LOS ANGELES (AP) — Prospective homebuyers are facing higher costs to finance a home with the average long-term U.S. mortgage rate moving above 7% this week to its highest level in nearly five months.
The average rate on a 30-year mortgage rose to 7.1% from 6.88% last week, mortgage buyer Freddie Mac said Thursday. A year ago, the rate averaged 6.39%.
When mortgage rates rise, they can add hundreds of dollars a month in costs for borrowers, limiting how much they can afford at a time when the U.S. housing market remains constrained by relatively few homes for sale and rising home prices.
“As rates trend higher, potential homebuyers are deciding whether to buy before rates rise even more or hold off in hopes of decreases later in the year,” said Sam Khater, Freddie Mac’s chief economist. “Last week, purchase applications rose modestly, but it remains unclear how many homebuyers can withstand increasing rates in the future.”
AP business correspondent Alex Veiga reports mortgage rates reaching their highest level in months.
After climbing to a 23-year high of 7.79% in October, the average rate on a 30-year mortgage had remained below 7% since early December amid expectations that inflation would ease enough this year for the Federal Reserve to begin cutting its short-term interest rate.
Mortgage rates are influenced by several factors, including how the bond market reacts to the Fed’s interest rate policy and the moves in the 10-year Treasury yield, which lenders use as a guide to pricing home loans.
But home loan rates have been mostly drifting higher in recent weeks as stronger-than-expected reports on employment and inflation have stoked doubts over how soon the Fed might decide to start lowering its benchmark interest rate. The uncertainty has pushed up bond yields.
The yield on the 10-year Treasury jumped to around 4.66% on Tuesday — its highest level since early November — after top officials at the Federal Reserve suggested the central bank may hold its main interest steady for a while. The Fed wants to get more confidence that inflation is sustainably heading toward its target of 2%.
The yield was at 4.64% at midday Thursday after new data on applications for unemployment benefits and a report showing manufacturing growth in the mid-Atlantic region pointed to a stronger-than-expected U.S. economy.
“With no cuts to the federal funds rate imminent and with the economy still strong, there is no reason to see downward pressure on mortgage rates right now,” said Lisa Sturtevant, chief economist at Bright MLS. “It seems increasingly likely that mortgage rates are not going to come down any time soon.”
Sturtevant said it’s likely the average rate on a 30-year mortgage will hold close to 7% throughout the spring before easing to the mid-to-high 6% range into the summer.
Other economists also expect that mortgage rates will ease moderately later this year, with forecasts generally calling for the average rate to remain above 6%.
Mortgage rates have now risen three weeks in a row, a setback for home shoppers this spring homebuying season, traditionally the housing market’s busiest time of the year.
Sales of previously occupied U.S. homes fell last month as home shoppers contended with elevated mortgage rates and rising prices.
While easing mortgage rates helped push home sales higher in January and February, the average rate on a 30-year mortgage remains well above 5.1%, where was just two years ago.
That large gap between rates now and then has helped limit the number of previously occupied homes on the market because many homeowners who bought or refinanced more than two years ago are reluctant to sell and give up their fixed-rate mortgages below 3% or 4%.
Meanwhile, the cost of refinancing a home loan also got pricier this week. Borrowing costs on 15-year fixed-rate mortgages, often used to refinance longer-term mortgages, rose this week, pushing the average rate to 6.39% from 6.16% last week. A year ago it averaged 5.76%, Freddie Mac said.
Lloyds profits fall as competition for mortgages heats up
Pre-tax profits drop to £1.6bn between January and March, down from £2.3bn last year
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Lloyds Banking Group has suffered a 28% drop in first-quarter profits amid tough competition for mortgages and savings, but bosses said they expected those pressures to soon ease, helped by an improving UK economy.
The country’s largest mortgage lender, which also owns the Halifax brand, said pre-tax profits dropped to £1.6bn between January and March, having fallen from £2.3bn last year when rising interest rates boosted the lender’s profits by almost 50%.
The bank’s chief financial officer, William Chalmers, said this reflected “keen pricing in the mortgage markets, and savings moving into higher rate accounts”. Competition and jitters in the mortgage market led to a drop in its total outstanding loan book.
It resulted in a 10% drop in net interest income, which accounts for the difference in loan charges versus what is paid out to savers, to £3.2bn in the three months to March.
Pressure from politicians and regulators to pass on interest rates to savers at the same rate they had been raising mortgage and loan charges has squeezed income for major mortgage providers such as Lloyds in recent months.
In response, banks have had to compete harder for customer deposits by offering more substantial returns, particularly on fixed savings products where consumers lock away cash for longer. It attracted £1.3bn in regular customer deposits but that failed to make up for the £3.5bn pulled by business clients.
However, Chalmers said these savings and mortgage pressures were likely to “ease through 2024”, as economic conditions continued to improve.
House prices, which Lloyds previously expected to fall by 2.2% in 2024, are forecast to rise by 1.5% by the end of the year.
The banking group, often seen as a bellwether for the UK economy, is also forecasting a steady improvement in economic growth, at a rate of 0.3% in most quarters and a drop in inflation to 2.4% – from 3.2% in March – resulting in a fall in interest rates to 4.5% by December. It expects the Bank of England to cut rates three times in 2024, starting in the middle of the year.
Chalmers said mortgage applications had already soared by 20% in the first quarter, which could translate into new home loans, and reverse some of its loan book losses. That partly reflected the group’s willingness to offer better interest rates in order to boost lending.
“We’re really pleased to see the pickup in applications, and development of our market share, in that respect. And I think that represents what is a series of competitive offers out there in the market, suiting our customer needs. We’d hope to maintain that ambition over the course of the year,” Chalmers said.
Overall, the banking boss said he expected the UK mortgage market to pick up by 5% by the end of 2024. “We’d hope to play a major part in it,” Chalmers added.
The improved economic outlook meant the bank was more confident that customers could repay their loans. Despite the cost of living crisis and higher mortgage repayments, which have weighed on borrowers, Lloyds set aside £57m for potential defaults, compared with £243m last year.
The Lloyds chief executive, Charlie Nunn, said: “The group is continuing to deliver in line with expectations in the first quarter of 2024, with solid net income, cost discipline and strong asset quality. Our performance provides us with further confidence around our strategic ambitions and 2024 and 2026 guidance.”
Investors had also been hoping for updates on the Financial Conduct Authority investigation into whether consumers have been charged inflated prices for car loans. Lloyds, which has the largest car loan division of the four biggest UK banks, has already put aside £450m – far short of the £2bn that analysts believe it could be on the hook for.
However, Lloyds did not give any more details about whether it might put aside more cash to cover potential fines or compensation for customers. The FCA has indicated that it will give more details on its findings by the autumn.
There’s a reason so many people have been struggling to purchase a home this year. Not only are housing prices elevated as a result of low inventory, but mortgages are expensive to sign.
As of this writing, the average mortgage rate on a 30-year loan is 6.82%, according to Freddie Mac. But rates have fluctuated a bit since the start of the year, and they’ll likely continue to do so based on general market conditions.
Meanwhile, most mortgage experts expect rates to cool later in the year. But how low will they go? That’s the big question.
Federal Reserve actions could lower borrowing costs for home buyers
The Federal Reserve raised interest rates 11 times between 2022 and 2023 to help slow the pace of inflation. While the Fed’s actions don’t always completely correlate to movement in mortgage rates, they have the potential to influence them. As such, it’s not a big surprise that mortgages are currently expensive to sign.
There’s some good news, though. Despite the fact that inflation remains stubbornly elevated at over 3%, which is above the 2% level the Fed is targeting, it’s cooled nicely since 2022. As such, the Fed still thinks it can move forward with three interest rate cuts in 2024, the first of which could come within months.
What this means is that mortgage rates could fall quite a bit between now and the end of the year. But it’s tough to get a handle on how low they’ll go.
More: Check out our picks for the best mortgage lenders
Is it conceivable that mortgage rates will drop to about 6%? Yes. Whether they’ll go lower is the big question, and that’s a hard one to answer right now.
In January, the National Association of Realtors projected that mortgage rates would fall to 6.3% by the fourth quarter of the year. But if rates fall to 6.3% at the start of that quarter, they may be closer to the 6% mark by the end of it.
How to lock in the most competitive mortgage rate you can
It’s hard to know exactly how low mortgage rates will go in 2024. So instead of fixating on that, try to focus on steps you can take to set yourself up for a more attractive mortgage rate.
For one thing, try boosting your credit score. You can do so by paying bills on time and shedding some credit card debt. Checking your credit report for errors is also a great idea.
Also, try to work on reducing your debt-to-income ratio. That measures the percentage of your income that’s allocated toward existing debt payments. Paying off some credit card debt could help in this regard, too.
Finally, be prepared to shop around. You never know when one lender might have a better rate to offer you than another.
It’s fair to assume that mortgages will be less expensive to sign by the time 2024 gets close to wrapping up. But how much less expensive is a question that remains tough to answer.
Average mortgage rates inched lower yesterday. But all that did was wipe out last Friday’s similarly tiny rise.
Earlier this morning, markets were signaling that mortgage rates today might barely budge. However, these early mini-trends often alter direction or speed as the hours pass.
Current mortgage and refinance rates
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Program
Mortgage Rate
APR*
Change
Conventional 30-year fixed
7.302%
7.353%
+0.01
Conventional 15-year fixed
6.757%
6.836%
+0.01
30-year fixed FHA
7.064%
7.111%
-0.07
5/1 ARM Conventional
6.888%
8.036%
+0.12
Conventional 20-year fixed
7.199%
7.257%
+0.05
Conventional 10-year fixed
6.663%
6.737%
+0.06
30-year fixed VA
7.292%
7.332%
+0.01
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 your mortgage rate today?
This morning’s Financial Times reports, “While the base case remains a reduction in borrowing costs, the options market shows a 20% probability of an increase.” That means most investors think the Federal Reserve will cut general interest rates this year, but they reckon there’s a 20% chance of the central bank actually hiking them. That’s new and scary.
Although the Fed doesn’t directly determine mortgage rates it has a huge influence on the bond market that does. And I very much doubt mortgage rates will fall consistently before the Fed signals that a cut in general interest rates is imminent. And a Fed rate hike is likely to send mortgage rates much higher: maybe back up to 8% or beyond.
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
LOCKif 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 are mostly compared with roughly the same time the business day before, so much of the movement will often have happened in the previous session. The numbers are:
The yield on 10-year Treasury notes edged down to 4.6% from 4.64%. (Good for mortgage rates.) More than any other market, mortgage rates typically tend to follow these particular Treasury bond yields
Major stock indexes were rising this morning. (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 $81.59 from $82.06 a barrel. (Good for mortgage rates*.) Energy prices play a prominent role in creating inflation and also point to future economic activity
Goldprices fell to $2,333 from $2,350 an ounce. (Neutral for mortgage rates*.) It is generally better for rates when gold prices rise and worse when they fall. Because gold tends to rise when investors worry about the economy.
CNN Business Fear & Greed index — climbed to 40 from 33 out of 100. (Bad 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, post-pandemic upheavals, and war in Ukraine, 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 look likely to be unchanged or close to unchanged. However, be aware that “intraday swings” (when rates change speed or direction during the day) are a common feature right now.
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What’s driving mortgage rates today?
Today
This morning’s two April purchasing managers’ indexes (PMIs) will likely be good for mortgage rates. These “flashes” (initial readings and subject to revision) are both from S&P.
Here are this morning’s actual numbers in bold, alongside the prepublication consensus forecasts, according to MarketWatch, together with the March actual figures:
Services PMI — 50.9 actual; 52 expected; 51.7 in March
Manufacturing PMI — 51.1 actual; 52 expected; 51.9 in March
You can see that the PMIs were worse than expected, which is typically good news for mortgage rates.
Tomorrow
Tomorrow’s durable goods orders for March rarely affect mortgage rates. And they’d need to contain some pretty shocking data to do so tomorrow.
Markets are expecting those orders to have risen by 2.6% in March compared to a 1.3% increase in February. They’ll probably need to be significantly higher than 2.% to exert upward pressure on mortgage rates and appreciably lower to push them downward.
The rest of this week
Nothing has changed since yesterday concerning economic reports due on Thursday and Friday. So, I’ll repeat what I wrote yesterday:
We’re due the first reading of gross domestic product (GDP) for the January-March quarter on Thursday. And that could have a larger effect than PMIs and durable goods orders, depending on the gap between expectations and actuals.
But Friday’s personal consumption expenditures (PCE) price index for March is this week’s star report. That’s the Federal Reserve’s favorite gauge of inflation. And it could certainly affect mortgage rates, possibly appreciably.
The next meeting of the Fed’s rate-setting committee is scheduled to start on Apr. 30 and last two days. So, the PCE price index will be the last inflation report it sees before making decisions.
And index that shows inflation cooling could change the mood at that meeting. True, it’s vanishingly unlikely that a cut to general interest rates will be unveiled on May 1 no matter what.
But a PCE price index that shows inflation cooling could help the Fed to move forward with cuts earlier than expected, which should cause mortgage rates to fall. Unfortunately, one that suggests inflation remains hot or is getting hotter could send those rates higher.
I’ll brief you more fully on each potentially significant report on the day before it’s published.
Don’t forget you can always learn more about what’s driving mortgage rates in the most recent weekend edition of this daily report. These provide a more detailed analysis of what’s happening. They are published each Saturday morning soon after 10 a.m. (ET) and include a preview of the following week.
Recent trends
According to Freddie Mac’s archives, the weekly all-time lowest rate for 30-year, fixed-rate mortgages was set on Jan. 7, 2021, when it stood at 2.65%. The weekly all-time high was 18.63% on Sep. 10, 1981.
Freddie’s Apr. 18 report put that same weekly average at 7.1%, up from the previous week’s 6.88%. But note that Freddie’s data are almost always out of date by the time it announces its weekly figures.
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 four quarters of 2024 (Q1/24, Q2/24 Q3/24 and Q4/24).
The numbers in the table below are for 30-year, fixed-rate mortgages. Fannie’s were updated on Mar. 19 and the MBA’s on Apr. 18.
Forecaster
Q1/24
Q2/24
Q3/24
Q4/24
Fannie Mae
6.7%
6.7%
6.6%
6.4%
MBA
6.8%
6.7%
6.6%
6.4%
Of course, given so many unknowables, both these forecasts might be even more speculative than usual. And their past record for accuracy hasn’t been wildly impressive.
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.
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?
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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.
Verify your new rate. Start here
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.
Check your refinance rates today. Start here
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.
So, 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.
Indeed, 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.
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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 as evidence of their financial circumstances. 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. And 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.
Time to make a move? Let us find the right mortgage for you
Current mortgage rates methodology
We receive current mortgage rates each day from a network of mortgage lenders that offer home purchase and refinance loans. Those mortgage rates shown here are based on sample borrower profiles that vary by loan type. See our full loan assumptions here.
“There’s such scarcity that the first thing that matters is finding a home you like,” said Jay Tuli, president of Leader Bank, which sells 90 percent of its home loans in Massachusetts.
Home sales are down year-over-year due to the lack of inventory, said Theresa Hatton, chief executive of Massachusetts Association of Realtors.
Many prospective buyers who were waiting for the Federal Reserve to begin cutting interest rates by now have reason to give up hope. Inflation isn’t coming down quickly enough and, at 3.5 percent, is still well above the Fed’s 2 percent target. So the central bank won’t trim short-term rates fast enough this year, contrary to what most economists had been expecting. Consequently, the 30-year fixed mortgage rate has risen to 7.1 percent, over 1 percentage point higher than this time last year and 0.6 percent more than January 2024, Freddie Mac reported last week.
“Until inflation cools a bit, we can expect mortgage rates to remain elevated,” said Michael Debronzo, a regional sales executive at PNC Bank, which has noted a slight uptick in loan applications.
The market is closely watching the Fed’s every move and the economy is a confounding puzzle even for experts. That will result in a volatile ride for the remainder of the year.
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With that in mind, here are three things for home buyers to consider, according to Berkshire Bank’s Ellen Steinfeld, head of consumer lending and payments:
Expect home listings to remain tight. That’s because those who financed their homes during the low-rate era are staying in their homes for longer. Even those who were looking to downsize are staying put. Financially, it doesn’t make sense to sell if you also have to buy at these rates. Usually, people try and sell their home before bidding on a new one, but right now it’s the other way around, said Steinfeld, who’s based in Long Island, N.Y.
This also means home prices are unlikely to drop. In certain cases people are paying more than the asking price, engaging in bidding wars. “I anticipate during the remainder of this year we’ll continue to see price appreciation,” Steinfeld noted.
Finally, even though interest rates will likely drop a smidge by late 2024, they won’t reverse anywhere as quickly as their speedy rise postpandemic. Meanwhile, buyers can do cheaper 3- or 5-year adjustable rate mortgages and refinance when rates drop.
“The cost of refinancing is reasonable enough,” Steinfeld said.
Piggyback, 2nds, POS Products; G-Rate’s CEO Podcast Interview; Agency News
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Piggyback, 2nds, POS Products; G-Rate’s CEO Podcast Interview; Agency News
By: Rob Chrisman
Mon, Apr 22 2024, 11:28 AM
When I was a kid, whenever I would walk by a pay phone or newspaper vending machine, I’d check the coin change slot. Or periodically check under my Dad’s La-Z-Boy… every penny or dollar counted! (Nowadays, I still get excited when I find a forgotten quarter in my own pants or backpack.) Plenty of folks at last week’s Great River Conference were trying to do the modern equivalent of that by learning about the current vendor offerings of technology, or meeting with their current vendors to see if pennies or dollars could be saved on every loan given the current $12k+ cost per funded loan. Smart and compliant speed and efficiency are critical… speaking of which, found here, today’s podcast features an interview with Guaranteed Rate’s Victor Ciardelli on the company’s goal of closing a loan in one-day and how they will get there. This week’s podcasts are sponsored by Calque. With The Trade-In Mortgage powered by Calque, homeowners can buy before they sell, make non-contingent offers, and tap their home equity to fund the down payment on their next home.
Lender and Broker Products, Software, and Services
When people say they can see miles and miles on a clear day, they aren’t wrong: the horizon is about 3 miles away, with some variation depending on your height. And whatever may lie beyond, Dark Matter Technologies is helping lenders prepare with its first annual Horizon user conference. The event kicks off Wednesday at the Fontainebleau Miami Beach and will bring together hundreds of industry notables to network, get the inside scoop on Dark Matter’s innovation roadmap, and explore business trends including market growth strategies, AI, and cybersecurity. Feeling a little FOMO? Request a consultation today and your team could be working smarter with the Empower LOS, and catching some Florida sun, by this time next year.
Does it feel like your current point-of-sale vendor has lost focus on mortgage? As a mortgage-specialized partner, Maxwell is committed to giving lenders a competitive advantage in a changing mortgage market. With Maxwell Point of Sale, lenders can tailor workflows to fit the unique needs of their organization, so back-end teams can work quickly without costly interruptions. Compared to a top competitor, Maxwell Point of Sale averages a 5.9 percent higher pull-through rate from rate-lock to close. For the average lender using Maxwell POS, this equates to $42MM in additional loan volume. Schedule a call with the team to learn how Maxwell Point of Sale can start working for you, your borrowers, and your lending team quickly.
Take your accounting department from “Cost Center” to Revenue Generator” with Loan Vision & LV-PAM. Loan Vision customers report a 10 percent reduction in loan fallout, 30 percent+ decrease in days to close the books, and 20 percent+ reduction in accounting headcount. Interested in learning how Loan Vision can reduce internal costs and help you gain a competitive edge? Contact Carl Wooloff to schedule a call today.
LoanStream wants you to Spring into more business with its April Specials on Prime, Non-QM and Closed End Seconds now through April 30th, 2024. Includes 25 BPS Price Improvement on FHA/VA loans 620+ FICO (excludes DPA and CalHFA) on Prime, 25 BPS price improvement on all Non-QM loans (excludes Select) and 25 BPS Price Improvement on all Closed-End Seconds. Restrictions apply so contact your LoanStream Account Executive to learn more. Specials are valid for loans locked 4/1/2024 through 4/30/2024. Offers subject to change at any time, terms and conditions apply.
Symmetry Lending introduces its April Special for Piggyback Pricing! Enjoy a remarkable discount on Piggyback HELOC transactions until April’s end, including a -1.00 percent Spring Discount for qualified customers with a FICO score of 740+ and a draw of $200k+, equating to Prime + .25 percent margin. This offer demonstrates appreciation for clients’ support and trust. Ready to seize this opportunity? Connect with your Symmetry Lending Area Manager to formulate a plan for getting these solutions in front of your clients today!
eClosing Survey by STRATMOR
Today, Snapdocs released new industry research that found lenders using the company’s eClosing platform experience 18-day faster loan velocity than their industry peers. The survey was conducted by STRATMOR Group with data self-reported by mortgage lenders. I got a note from Michael Sachdev, CEO of Snapdocs that said eClosing technology, when paired with the right partner to scale adoption, is helping lenders set new industry benchmarks for loan processing speed, operating costs, and borrower satisfaction. So often we see vendors make claims about their product value, but this report is a good example of that validation being sourced directly from the lender users themselves.
Agency and Investor News
Last week, the Department of Housing and Urban Development issued a HUD final rule that it says will increase lender participation in the Section 184 Indian Housing Loan Guarantee program, strengthen regulations to meet growing demand, and ensure the program will remain a vital resource for Native American families for years to come. Miki Adams, president of CBC Mortgage Agency, a correspondent investor that is wholly owned by the Cedar Band of Paiutes in Utah, stated, “The Section 184 program is a vital tool for so many Native American homebuyers. The new regulations will bring more clarity and predictability to this important program, and we applaud the Administration for the improvements and their efforts to work closely with Tribal leaders and other stakeholders. There is still more that must be done to modernize the program and we look forward to working collaboratively with HUD on future improvements.”
Loss mitigation: what would you do? A borrower is out of work, is three months delinquent on their mortgage payments, has been offered a new job in another state, and will relocate within 60 days. They’re also unable to catch up on their arrears and have equity in the home. What should the servicer do? Review this and other scenarios from Fannie Mae’s March Loss Mitigation webinar and download the presentation.
Fannie Mae has launched “Mission Index,” a new initiative to sell agency mortgage-backed securities (MBS) that cater to socially conscious investors, aiming to attract more buyers to the market, Bloomberg reported. Fannie Mae assigns scores to MBS pools based on affordable rental housing availability, borrower location (high-poverty or rural areas), and other indicators, giving investors more visibility into the underlying mortgages and stimulate lending to underserved borrowers, potentially leading to lower interest rates for these borrowers.
Saving for a down payment is a barrier first-time homebuyers face. While there are numerous down payment assistance programs (DPA) available, it can be difficult for housing professionals to find programs that meet the specific needs of their borrower. Given the number of DPA programs in the market, there hasn’t been a consistent way to match the right DPA program to the needs of a particular borrower. To address this issue, Freddie Mac launched DPA One®, a free online solution to help DPA program providers reduce submission errors and program requirement questions from lenders by developing a single, standardized, online access point to manage their DPA program information. To learn more, read Freddie Mac’s case study about how one of Freddie Mac’s housing finance agency partners, Southeast Texas Housing Finance Corporation (SETH), is promoting affordable housing in the Southeast Texas community.
As part of a recent Fannie Mae Mortgage Lender Sentiment Survey® (MLSS) special topic analysis, Fannie’s economists surveyed senior executives of mortgage lending institutions to better understand how they feel about Technology Service Provider (TSP) solutions, particularly as TSPs have become an increasingly essential part of lenders’ day to day operations. The results are in a new Perspectives blog.
Ginnie Mae announced revisions to its monthly single-family reporting requirements to include expanded Payment Default Status (PDS) reporting. The expanded PDS dataset will include loan default information, any mitigation actions taken, and the timing of those actions. For more information regarding the transition to the new reporting requirements, see All Participants Memorandum (APM) 24-06.
In Bulletin 2024-1, Freddie Mac announced changes to trust income requirements pertaining to history of receipt for trust income with pre-determined fixed payments, and documentation of continuance for all trust income types. Pennymac is aligning with these changes effective with loan deliveries on or after April 30, 2024. View Pennymac Announcement 24-36 for details.
Pennymac posted Announcement 24-37 informing it will update Conventional LLPAs effective for all Best Efforts Commitments taken on or after Monday, April 22, 2024.
Capital Markets
Investor attitudes drive investor demand, and therefore rates. So, what is driving investor attitudes? There is the escalated geopolitical uncertainty between Iran and Israel (central bankers are girding for potential oil shocks that could reignite consumer-price growth), there is rising volatility amidst fear of a potential rate increase due to sticky inflation (voting Fed members have not ruled out the possibility of a future rate hike and have urged patience for any potential easing at least until year-end), there is also cautious optimism surrounding the world economy (earnings season continues on Wall Street this week), and new economic releases are always on the docket, even if most are backward-looking (Q1 GDP, due out later this week, is expected to have risen to 2.9 percent as of the most recent estimate).
More germane to the mortgage industry, we learned last week that existing home sales were down 4.3 percent during the month of March. Meanwhile, housing starts fell 14.7 percent in March although some of the decline was attributed to weather conditions in parts of the country. In terms of the American consumer, retail sales in March rose 0.7 percent which was well above market expectations for a 0.3 percent increase. Additionally, retail sales from February were revised higher from the initial release. The 1.1 percent jump in control group sales led some economists to increase their forecast for personal consumption growth in the first quarter.
Bank economists are growing more optimistic about the outlook for credit conditions compared to the latter half of 2023, according to the American Bankers Association’s latest Credit Conditions Index. Conditions are expected to improve for a second consecutive quarter in Q2, which would mark the highest level in two years, reflecting a moderate increase in optimism. Job growth is expected to continue, inflation is forecasted to ease toward the Fed’s 2 percent target, and three rate cuts are expected by the end of the year.
This week’s highlights include month-end supply consisting of $183 billion in fixed coupons and $44 billion 2-year FRNs auctioned over tomorrow through Thursday, flash PMIs from S&P Global, new home sales, Fed surveys, durable goods, Q1 GDP, PCE, and Michigan Sentiment. No Fed speakers are scheduled with the Fed in blackout ahead of the May 1/2 FOMC meeting. The week gets off to a quiet start with one data point, Chicago Fed National Activity Index for March, due out later this morning. We start Monday with 30-year Agency MBS prices worse roughly .125 from Friday evening and the 10-year yielding 4.65 after closing last week at 4.62 percent.
Employment
radius financial group inc. is looking for an experienced Accounting Manager to lead all accounting operations. radius is a full-service retail mortgage banker that has been making mortgages better through a customer obsessed and team inspired culture since 1999. We are seeking an experienced Accounting Manager to lead all loan accounting, financial reporting, accounts payable and payroll functions. The Accounting Manager will report to the CFO and must have experience in a mortgage accounting system (Loan Vision is a plus), branch reporting and MSR accounting. Remote candidates will be considered and should send confidential inquires to Mike Clark.
Imagine a world where you, as a loan officer, aren’t stuck choosing between a broker model and a retail model. What if there was a company that blended the best of both worlds: the transparency of a broker model with the solid support of a retail banking platform? What if this company not only generated qualified local leads for you but also helped you add value for your existing realtor partners and connect with new ones? What if I told you this company is not just a dream: It’s real and it’s here to revolutionize your workflow. Please schedule a confidential Zoom meeting with Next Wave Mortgage.
TAYGO INC. presents an enticing new opportunity for a SaaS Sales Representative! This pivotal role is instrumental in propelling the success of TAYGO through selling our SaaS solutions to prospective clients. The key focus is comprehending the requirements and challenges of mortgage lenders (as well as mortgage brokers) and adeptly showcasing how our products, WEB-GO and RIN-GO, can optimize their operations and business performance. You must have a strong understanding of CRM products, their features, and the mortgage industry. You must effectively engage with prospects to understand their needs. You must also carefully monitor existing clients’ activities to identify upsell opportunities. You must have exceptional communication skills for online demos and meetings, cold or warm calls and emails. Your expertise, patience, and ability to build and maintain strong customer relationships will be vital in achieving our sales goals and ensuring customer satisfaction. Please send your resume to [email protected].
Alanna McCargo, President of the Government National Mortgage Association (Ginnie Mae) and whom I have had the opportunity to spend some time with, will resign from public office, effective May 3. “McCargo has served in the Biden-Harris Administration since January 2021, first as the Senior Advisor for Housing Finance in the U.S. Department of Housing and Urban Development (HUD) for former Secretary Marcia Fudge and then later nominated by President Biden to lead Ginnie Mae. McCargo’s confirmation, with bipartisan support by the U.S. Senate, made history as she became the first woman and woman of color at the helm of this U.S. Government corporation.”
The announcement came with the usual platitudes from Ms. McCargo about the Administration and Ginnie Mae and its “complex $2.5 trillion guarantee business” as well as others saying some very nice things about her.
Principal Executive Vice President (PEVP) Sam Valverde will serve as the Acting President upon President McCargo’s departure. Senior Advisor for Strategic Operations and Interim Chief Operating Officer Laura Kenney will assume additional responsibilities as part of this transition.
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According to the latest Census Bureau report, housing starts declined 14.7% to a seasonally adjusted annual rate of 1.32 million units in March. Multifamily starts plunged 20.8% to 290,000, while single-family starts fell 12.4% to a rate of 1.02 million. The continued imbalance between supply and demand is expected to keep home prices rising, according … [Read more…]
Average mortgage rates rose very slightly yesterday. I’m afraid it’s a sign that Wednesday’s moderate fall wasn’t necessarily the start of much happier times.
Earlier this morning, markets were signaling that mortgage rates today could barely budge. However, these early mini-trends frequently alter direction or speed as the hours pass.
Current mortgage and refinance rates
Find your lowest rate. Start here
Program
Mortgage Rate
APR*
Change
Conventional 30-year fixed
7.29%
7.34%
+0.03
Conventional 15-year fixed
6.744%
6.822%
+0.04
30-year fixed FHA
7.129%
7.179%
+0.21
5/1 ARM Conventional
6.682%
7.918%
-0.01
Conventional 20-year fixed
7.15%
7.207%
+0.07
Conventional 10-year fixed
6.607%
6.68%
+0.02
30-year fixed VA
7.28%
7.324%
+0.2
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 your mortgage rate today?
I reckon it’s likely to be some months before we begin to see consistently falling mortgage rates. The economy is currently too robust and inflation is too warm for a sustained downward trend. And there are few signs of that changing until the summer or fall — or perhaps even later.
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
LOCKif 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 are mostly compared with roughly the same time the business day before, so much of the movement will often have happened in the previous session. The numbers are:
The yield on 10-year Treasury notes ticked lower to 4.62 from 4.63%. (Good for mortgage rates.) More than any other market, mortgage rates typically tend to follow these particular Treasury bond yields
Major stock indexes were mixed this morning. (Neutral 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 $82.77 from $82.98 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 $2,398 from $2,393 an ounce. (Neutral for mortgage rates*.) It is generally better for rates when gold prices rise and worse when they fall. Because gold tends to rise when investors worry about the economy.
CNN Business Fear & Greed index — nudged down to 32 from 35 out of 100. (Good 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, post-pandemic upheavals, and war in Ukraine, 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 look likely to be unchanged or close to unchanged. However, be aware that “intraday swings” (when rates change speed or direction during the day) are a common feature right now.
Find your lowest rate. Start here
What’s driving mortgage rates today?
Today
There are no economic reports scheduled for release today. And the words of the sole senior Federal Reserve official with a speaking engagement, Chicago Fed President Austan Goolsbee, are unlikely to affect markets. His boss, Fed Chair Jerome Powell, laid out the central bank’s position on future cuts to general interest rates as recently as Tuesday.
Of course, mortgage rates can still move on days like today. But they’re generally driven by market sentiment or occasionally by important news that affects the economy.
Next week
Next Monday is much like today: zero economic reports on the schedule. Tuesday’s purchasing managers’ indexes (PMIs) could produce some movement in mortgage rates. But that’s typically limited and temporary, a description that applies to Wednesday’s durable goods orders data, too.
Things could warm up next Thursday when the first reading of gross domestic product (GDP) for the January-March quarter is due.
And next Friday should bring the March personal consumption expenditures (PCE) price index. That’s the Federal Reserve’s favorite gauge of inflation. So, it can certainly affect mortgage rates.
Don’t forget you can always learn more about what’s driving mortgage rates in the most recent weekend edition of this daily report. These provide a more detailed analysis of what’s happening. They are published each Saturday morning soon after 10 a.m. (ET) and include a preview of the following week.
Recent trends
According to Freddie Mac’s archives, the weekly all-time lowest rate for 30-year, fixed-rate mortgages was set on Jan. 7, 2021, when it stood at 2.65%. The weekly all-time high was 18.63% on Sep. 10, 1981.
Freddie’s Apr. 18 report put that same weekly average at 7.1%, up from the previous week’s 6.88%. But note that Freddie’s data are almost always out of date by the time it announces its weekly figures.
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 four quarters of 2024 (Q1/24, Q2/24 Q3/24 and Q4/24).
The numbers in the table below are for 30-year, fixed-rate mortgages. Fannie’s were updated on Mar. 19 and the MBA’s on Apr. 18.
Forecaster
Q1/24
Q2/24
Q3/24
Q4/24
Fannie Mae
6.7%
6.7%
6.6%
6.4%
MBA
6.8%
6.7%
6.6%
6.4%
Of course, given so many unknowables, both these forecasts might be even more speculative than usual. And their past record for accuracy hasn’t been wildly impressive.
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.
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?
Verify your new rate
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.
Verify your new rate. Start here
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.
Check your refinance rates today. Start here
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.
So, 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.
Indeed, 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.
Verify your new rate. Start here
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 as evidence of their financial circumstances. 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. And 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.
Time to make a move? Let us find the right mortgage for you
Current mortgage rates methodology
We receive current mortgage rates each day from a network of mortgage lenders that offer home purchase and refinance loans. Those mortgage rates shown here are based on sample borrower profiles that vary by loan type. See our full loan assumptions here.
It’s the season of new beginnings and fresh starts: Spring cleaning, the outdoors, weddings, gardening and… real estate.
But in a housing market marked by high mortgage rates, low housing inventory and steep home prices, we still haven’t seen a typical spring homebuying season.
Though mortgage application volume is higher than it was last fall when home loan rates peaked above 8%, it’s still 10% lower than it was last year.
As temperatures go up in 2024, experts anticipate a somewhat healthier spring market, with inventory and home listings growing. So far, however, it hasn’t been such a great kickoff: In April, the average rate for a 30-year fixed mortgage pushed back above 7% in response to hot inflation data.
But context is critical, according to Logan Mohtashami, lead analyst at HousingWire. “Last year was the all-time low in new listings data,” he said.
Here’s a look at how the spring market is shaping up and what buyers can do to navigate it successfully.
Why is spring the season to buy and sell a home?
There are several reasons behind the rush of home listings and sales in the springtime and early summer months, according to Jeb Smith, realtor and CNET Money Expert Review Board member.
Warmer weather: Better temperatures and more sunlight make it easier for buyers to go out, tour and inspect properties compared with the winter months.
Timing with academic calendar: Families start the buying process so they can be settled into a new home before the start of their child’s school year in the fall.
Greater inventory: With sellers motivated to sell due to an influx of motivated buyers, increased supply hits the market.
Favorable to buyers and sellers: Buyers know there will be more choices available to them, and sellers take advantage of demand to list their homes at higher prices.
Why is today’s spring market different?
Beyond seasonal trends, the housing market is highly sensitive to broader economic shifts. Over the past two years, high inflation and surging mortgage rates have done significant damage to affordability for the average homebuyer.
From May 2019 to May 2023, average mortgage rates increased by more than 2%, causing a roughly 25% drop in home sales, according to data from Redfin. Homeowners who are currently “locked in” with low home loan rates have less incentive to sell, which keeps prospective buyers “locked out.”
Meanwhile, many prospective buyers are priced out of the market. According to Zillow, the monthly mortgage payment on a typical US home has almost doubled since January 2020. The average income needed to afford a home is now more than $106,500 — an 80% increase over four years — while the typical US household earns around $81,000 each year.
High mortgage rates also negatively impact existing housing inventory, said Daryl Fairweather, chief economist at Redfin. Because most sellers are also buyers, homeowners would rather hold onto their sub-5% mortgage rates than take out a new home loan at a 7% rate.
This “rate-lock” scenario — with sellers reluctant to give up their existing mortgage — is starting to loosen, according to Orphe Divounguy, senior economist at Zillow Home Loans. Homeowners have accrued substantial equity over the last period and are more motivated to cash in on it. “Any who were waiting for rates to fall have likely given up,” Divounguy said.
Who has the upper hand this season? Buyers or sellers?
Shrinking housing supply over the past several years has given sellers the upper hand. After all, you can’t buy what’s not for sale.
“In most areas of the country, we still have more buyer demand than inventory, which is typically indicative of a seller’s market,” Smith said. Because of that imbalance, many housing markets continue to be very competitive with multiple offers on homes, he said.
Yet in some areas where supply has returned to pre-pandemic levels, buyers have more of the upper hand. Divounguy said that in markets where new construction has taken off and existing inventory has recovered, price growth is slower, giving buyers better traction in negotiations.
Generally speaking, however, housing supply is still too low. “Even with home sales still trending at record-low levels, we have too many people chasing too few homes,” Mohtashami said.
In a buyer’s market, there’s a surplus of homes for sale and not enough buyers. Buyers have more options and leverage to negotiate lower prices or other concessions from sellers.
In a seller’s market, demand for homes exceeds supply. With more buyers ready to make offers on fewer homes, sellers are at an advantage and asking prices are generally higher.
If mortgage rates were to drop significantly, we’d likely see a substantial uptick in buyer and seller activity. However, 6% mortgage rates are still several months away, keeping a lid on the number of new listings this spring.
At the same time, homeseekers who need to relocate — or those getting tired of waiting on the sidelines — are starting to adjust to the new normal. Many families can’t put their lives on hold forever, and another era of sub-3% mortgage rates isn’t on the horizon.
“Buyers seem to now be accepting this higher-rate environment and are getting back into the market,” said Melissa Cohn, regional vice president at William Raveis Mortgage. Many of them know they have the option to refinance to a lower rate when mortgage rates eventually come down, she said.
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How does low inventory affect home prices?
In February, new listings increased 14.8% from the prior year, the largest annual gain since May 2021, according to Redfin. Currently, there are about 25% more available homes for sale compared with 2023, adding up to around 100,000 extra single-family homes on the market, Smith said. But again, context is critical.
“Even with this increase, the number of homes for sale is still much lower than what we saw before the pandemic hit, indicating we’re not yet back to a ‘normal’ market,” Smith said.
With buyer demand outweighing existing supply, home prices continue to go up. In February, the median sale price was $412,778, which is 6.6% higher than the previous year.
Should you sit it out this homebuying season?
Ultimately, the right time to buy a house depends on your finances, goals and timeline. The housing market has its patterns and fluctuations, but that doesn’t mean it has to dictate what works for you.
If you find a home that meets your needs and aligns with your budget, go for it. You can always refinance to a lower mortgage rate later.
But if you decide to delay buying a house, you can take steps toward having a more solid foundation as a future homeowner. By waiting, you’re giving yourself time to save for a bigger down payment, improve your credit and be in an overall better position to purchase a house, even if it’s not for several spring seasons down the road.
Retirement at 65 has been a longstanding norm for U.S. workers, but older investors believe that not only is such an outcome unfeasible, but they’re likely to face more challenging retirements than their parents or grandparents.
This is according to recently released survey results from Nationwide, with a respondent pool that included 518 financial advisers and professionals, as well as 2,346 investors ages 18 and older with investable assets of $10,000 or more. The survey follows other ongoing research into the baby boomer generation as it approaches “Peak 65.”
The investors included a subset of 391 “pre-retirees“ between the ages of 55 and 65 who are not retired, along with subsets of 346 single women and 726 married women, Nationwide explained of its methodology.
Seven in 10 of the pre-retiree investors said that the norm of retirement at age 65 “doesn’t apply to them,” while 67% of this cohort also believe that their own retirement challenges will outweigh those of preceding generations.
Stress is changing the perceptions of retired life, especially for those who are closest to retirement, the results suggest.
“Four in 10 (41%) pre-retirees said they would continue working in retirement to supplement their income out of necessity, and more than a quarter (27%) plan to live frugally to fund their retirement goals,” the results explained. “What’s more, pre-retirees say their plans to retire have changed over the last 12 months, with 22% expecting to retire later than planned.”
Eric Henderson, president of Nationwide Annuity, said that previous generations who observed a “smooth transition” into retired life do not appear to be translating to the current generation making the same move.
“Today’s investors are having a tougher time picturing that for themselves as they grapple with inflation and concerns about running out of money in retirement,” Henderson said in a statement.
The result is that more pre-retirees are changing their spending habits and aiming to live more inexpensively. Forty-two percent of the surveyed pre-retiree cohort agreed with the idea that managing day-to-day expenses has grown more challenging due to rising costs of living, while 27% attributed inflation as the key reason they are saving less for retirement today.
Fifty-seven percent of respondents said that inflation “poses the most immediate challenge to their retirement portfolio over the next 12 months,” while 41% said they were avoiding unnecessary expenses like vacations and leisure shopping.
Confidence in the U.S. Social Security program has also fallen, the survey found.
“Lack of confidence in the viability of Social Security upon retirement (38%) is a significant factor influencing pre-retirees to rethink or redefine their retirement planning strategies,” the results explained. “Over two-fifths (43%) are not counting on Social Security benefits as much as previously expected, and more than a quarter (27%) expect to receive less in benefits than previously anticipated.”
The survey was conducted by The Harris Poll on behalf of Nationwide in January 2024.