about that significant and sustained fall. And, while it’s possible such a heap will be delivered quickly, it’s probably more likely we’ll see any improvements late this year or sometime in 2024.
So, my personal rate lock recommendations remain:
LOCK if closing in 7 days
LOCK if closing in 15 days
LOCK if closing in 30 days
LOCK if closing in 45 days
LOCK if closing in 60days
However, with so much uncertainty at the moment, your instincts could easily turn out to be as good as mine — or better. So let your gut and your own tolerance for risk help guide you.
>Related: 7 Tips to get the best refinance rate
Market data affecting today’s mortgage rates
Here’s a snapshot of the state of play this morning at about 9:50 a.m. (ET). The data, compared with roughly the same time yesterday, were:
The yield on 10-year Treasury notes tumbled to 3.81% from 3.91%. (Very good for mortgage rates.) More than any other market, mortgage rates typically tend to follow these particular Treasury bond yields
Major stock indexes were higher. (Bad for mortgage rates.) When investors buy shares, they’re often selling bonds, which pushes those prices down and increases yields and mortgage rates. The opposite may happen when indexes are lower. But this is an imperfect relationship
Oil prices decreased to $75.65 from $75.94 a barrel. (Neutral for mortgage rates*.) Energy prices play a prominent role in creating inflation and also point to future economic activity
Goldprices rose to $1,964 from $1,959 an ounce. (Neutral for mortgage rates*.) It is generally better for rates when gold prices rise and worse when they fall. Gold tends to rise when investors worry about the economy.
CNN Business Fear & Greed index — held steady at 81 out of 100. (Neutral for mortgage rates.) “Greedy” investors push bond prices down (and interest rates up) as they leave the bond market and move into stocks, while “fearful” investors do the opposite. So lower readings are often better than higher ones
*A movement of less than $20 on gold prices or 40 cents on oil ones is a change of 1% or less. So we only count meaningful differences as good or bad for mortgage rates.
Caveats about markets and rates
Before the pandemic and the Federal Reserve’s interventions in the mortgage market, you could look at the above figures and make a pretty good guess about what would happen to mortgage rates that day. But that’s no longer the case. We still make daily calls. And are usually right. But our record for accuracy won’t achieve its former high levels until things settle down.
So, use markets only as a rough guide. Because they have to be exceptionally strong or weak to rely on them. But, with that caveat, mortgage rates today might fall. However, be aware that “intraday swings” (when rates change speed or direction during the day) are a common feature right now.
Important notes on today’s mortgage rates
Here are some things you need to know:
Typically, mortgage rates go up when the economy’s doing well and down when it’s in trouble. But there are exceptions. Read ‘How mortgage rates are determined and why you should care’
Only “top-tier” borrowers (with stellar credit scores, big down payments, and very healthy finances) get the ultralow mortgage rates you’ll see advertised
Lenders vary. Yours may or may not follow the crowd when it comes to daily rate movements — though they all usually follow the broader trend over time
When daily rate changes are small, some lenders will adjust closing costs and leave their rate cards the same
Refinance rates are typically close to those for purchases.
A lot is going on at the moment. And nobody can claim to know with certainty what will happen to mortgage rates in the coming hours, days, weeks or months.
What’s driving mortgage rates today?
Yesterday
Yesterday’s consumer price index (CPI) was a real tonic for mortgage rates. Comerica Bank’s chief economist said that “the fever is breaking“ for inflation.
And The Wall Street Journal (paywall) suggested: “Inflation cooled last month to its slowest pace in more than two years, giving Americans relief from a painful period of rising prices and boosting the chances that the Federal Reserve will stop raising interest rates after an expected increase this month.“
Note that the Journal’s writers (and many others) still expect a rise in general interest rates on Jul. 26. And that might limit how far mortgage rates can fall in the short term.
But other things could also limit the extent and duration of further decreases in mortgage rates. More and more people are talking up the possibility of a “soft landing.“ That refers to the Fed successfully driving down inflation without throwing the country into a recession.
But those of us wanting lower mortgage rates were kind of hoping for a recession. Of course, we didn’t want the bad stuff for the wider population. But mortgage rates tend to fall when the economy is in trouble and rise when it’s doing well.
So, while some falls in mortgage rates might be on the cards later in the year or in 2024, they might not be as big as we’d once been able to hope.
The rest of this week
This morning’s producer price index (PPI) for June was nothing like as important to mortgage rates as yesterday’s CPI. It and tomorrow’s import price index (IPI) are generally seen as secondary inflation measures. But, with markets hyper-sensitive to inflation news right now, they’re worth observing.
Today’s PPI was probably good for mortgage rates. The headline figure (PPI for final demand) came in at 0.1% in June, compared with the expected 0.2%. Just don’t expect it to have as positive an effect as yesterday’s news.
Please read the weekend edition of this daily report for more background on what’s happening to mortgage rates.
Recent trends
According to Freddie Mac’s archives, the weekly all-time low for mortgage rates was set on Jan. 7, 2021, when it stood at 2.65% for conventional, 30-year, fixed-rate mortgages.
Freddie’s Jul. 6 report put that same weekly average at 6.81%, up from the previous week’s 6.71%. But Freddie is almost always out of date by the time it announces its weekly figures.
In November, Freddie stopped including discount points in its forecasts. It has also delayed until later in the day the time at which it publishes its Thursday reports. Andwe now update this section on Fridays.
Expert forecasts for mortgage rates
Looking further ahead, Fannie Mae and the Mortgage Bankers Association (MBA) each has a team of economists dedicated to monitoring and forecasting what will happen to the economy, the housing sector and mortgage rates.
And here are their rate forecasts for the current quarter (Q2/23) and the following three quarters (Q3/23, Q4/23 and Q1/24).
The numbers in the table below are for 30-year, fixed-rate mortgages. They were both updated in June.
In the past, we included Freddie Mac’s forecasts. But it seems to have given up on publishing those.
Forecaster
Q2/23
Q3/23
Q4/23
Q1/24
Fannie Mae
6.5%
6.6%
6.3%
6.1%
MBA
6.5%
6.2%
5.8%
5.6%
Of course, given so many unknowables, the whole current crop of forecasts might be even more speculative than usual. And their past record for accuracy hasn’t been wildly impressive.
Find your lowest mortgage rate today
You should comparison shop widely, no matter what sort of mortgage you want. Federal regulator the Consumer Financial Protection Bureau found in May 2023:
“Mortgage borrowers are paying around $100 a month more depending on which lender they choose, for the same type of loan and the same consumer characteristics (such as credit score and down payment).”
In other words, over the lifetime of a 30-year loan, homebuyers who don’t bother to get quotes from multiple lenders risk losing an average of $36,000. What could you do with that sort of money?
Mortgage rate methodology
The Mortgage Reports receives rates based on selected criteria from multiple lending partners each day. We arrive at an average rate and APR for each loan type to display in our chart. Because we average an array of rates, it gives you a better idea of what you might find in the marketplace. Furthermore, we average rates for the same loan types. For example, FHA fixed with FHA fixed. The end result is a good snapshot of daily rates and how they change over time.
How your mortgage interest rate is determined
Mortgage and refinance rates vary a lot depending on each borrower’s unique situation.
Factors that determine your mortgage interest rate include:
Overall strength of the economy — A strong economy usually means higher rates, while a weaker one can push current mortgage rates down to promote borrowing
Lender capacity — When a lender is very busy, it will increase rates to deter new business and give its loan officers some breathing room
Property type (condo, single-family, town house, etc.) — A primary residence, meaning a home you plan to live in full time, will have a lower interest rate. Investment properties, second homes, and vacation homes have higher mortgage rates
Loan-to-value ratio (determined by your down payment) — Your loan-to-value ratio (LTV) compares your loan amount to the value of the home. A lower LTV, meaning a bigger down payment, gets you a lower mortgage rate
Debt-To-Income ratio — This number compares your total monthly debts to your pretax income. The more debt you currently have, the less room you’ll have in your budget for a mortgage payment
Loan term — Loans with a shorter term (like a 15-year mortgage) typically have lower rates than a 30-year loan term
Borrower’s credit score — Typically the higher your credit score is, the lower your mortgage rate, and vice versa
Mortgage discount points — Borrowers have the option to buy discount points or ‘mortgage points’ at closing. These let you pay money upfront to lower your interest rate
Remember, every mortgage lender weighs these factors a little differently.
To find the best rate for your situation, you’ll want to get personalized estimates from a few different lenders.
Are refinance rates the same as mortgage rates?
Rates for a home purchase and mortgage refinance are often similar.
However, some lenders will charge more for a refinance under certain circumstances.
Typically when rates fall, homeowners rush to refinance. They see an opportunity to lock in a lower rate and payment for the rest of their loan.
This creates a tidal wave of new work for mortgage lenders.
Unfortunately, some lenders don’t have the capacity or crew to process a large number of refinance loan applications.
In this case, a lender might raise its rates to deter new business and give loan officers time to process loans currently in the pipeline.
Also, cashing out equity can result in a higher rate when refinancing.
Cash-out refinances pose a greater risk for mortgage lenders, so they’re often priced higher than new home purchases and rate-term refinances.
How to get the lowest mortgage or refinance rate
Since rates can vary, always shop around when buying a house or refinancing a mortgage.
Comparison shopping can potentially save thousands, even tens of thousands of dollars over the life of your loan.
Here are a few tips to keep in mind:
1. Get multiple quotes
Many borrowers make the mistake of accepting the first mortgage or refinance offer they receive.
Some simply go with the bank they use for checking and savings since that can seem easiest.
However, your bank might not offer the best mortgage deal for you. And if you’re refinancing, your financial situation may have changed enough that your current lender is no longer your best bet.
So get multiple quotes from at least three different lenders to find the right one for you.
2. Compare Loan Estimates
When shopping for a mortgage or refinance, lenders will provide a Loan Estimate that breaks down important costs associated with the loan.
You’ll want to read these Loan Estimates carefully and compare costs and fees line-by-line, including:
Interest rate
Annual percentage rate (APR)
Monthly mortgage payment
Loan origination fees
Rate lock fees
Closing costs
Remember, the lowest interest rate isn’t always the best deal.
Annual percentage rate (APR) can help you compare the ‘real’ cost of two loans. It estimates your total yearly cost including interest and fees.
Also pay close attention to your closing costs.
Some lenders may bring their rates down by charging more upfront via discount points. These can add thousands to your out-of-pocket costs.
3. Negotiate your mortgage rate
You can also negotiate your mortgage rate to get a better deal.
Let’s say you get loan estimates from two lenders. Lender A offers the better rate, but you prefer your loan terms from Lender B. Talk to Lender B and see if they can beat the former’s pricing.
You might be surprised to find that a lender is willing to give you a lower interest rate in order to keep your business.
And if they’re not, keep shopping — there’s a good chance someone will.
Fixed-rate mortgage vs. adjustable-rate mortgage: Which is right for you?
Mortgage borrowers can choose between a fixed-rate mortgage and an adjustable-rate mortgage (ARM).
Fixed-rate mortgages (FRMs) have interest rates that never change, unless you decide to refinance. This results in predictable monthly payments and stability over the life of your loan.
Adjustable-rate loans have a low interest rate that’s fixed for a set number of years (typically five or seven). After the initial fixed-rate period, the interest rate adjusts every year based on market conditions.
With each rate adjustment, a borrower’s mortgage rate can either increase, decrease, or stay the same. These loans are unpredictable since monthly payments can change each year.
Adjustable-rate mortgages are fitting for borrowers who expect to move before their first rate adjustment, or who can afford a higher future payment.
In most other cases, a fixed-rate mortgage is typically the safer and better choice.
Remember, if rates drop sharply, you are free to refinance and lock in a lower rate and payment later on.
How your credit score affects your mortgage rate
You don’t need a high credit score to qualify for a home purchase or refinance, but your credit score will affect your rate.
This is because credit history determines risk level.
Historically speaking, borrowers with higher credit scores are less likely to default on their mortgages, so they qualify for lower rates.
For the best rate, aim for a credit score of 720 or higher.
Mortgage programs that don’t require a high score include:
Conventional home loans — minimum 620 credit score
FHA loans — minimum 500 credit score (with a 10% down payment) or 580 (with a 3.5% down payment)
VA loans — no minimum credit score, but 620 is common
USDA loans — minimum 640 credit score
Ideally, you want to check your credit report and score at least 6 months before applying for a mortgage. This gives you time to sort out any errors and make sure your score is as high as possible.
If you’re ready to apply now, it’s still worth checking so you have a good idea of what loan programs you might qualify for and how your score will affect your rate.
You can get your credit report from AnnualCreditReport.com and your score from MyFico.com.
How big of a down payment do I need?
Nowadays, mortgage programs don’t require the conventional 20 percent down.
In fact, first-time home buyers put only 6 percent down on average.
Down payment minimums vary depending on the loan program. For example:
Conventional home loans require a down payment between 3% and 5%
FHA loans require 3.5% down
VA and USDA loans allow zero down payment
Jumbo loans typically require at least 5% to 10% down
Keep in mind, a higher down payment reduces your risk as a borrower and helps you negotiate a better mortgage rate.
If you are able to make a 20 percent down payment, you can avoid paying for mortgage insurance.
This is an added cost paid by the borrower, which protects their lender in case of default or foreclosure.
But a big down payment is not required.
For many people, it makes sense to make a smaller down payment in order to buy a house sooner and start building home equity.
Choosing the right type of home loan
No two mortgage loans are alike, so it’s important to know your options and choose the right type of mortgage.
The five main types of mortgages include:
Fixed-rate mortgage (FRM)
Your interest rate remains the same over the life of the loan. This is a good option for borrowers who expect to live in their homes long-term.
The most popular loan option is the 30-year mortgage, but 15- and 20-year terms are also commonly available.
Adjustable-rate mortgage (ARM)
Adjustable-rate loans have a fixed interest rate for the first few years. Then, your mortgage rate resets every year.
Your rate and payment can rise or fall annually depending on how the broader interest rate trends.
ARMs are ideal for borrowers who expect to move prior to their first rate adjustment (usually in 5 or 7 years).
For those who plan to stay in their home long-term, a fixed-rate mortgage is typically recommended.
Jumbo mortgage
A jumbo loan is a mortgage that exceeds the conforming loan limit set by Fannie Mae and Freddie Mac.
In 2023, the conforming loan limit is $726,200 in most areas.
Jumbo loans are perfect for borrowers who need a larger loan to purchase a high-priced property, especially in big cities with high real estate values.
FHA mortgage
A government loan backed by the Federal Housing Administration for low- to moderate-income borrowers. FHA loans feature low credit score and down payment requirements.
VA mortgage
A government loan backed by the Department of Veterans Affairs. To be eligible, you must be active-duty military, a veteran, a Reservist or National Guard service member, or an eligible spouse.
VA loans allow no down payment and have exceptionally low mortgage rates.
USDA mortgage
USDA loans are a government program backed by the U.S. Department of Agriculture. They offer a no-down-payment solution for borrowers who purchase real estate in an eligible rural area. To qualify, your income must be at or below the local median.
Bank statement loan
Borrowers can qualify for a mortgage without tax returns, using their personal or business bank account. This is an option for self-employed or seasonally-employed borrowers.
Portfolio/Non-QM loan
These are mortgages that lenders don’t sell on the secondary mortgage market. This gives lenders the flexibility to set their own guidelines.
Non-QM loans may have lower credit score requirements, or offer low-down-payment options without mortgage insurance.
Choosing the right mortgage lender
The lender or loan program that’s right for one person might not be right for another.
Explore your options and then pick a loan based on your credit score, down payment, and financial goals, as well as local home prices.
Whether you’re getting a mortgage for a home purchase or a refinance, always shop around and compare rates and terms.
Typically, it only takes a few hours to get quotes from multiple lenders — and it could save you thousands in the long run.
Current mortgage rates methodology
We receive current mortgage rates each day from a network of mortgage lenders that offer home purchase and refinance loans. Mortgage rates shown here are based on sample borrower profiles that vary by loan type. See our full loan assumptions here.
Some principal mortgage rates rose over the last seven days. The average 15-year fixed and 30-year fixed mortgage rates both were higher. For variable rates, the 5/1 adjustable-rate mortgage also climbed.
After hiking interest rates 10 times since March 2022, the Federal Reserve pumped the brakes during its June meeting. The central bank’s benchmark federal funds rate will remain at a range of 5.00% to 5.25% for the time being, although the Fed hasn’t ruled out the possibility of further increases if inflation doesn’t continue to moderate.
As long as inflation continues to trend downward, experts say a pause in rate hikes from the Fed could bring some stability to today’s volatile mortgage rate market.
Current Mortgage Rates for July 2023
Mortgage rates change every day. Experts recommend shopping around to make sure you’re getting the lowest rate. By entering your information below, you can get a custom quote from one of CNET’s partner lenders.
About these rates: Like CNET, Bankrate is owned by Red Ventures. This tool features partner rates from lenders that you can use when comparing multiple mortgage rates.
Mortgages hit a 20-year high in late 2022, but now the macroeconomic environment is changing again. Rates dipped significantly in January before climbing back up in February. Aside from a brief surge towards the end of May, rates continue to fluctuate in the 6% to 7% range.
Even though the Fed hit pause on rate hikes, mortgage interest rates will continue to fluctuate on a daily basis. That’s because mortgage rates aren’t tied to the federal funds rate in the same way other products are, such as home equity loans and home equity lines of credit, or HELOCs. Mortgage rates respond to a variety of economic factors, including inflation, employment and the broader outlook for the economy.
“Mortgage rates will continue to ebb and flow week to week, but ultimately, I think rates will stick to that 6% to 7% range we’re seeing now,” said Jacob Channel, senior economist at loan marketplace LendingTree. “I don’t anticipate them to spike or even show a sustained spike following this meeting,” Channel said.
Overall, inflation remains high but has been slowly, but consistently, falling every month since it peaked in June 2022.
After raising rates dramatically in 2022, the Fed opted for smaller, 25-basis-point increases in its first three meetings of 2023. The decision to hold rates steady on June 14 suggests that inflation is cooling and ongoing rate hikes may no longer be necessary to bring inflation down to the Fed’s 2% target. The central bank is unlikely to cut rates any time soon, but positive signaling from the Fed and cooling inflation may ease some of the upward pressure on mortgage rates.
“Rates are getting to a point of being steady. So, it’s more a question of how long it will take for rates to start ticking back down and when inflation will return to a place where your dollar starts buying a little bit more each month,” said Kevin Williams, founder of Full Life Financial Planning.
However, mortgage rates remain well above where they were a year ago. Fewer buyers are willing to jump into the housing market, driving demand down and causing home prices in some regions to ease, but that’s only part of the home affordability equation.
“Interest rates have been much higher in the past and people bought homes and financed homes at those rates. But it’s been hard for people to react to such a rapid increase in just a short amount of time,” said Daniel Oney, research director at the Texas Real Estate Research Center at Texas A&M University. “Everybody had a target for how much they needed to save in order to go into the housing market, but when interest rates increased, those goal posts moved too,” he added.
What does this mean for homebuyers this year? Mortgage rates are likely to decrease slightly in 2023, although they’re highly unlikely to return to the rock-bottom levels of 2020 and 2021. However, rate volatility may continue for some time. “Expect mortgage rates to yo-yo up and down in the first half of the year, at least until there is a consensus about when the Fed will conclude raising interest rates,” said Greg McBride, CFA and chief financial analyst at Bankrate. McBride expects rates to fall more consistently as the year progresses. “Thirty-year fixed mortgage rates will end the year near 5.25%,” he predicted.
Rather than worrying about market mortgage rates, homebuyers should focus on what they can control: getting the best rate they can for their situation.
“The most important thing is that they find the right home. The second most important thing is obviously to find the most efficient way to finance it,” said Melissa Cohn, regional vice president of William Raveis Mortgage.
Take steps to improve your credit score and save for a down payment to increase your odds of qualifying for the lowest rate available. Also, be sure to compare the rates and fees from multiple lenders to get the best deal. Looking at the annual percentage rate, or APR, will show you the total cost of borrowing and help you compare apples to apples.
30-year fixed-rate mortgages
For a 30-year, fixed-rate mortgage, the average rate you’ll pay is 7.17%, which is a growth of 12 basis points compared to one week ago. (A basis point is equivalent to 0.01%.) Thirty-year fixed mortgages are the most frequently used loan term. A 30-year fixed mortgage will usually have a higher interest rate than a 15-year fixed rate mortgage — but also a lower monthly payment. You won’t be able to pay off your house as quickly and you’ll pay more interest over time, but a 30-year fixed mortgage is a good option if you’re looking to minimize your monthly payment.
15-year fixed-rate mortgages
The average rate for a 15-year, fixed mortgage is 6.52%, which is an increase of 6 basis points from seven days ago. You’ll definitely have a bigger monthly payment with a 15-year fixed mortgage compared to a 30-year fixed mortgage, even if the interest rate and loan amount are the same. However, as long as you’re able to afford the monthly payments, there are several benefits to a 15-year loan. You’ll typically get a lower interest rate, and you’ll pay less interest in total because you’re paying off your mortgage much quicker.
5/1 adjustable-rate mortgages
A 5/1 adjustable-rate mortgage has an average rate of 6.11%, an addition of 3 basis points from the same time last week. You’ll typically get a lower interest rate (compared to a 30-year fixed mortgage) with a 5/1 ARM in the first five years of the mortgage. But you might end up paying more after that time, depending on the terms of your loan and how the rate shifts with the market rate. If you plan to sell or refinance your house before the rate changes, an adjustable-rate mortgage may make sense for you. Otherwise, changes in the market mean your interest rate might be a good deal higher once the rate adjusts.
Mortgage rate trends
Mortgage rates were historically low throughout most of 2020 and 2021 but increased steadily throughout 2022. Now, mortgage rates are roughly twice what they were a year ago, pushed up by persistently high inflation. That high inflation prompted the Fed to raise its target federal funds rate seven times in 2022. By raising rates, the Fed makes it more expensive to borrow money and more appealing to keep money in savings, suppressing demand for goods and services.
Mortgage interest rates don’t move in lockstep with the Fed’s actions in the same way that, say, rates for a home equity line of credit do. But they do respond to inflation. As a result, cooling inflation data and positive signals from the Fed will influence mortgage rate movement more than the most recent 25-basis-point rate hike.
We use information collected by Bankrate to track daily mortgage rate trends. This table summarizes the average rates offered by lenders across the US:
Current average mortgage interest rates
Loan type
Interest rate
A week ago
Change
30-year fixed rate
7.17%
7.05%
+0.12
15-year fixed rate
6.52%
6.46%
+0.06
30-year jumbo mortgage rate
7.19%
7.08%
+0.11
30-year mortgage refinance rate
7.29%
7.21%
+0.08
Rates as of July 4, 2023.
How to find the best mortgage rates
To find a personalized mortgage rate, speak to your local mortgage broker or use an online mortgage service. In order to find the best home mortgage, you’ll need to consider your goals and current finances.
Specific interest rates will vary based on factors including credit score, down payment, debt-to-income ratio and loan-to-value ratio. Generally, you want a higher credit score, a larger down payment, a lower DTI and a lower LTV to get a lower interest rate.
Besides the mortgage interest rate, other costs including closing costs, fees, discount points and taxes might also affect the cost of your home. Be sure to comparison shop with multiple lenders — for example, credit unions and online lenders in addition to local and national banks — in order to get a loan that works best for you.
What is a good loan term?
When picking a mortgage, you should consider the loan term, or payment schedule. The mortgage terms most commonly offered are 15 years and 30 years, although you can also find 10-, 20- and 40-year mortgages. Another important distinction is between fixed-rate and adjustable-rate mortgages. The interest rates in a fixed-rate mortgage are set for the duration of the loan. For adjustable-rate mortgages, interest rates are stable for a certain number of years (commonly five, seven or 10 years), then the rate changes annually based on the market interest rate.
One important factor to consider when choosing between a fixed-rate and adjustable-rate mortgage is the length of time you plan on staying in your house. For people who plan on staying long-term in a new house, fixed-rate mortgages may be the better option. While adjustable-rate mortgages might offer lower interest rates upfront, fixed-rate mortgages are more stable over time. If you don’t plan to keep your new house for more than three to 10 years, though, an adjustable-rate mortgage may give you a better deal. The best loan term depends on your specific situation and goals, so be sure to consider what’s important to you when choosing a mortgage.