You’ve paid rent year after year and what do you have to show for it? Zilch. Zero. Nothing.
If you’re starting to dream about building equity, now is a great time to make the leap. Interest rates are still low, and real estate prices haven’t started to spike yet. Before you apply to a lender, though, there are a few things you should know.
Applying won’t damage your credit
“If you are shopping around for a mortgage and worried that the inquiries will ding your credit score, don’t worry,” said Roman Shteyn, co-founder of Credit-Land.com. “The credit bureaus know that people may go to different providers to check interest rates especially for a big purchase like a house. Loan inquiries within 30 to 45 days of each other for the same thing are lumped together and treated as a single request, and your credit score should not be impacted.”
Your past matters to lenders
They will look at previous mortgages on your credit report to determine your creditworthiness
“We all know a foreclosure has a negative impact on your credit score,” says Shteyn “but many people don’t realize a short sale can be damaging as well. It can knock your score down 85 to 160 points depending on your score at the time and how it was reported to the credit bureau.” Occasionally, a lender will agree to report a short sale as paid which will not negatively affect a credit score. But this is rare.
A short sale is not as bad as a foreclosure, which will make it more difficult to get a loan. It will remain on your credit score for seven years, and lenders will see this black mark whenever you apply for credit during this period.
Lenders handle couples with different credit scores in a special way
If you’re applying for a mortgage loan as a couple, the mortgage lender will check both of your credit reports and credit scores. The bank reviews your debt, the length of your credit history and current credit activity.
Paying bills late and too much debt can negatively impact a mortgage approval, plus influence the mortgage rate. However, some couples believe that they’ll receive a low interest rate as long as one person has excellent credit — but this isn’t always the case.
Typically mortgage lenders use the lowest credit score to determine the mortgage rate. Therefore, if you have a 790 credit score and your partner has a 670 credit score, you’re not likely to receive the most favorable rate due to your partner’s less-than-perfect credit history.
To ensure the best rate, both of you need to maintain good credit before applying for a loan. This includes paying bills on time, paying off debt and checking your credit reports for errors.
For a lender, there’s nothing like responsibility
Make other loan and debt payments on time, especially over the months leading up to the filing of your mortgage application. Every 30-, 60- or 90-day delinquency on a loan or credit card is going to reduce the credit score the lender considers as part of the loan file. That score, in turn, will determine how good a loan you get — if you get one at all.
You need to be strategic about your personal finances
Consider paying off more debt and putting down a smaller amount at closing. This move leaves borrowers with larger mortgages, but it will allow them to replace non tax-deductible, high-interest rate debt (like credit card debt) with lower-rate mortgage debt that features deductible interest.
If you have a financial setback and need to miss a payment on your other debts, miss the credit card payment first, followed by the payment on any installment loan you might have and finally, the payment for an existing mortgage. That’s because credit scoring systems look at the performance of similar loans first when deciding what type of score to assign.
Before you apply, think about the future
If your next few years are full of big life changes and multiple new financial obligations, apply for a mortgage first. Numerous credit inquiries, such as new applications for credit cards, can hurt a borrower’s credit score, especially if they’re filed in the months prior to the home loan review process.
The value of your potential home can make or break the deal
Sometimes it’s not your fault that your mortgage application is denied. If your home isn’t worth enough, lenders might not approve your request for a mortgage. Say you agree to pay $200,000 for a home and are asking for a mortgage loan of $190,000. If an appraiser determines that the home is worth only $160,000, a mortgage lender might not grant you a loan, even if you are willing to pay the higher amount.
The 3 big don’ts
We can talk about the things you should do when applying for a mortgage all day long, but realistically, avoiding the big mistakes should be your first concern. Here are five things you should remember.
Don’t make any big purchases over the next couple of months. It makes less money available for the down payment and it might require you to get yet another loan.
Don’t upgrade too fast. Lenders consider what’s known in the industry as “payment shock” when approving loans. Somebody who goes from a relatively small monthly housing payment to a huge one either won’t qualify for a mortgage or will end up having to cover too much loan with too little money.
Don’t just get pre-qualified for a mortgage, get pre-approved. Home buyers must allow their lenders to pull credit reports, check debt-to-income ratios and perform other underwriting steps. But that puts a borrower much closer to obtaining a loan and locking in a rate and term.
After a push higher on Monday, stocks, bond yields, and mortgage rates are easing back a little on Tuesday. Market participants are still largely in a wait and see mode ahead of Wednesday’s key Consumer Price Index Report.
With inflation data remaining in the spotlight, that reading has the potential to send current mortgage rates one way or another. Read on for more details.
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Market Outlook 2.12.18 from Total Mortgage on Vimeo.
Where are mortgage rates going?
Rates down a little today
It was a strong start to the week on Monday with all of the major stock indexes moving higher. With long-term Treasury yields being sold off, we saw yields rise to multi-year highs.
Click here to get today’s latest mortgage rates (Jul. 16, 2023).
Of particular importance to mortgage rates is the yield on the 10-year Treasury note, which moved as high as 2.89% on Monday. That’s a big rise from where it was at the start of the year at 2.46%.
Mortgage rates typically move in the same direction as the 10-year yield, and as we saw in the most recent Freddie Mac Primary Mortgage Market Survey, the average rate on a 30-year fixed rate mortgage has moved up thirty three basis points since the start of the year.
The general consensus among market analysts is that bond yields and mortgage rates still have room left to run. How high they will rise in 2018 is an ongoing debate, but we have seen several calls for the 30-year fixed rate to hit 5% by the time 2019 rolls around.
That’s not something that will happen overnight, but we are still dealing with the threat of rising rates this week. Tomorrow, we will get the Consumer Price Index reading for January–a key inflation reading that financial market participants will certainly have their eye on.
We haven’t seen much uptick for CPI in recent months, but that only increases the potential for a big market reaction if we see some unexpected growth.
After all, one of the leading theories for last week’s stock market decline was the jump in average hourly earning in the monthly job report for January, signaling to investors that inflation was picking up.
So what would happen if CPI comes in higher? Well, it’s easy to imagine a similar scenario as last Monday with stocks falling and bond yields and mortgage rates surging.
It’s definitely a wait and see game, with no clear outcome readily visible. The CPI report will be released at 8:30am tomorrow morning and the market reaction, if there is one, will happen swiftly after the release.
Federal Reserve on track to raise rates in March
Cleveland Fed President Loretta Mester spoke this morning to the Chamber of Commerce in Dayton, Ohio, stating that she is not overly concerned about the U.S. stock market’s recent stumble. She said, “I expect the economy will work through this episode of market turbulence and I have not changed my outlook.”
That means that she’s still planning on raising the federal funds rate by about three-quarters of a point in 2018. Mester did throw in the caveat that she would have to readjust her outlook on monetary policy if the data starts to come in differently.
Overall, it still seems like the Fed is poised to raise the federal funds rate for the first time in 2018 at their March meeting next month.
Rate/Float Recommendation
Lock now to avoid risk of rising rates
Mortgage rates have been steadily rising throughout 2018. There is the definite risk that they will rise tomorrow when we get some key inflation data. If you want to avoid the risk of rising mortgage rates, your best bet is to lock in a rate now.
In the current rate environment, opting to float could mean that you’ll get a higher mortgage rate down the road. If that’s something you can stomach, then by all means do it, but just understand there is a clear risk involved.
Find out how to get the best rate possible with our in-depth video series.
Today’s economic data:
NFIB Small Business Optimism Index
The NFIB Small Business Optimism Index hit a 106.9 in January. That’s an increase from the prior month’s reading of 104.9.
Fedspeak
Loretta Mester at 8:30am
Get the GreenLight and close in 21 days*
Notable events this week:
Monday:
Tuesday:
NFIB Small Business Optimism Index
Fedspeak
Wednesday:
Consumer Price Index
Retail Sales
Atlanta Fed Business Inflation Expectations
Business Inventories
EIA Petroleum Status Report
Thursday:
Jobless Claims
Philadelphia Fed Business Outlook Survey
PPI-FD
Empire State Mfg Survey
Industrial Production
Housing Market Index
Friday:
Housing Starts
Import and Export Prices
Consumer Sentiment
*Terms and conditions apply.
Carter Wessman
Carter Wessman is originally from the charming town of Norfolk, Massachusetts. When he isn’t busy writing about mortgage related topics, you can find him playing table tennis, or jamming on his bass guitar.
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.
Britain’s biggest banks are on track to make billions more from rising interest rates this year – fuelling claims they are profiteering at the expense of savers.
Major lenders stand accused of not extending a series of recent Bank of England rate hikes to savings accounts while ramping up mortgage and other borrowing costs, leading to fatter profits.
City analysts expect NatWest, which was bailed out by the taxpayer during the financial crisis, to make almost £12 billion in net interest income – the difference between what they pay savers and charge borrowers. This is £2 billion more than last year.
Lloyds Banking Group, Britain’s biggest lender and owner of the Halifax brand, is set to scoop almost £14 billion, nearly £1 billion more than a year ago.
Inflation fight: Base rate has soared as the bank of England battles inflation but savers haven’t seen as big rises as borrowers
Both will report results later this month. The Mail on Sunday and This is Money recently revealed that the six biggest lenders made £44 billion last year in net interest income, which was £8 billion more than the previous year.
But the latest forecasts indicate it will be an even bigger bonanza this year as the cost of borrowing continues to soar, with interest rates now expected at peak at over six per cent.
It comes as ministers are braced for the latest inflation data. Figures this week are expected to show the pace of price rises slowed in June to around 8 per cent.
That would be still way above the Bank’s 2 per cent target – and puts Prime Minister Rishi Sunak’s promise to halve inflation by the end of this year in peril.
The Bank is poised to jack up rates again next month – from their current level of 5 per cent – as it tries to curb persistently high inflation, which is running at 8.7 per cent.
That will heap more misery on homeowners, with nearly a million of them facing an extra £500 a month in repayments as their cheaper fixed-rate deals end, the Bank reckons.
The typical cost of a two-year fixed rate mortgage has soared to 6.8 per cent from 3.8 per cent a year ago, according to financial experts Moneyfacts.
But the interest paid on instant access savings accounts has only increased to 2.6 per cent from 0.5 per cent in that time.
The growing gap has enabled banks to rake in bumper profits. Experts says banks’ profits are highly sensitive to changes in interest rates.
Barclays, for example, makes an extra £170 million for every quarter-point increase in the base rate, according to investment bank JP Morgan.
It has warned banks’ ‘super normal profitability’ raises the risk of the Government imposing a windfall tax.
MPs and regulators are investigating the profiteering claims while encouraging savers to shop around for better rates.
Bank of England governor Andrew Bailey last week urged lenders to pass on interest rate rises to savers, saying they were financially strong enough to compete and offer better deals.
‘The resilience of the banking system is not a constraint on banks managing their net interest margins, and therefore managing the rates they pay to savers and the rates they charge on mortgages,’ he said.
Chancellor of the Exchequer Jeremy Hunt has also backed calls for banks to offer better returns to customers.
But Harriett Baldwin, chairman of the House of Commons’ Treasury select committee, which is examining the lenders’ rates ruse, said: ‘While it is positive to see that some firms are responding to our continued pressure, the easy access rates offered to High Street banks continue to lag, and are significantly lower than the base rate.
‘Banks must now step up and start alerting customers where better products are available.’
Lenders, however, deny charging rip-off rates and say margins of around 3 per cent have only recently recovered to pre-pandemic levels.
There are also signs savings rates have improved after bank and building society bosses were recently called in to see the Financial Conduct Authority, the industry regulator.
But David Postings, chief executive of the UK Finance trade body, was accused of being ‘completely out of touch with reality’ by Labour MP and select committee member Angela Eagle after telling yesterday’s Daily Mail bank margins ‘were not egregious at all’.
If you’re like me, you’ve received lots of mailers from a bank called “Third Federal Savings & Loan,” promising a low rate mortgage with very few fees.
After maybe the 10th piece of mail from them came through my mailbox, I decided it was finally time to write a review. So here we go.
Third Federal Has Been Around Since 1938
Began during Great Depression in Cleveland, Ohio
Initially served immigrants from Poland and other Eastern European countries
Now operates in 25 states and DC, with branches in Florida and Ohio
They are a direct mortgage lender that offers purchase loans, refinances, and home equity products
First off, let’s talk a little history. Third Federal isn’t a newcomer like Better Mortgage or Rocket Mortgage.
They’ve been around since 1938, which if you’re counting, is nearly a century. That gives them some credibility, and if you ask, they’ll tell you that staying power can be attributed to conservative lending.
In other words, avoiding fads and questionable product choices like subprime or Alt-A in exchange for lasting relationships and more stability.
The company was started by Ben S. and Gerome Stefanski in Cleveland, Ohio during the Great Depression, using $50,000 in capital provided by members of the Slavic Village neighborhood.
It began by serving struggling immigrant families from Poland and other Eastern Europe nations who had settled in the area.
Over time, the business grew and thrived, and today they do business in 25 states, and run a branch network in the states of Florida and Ohio.
Where Third Federal Mortgage Operates
As noted, they do business in 25 states and the District of Columbia, but not all products are offered in all states. So pay close attention.
You can get a purchase loan or refinance in the following states: OH, FL, KY, NC, VA, MD, NJ, PA, IN, IL, GA, MO, TN.
And you can get just a refinance in these states: CO, NH, CA, NY, OR, MA, CT, DC, WA.
Additionally, home equity loans are available in: OH, FL, KY, CA, PA, NJ, VA and NC.
Lastly, bridge loans are available in all purchase markets mentioned above if you need to buy before you sell your existing home.
What Home Loan Programs Does Third Federal Offer?
You can view real rates and apply for a mortgage online
Or generate a free, true pre-approval that can even be locked in
They offer lots of interesting conventional loan products like Smart Rate ARMs and jumbo loans
But do not offer government loans or finance second homes or investment properties
While they don’t sound like a disruptor in the mortgage space, they do offer a similar digital experience along with interesting loan products.
If you want to apply for a home loan or equity line of credit, you can start the process online in minutes.
You can generate a pre-approval letter and even lock in your rate before you find a property via their prelock option.
The company specializes in conventional loans, meaning non-government stuff backed by Fannie Mae and Freddie Mac, along with jumbo loans on owner-occupied properties.
You won’t find FHA loans, VA loans, or USDA loans here, or mortgages for second homes and investment properties, but they do everything else, including home equity lines of credit.
They offer both fixed-rate mortgages and adjustable-rate mortgages, including lesser-known options like the 3/1 ARM and 10-year fixed mortgage.
Interestingly, their ARMs are tied to the Prime Rate, as opposed to say the LIBOR or some other index. Once the fixed period ends, they reset to Prime minus 1%.
They have two caps, including a periodic cap of 2%, meaning your rate could increase (or decrease) by up to two percentage points at the first adjustment.
And a lifetime cap of 6%, meaning the most the rate could increase during the life of the loan is six percentage points.
Their ARMs come in three different terms, including a standard 30-year term, 15-year term, and 10-year loan term. That’s pretty unique.
Additionally, they offer a discount on jumbo loans as opposed to charging more for them, which is typically the norm.
If you’re happy with your first mortgage, they also offer home equity lines of credit with no teaser or introductory rate.
They say it’s “always Prime minus 1.01%,” a rate they believe is 20% lower than most other lenders.
It comes with no closing costs and no prepayment penalty, and costs just $65 per year after being free the first year.
They also offer construction-to-perm loans and an end-loan mortgage product.
Third Federal Mortgage Rates
They openly advertise all their mortgage rates online
Rates offered with or without most closing costs (Low Cost option)
Their Smart Rate feature allows you to relock your rate whenever you want
Appear to be competitive with other lenders but always shop around
One thing I like about this bank is its transparency. They let you know about everything. And it’s no different when it comes to their mortgage rates.
They are advertised right on their website for all to see, without the need to apply or create an account.
You can see current rates for the 30-year fixed, 15-year fixed, 10-year fixed, 5/1 ARM, and 3/1 ARM.
Low Cost Mortgage Option – Pay Just $295 in Closing Costs!
Additionally, they show the “Low Cost” version of many of their loan programs, which requires just $295 in closing costs ($595 in NY).
They pay for everything other than pre-paid items like interest, taxes, and insurance, along with transfer taxes if applicable.
You aren’t on the hook for an application fee, underwriting fee, processing fee, appraisal, credit report, title insurance, recording, notary, and so on.
Nor do you need to pay a loan origination fee or mortgage points, unless you wish to pay discount points to obtain a lower-than-market rate.
These “Low Cost” options come with slightly higher interest rates to offset the lack of closing costs, and could be a good choice for someone who doesn’t plan to keep their mortgage long.
Their rates appear to be pretty competitive, and with low fees and no commissions paid to their loan officers, the APRs are similarly low.
One nice benefit is that they don’t charge extra for cash out refinances, so if you want to tap some equity, your interest rate won’t be higher as a result.
As always, compare their rates to other banks, credit unions, mortgage brokers, and so on to ensure you’re getting the best deal for your particular loan scenario.
Third Federal Smart Rate ARMs Feature Rate Relock Feature
Their ARMs feature a free Rate Relock option that allows you to fix your rate at any time
If your 3/1 ARM or 5/1 ARM is about to reset higher, you can relock for just $295
Fixed rate is then extended for three or five years, respectively
You can take advantage of this option as many times as you’d like during the loan term
They also offer a “Rate Relock” feature that allow you to relock your rate at any time if you take out one of their so-called “Smart Rate” adjustable-rate mortgages.
The process is apparently super simple and quick, and does not require an application or appraisal. However, I do believe they check your credit.
You just request the Rate Relock, pay a low $295 fee ($595 in NY), and your new interest rate will be relocked at current rates.
In the month following your request, the new interest rate will go into effect.
That way you don’t have to worry about your ARM exploding higher after the initial fixed period comes to an end.
It could be super beneficial if rates remain low or go down, as you could lower the interest rate on your mortgage without refinancing.
The company says with Rate Relock, “you’ll never have to refinance again!”
While true or not, it’s a neat little feature, just make sure the convenience isn’t built into a higher mortgage rate versus the competition.
Why Use Third Federal to Get a Mortgage?
They offer unique home loan programs you can’t find elsewhere
Purchase loans come with Lowest Rate Guarantee and On-Time Closing Guarantee
Standard rate lock period is 60 days as opposed to just 30
They service all the loans they close instead of selling them off to other companies
Assuming you live in a state where they do business and your property qualifies, Third Federal offers some really interesting loan options like ARMs with various loan terms.
Additionally, their mortgage rates appear to be pretty competitive, especially with the lack of most closing costs on their Low Cost option.
If you have a jumbo loan, your rate could be even lower, and all mortgages come with a standard 60-day rate lock as opposed to just 30 days.
Those purchasing a home with a Third Federal mortgage can take advantage of both their Lowest Rate Guarantee and On-Time Closing Guarantee.
And you can take out a mortgage up to 85% LTV without paying private mortgage insurance.
Also, they service 100% of the loans they originate, as opposed to selling them off to some unknown loan servicer you might not like.
Ultimately, they are probably a good choice for someone interested in taking out an ARM vs. a fixed mortgage.
You get added flexibility on the ARM with the Rate Relock feature, which could be really beneficial if mortgage rates continue to stay flat and/or low.
However, as mentioned, they do have some limitations when it comes to borrowing on all property types, and their fixed mortgages might not be as competitive as other banks.
Mortgage Passport Review
Recently, Third Federal launched a new online lending division known as “Mortgage Passport.”
They refer to the company as the coming together of high tech and human touch. In other words, same great service you’d get from a bank, but with the latest technology.
They pride themselves on their low rates, easy-to-use digital loan application, and their “smart” non-commissioned loan officers.
Mortgage Passport appears to offer refinances in the following states: CA, CO, CT, DC, GA, IL, IN, KY, MA, MD, MO, NC, NH, NJ, NY, OR, PA, TN, VA, and WA.
The Mortgage Passport division seems to be focused on refinances, and specifically cash out refinances that allow you to tap equity.
And they aren’t shy about showing off their mortgage rates, with daily rates prominently displayed on their website.
You can easily compare standard closing cost mortgages, no lender fee mortgages, and no closing cost mortgages side-by-side without having to log in or provide personal information.
From what I saw, their mortgage rates were very competitive, even the no-fee options. Note that no cost loans are not available in NY.
To get started, simply head to their website, click on “Apply Online” and you’ll be off to the races.
From there, a loan officer will reach out to review your application and collect a deposit (likely an appraisal fee) so your loan can be processed and underwritten.
While there aren’t a ton of Mortgage Passport reviews just yet, they do have a 4.9-star rating out of 5 on Bankrate from 8 reviews, with a 100% recommend rating.
And on their own website, a 4.8-rating and 100% recommend rating from five reviews. So it appears the feedback thus far is very positive.
If you’re looking for a digital mortgage process and a low mortgage rate on a refinance (with a variety of different closing cost options), Mortgage Passport could be a good choice
The chart below shows the number of active listings since 1982:
The people who told you demographics in the U.S. are awful and that we resemble Japan were drinking some powerful saki. For years, people said slowing U.S. population growth means we will become Japan, but I’ve been focused on demographics and how that will affect housing from 2020-2024. Concerning the housing economics demand curve, it’s always about the net people living and working.
In reality, housing economic modeling takes a lot of work, and some people instead choose marketing gimmicks to make a name for themselves. It’s very sexy to talk gloom and doom about the housing market, but sometimes that doesn’t end well. I have been highly skeptical of stock traders when they talk about housing economics.
And here is a case in point: New home sales came in Tuesday at a big beat of estimates, but the real story is one about supply and demand.
New home sales
From Census: New Home Sales Sales of new single‐family houses in March 2023 were at a seasonally adjusted annual rate of 683,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 9.6 percent (±15.2 percent)* above the revised February rate of 623,000, but is 3.4 percent (±12.7 percent)* below the March 2022 estimate of 707,000.
As we can see in the chart below, it’s not like the new home sales market is booming at all; we aren’t anywhere near the top of sales in 2005 or in 2020. However, what has happened is that the housing data has stabilized.
When did this all happen? The forward-looking housing data started to improve from Nov. 9, 2022, with purchase application data, and almost everyone ignored it. The thing is, builders have time to work off their backlog of homes because they’re efficient sellers — they can cut prices, lower mortgage rates and do what they need to do to sell their product, which is a commodity to them. They don’t have the same issues as an existing homeowner because they’re not living in the home they’re selling.
New Home Monthly Supply
For Sale Inventory and Months’ Supply, The seasonally‐adjusted estimate of new houses for sale at the end of March was 432,000. This represents a supply of 7.6 months at the current sales rate.
The builders are progressing here; their confidence improves as the monthly supply falls. Context is always crucial with all housing data, and we had a waterfall dive in many housing data lines and bounced from that deep dive.
However, the housing market is still not good enough to start issuing new housing permits. That’s when you will know housing is out of the recession, and when the builders can start building again. It’s that simple.
The data below is a significant improvement for builders, as housing completions are still rising while their monthly supply is falling.
I have a straightforward model for when the homebuilders will start issuing new permits with some kick and duration. My rule of thumb for anticipating builder behavior is based on the three-month supply average. This has nothing to do with the existing home sales market — this monthly supply data only applies to the new home sales market, and the current 7.6 months are too high for the builders to issue new permits with any natural steam.
When supply is 4.3 months and below, this is an excellent market for builders.
When supply is 4.4 to 6.4 months, this is an OK builder market. They will build as long as new home sales are growing.
When the supply is 6.5 months and above, the builders will pull back on construction.
So, as we can see below, the homebuilders are no longer dealing with spiking supply data but a slow-moving downtrend that still needs much work. However, there is a lot more to this the active listing story than meets the eye.
The 7.6 months of supply is broken down this way.
267,000 homes are under construction, still. 4.7 months of supply
94,000 homes still need to start construction. 1.7 months of supply
71,000 homes are completed for sale. 1.2 months of supply
No, I am not kidding you; the mass supply increase some people have been talking about is only 71,000. We are far from the peak of supply during the housing bubble crash nears, which was closer to 200,000.
All in all, Tuesday’s new home sales report is consistent with what we have seen in the new home sales data for many months now. The builders are simply taking advantage of the low total housing inventory by doing whatever it takes to move their product, and that is being helped by paying down the mortgage rate for their buyers. Imagine what the total housing market would look like if mortgage rates were at 5% today.
As part of the Housing Market Tracker, we look at seasonal inventory weekly, and hopefully, the seasonal inventory bottom has already happened, as I talk about here.
Regarding Wall Street’s take on the surprise in the new home sales sector, was it really a surprise? Someone had to be buying the builder stocks, right? The reality is that home sales crashed last year and that didn’t create the inventory that some housing experts were looking for last year and this year. This is where understanding how credit channels impact housing inventory would have helped.
Hopefully, my work during my time as a housing analyst for HousingWire has brought some light into this discussion, and this will be more in focus when the next recession hits. However, until then, the Housing Market Tracker data got ahead of this stabilization in new home sales data, and that shouldn’t have surprised Wall Street.
The average 30-year fixed-rate mortgage increased slightly to 2.80% for the week ending on July 29, halting a streak of weekly declines, according to mortgage rates data released Thursday by Freddie Mac‘s PMMS.
According to Sam Khater, chief economist at Freddie Mac, while there is some uncertainty about the Covid-19 Delta variant, the housing market is still enjoying record low rates.
“As the economy works to get back to its pre-pandemic self, and the fight against Covid-19 variants unfolds, owners and buyers continue to benefit from some of the lowest mortgage rates of all-time,” said Khater.
The 15-year fixed-rate mortgage decreased two basis points from last week, averaging 2.10% for the week ending on July 29.
Mortgage rates have rarely exceeded 3% this year, despite predictions that 2021 would bring a return to higher levels. Economists and investors are closely monitoring any indication from the Federal Reserve that it may begin tapering of mortgage backed securities and bond purchases.
How fine-tuning MSR valuations can help lenders improve decision-making
As rates change and the market shifts to a more purchase-driven origination environment, lenders need to carefully monitor margins and profitability. If we’ve learned anything in the past year, it’s that operational flexibility and accurate servicing valuation are key to lending profitability.
Presented by: Black Knight
So far, the Federal Reserve has not indicated it will change its accommodative stance until substantial further progress is made in the labor market.
At a press conference following the Federal Open Market Committee meeting this week, Federal Reserve Chairman Jerome Powell said there was some “ground to cover” in the labor market before tapering its $120 billion in monthly asset purchases.
Since March 2020, the Fed’s asset purchases have been split between $80 billion of U.S. Treasury bonds and $40 billion of mortgage backed securities each month, which keeps the cost of long-term borrowing low. A year ago at this time, the 30-year fixed-rate mortgage averaged 2.99%.
Despite the low cost of borrowing, the housing market is showing signs of sluggishness.
Ten-year Treasury yields decreased sharply last week, according to a report from the Mortgage Bankers Association. Investors are increasingly concerned about the rise in Delta variant cases, and what its economic impact will be, according to Joel Kan, MBA’s associate vice president of economic and industry forecasting.
That led to the 30-year fixed mortgage rate declining to its lowest level since February, the trade association reported. 30-year fixed-rate mortgages with conforming loan balances ($548,250 or less) decreased to 3.01% from 3.11% for the week ending in July 23.
The 15-year mortgage rate also fell to a record low last seen in 1990, declining 10 basis points to 2.36. Those ultra-low rates naturally resulted in a sharp uptick in refinancing activity.
“With over 95% of refinance applications for fixed rate mortgages, borrowers are looking to secure a lower rate for the life of their loan,” Kan said Wednesday.
But the low rates made little difference in the purchase market, which is still grappling with record home prices. The purchase index decreased to for the second week in a row to its lowest level since May 2020, continuing its third month of year-over-year declines.
The purchase index was down 1% from the week prior, and down 18% compared with last year.
The Federal Housing Finance Agency also reported that May home prices were 18% higher than a year ago. The Mountain Region, which includes Arizona, Colorado, Idaho, Montana, Nevada, New Mexico, Utah and Wyoming saw the sharpest yearly increases. Home prices in those states grew 23.2%, per the FHFA report.
“That continues a seven-month trend of unprecedented home-price growth,” Kan said. “Potential buyers continue to be put off by extremely high home prices and increased competition.”
ortgage interest rates are at the highest levels that Britain has seen for years, since August 2008 and the financial crisis.
The average two-year mortgage rates hit a 15-year high of 6.66% today, surpassing the peak hit in the wake of last year’s mini-budget.
rate on a two-year deal is up from 6.63% yesterday, according to data from Moneyfacts.
Additionally, lenders, brokers and property experts are warning high mortgage rates could keep rising.
Last month, the Bank of England raised the base rate to 5 per cent last month – the most it has been for 15 years – which caused concern across the country.
Analysts have warned that many households will feel the “intense pain” of crippling costs. The increase has led to the average cost of fixed-term mortgages rising to levels Brits had not seen since November 2022, when then-Prime Minister Liz Truss tried to push through her tax cuts, which spooked the markets and caused rates to rise.
Labour and said that, not including the latest hikes, Brits were already paying much more than their neighbours. It said a UK mortgage for a typical household costs £2,000 more a year than in France.
The European Central Bank showed that interest rates on average were 2.91 per cent in France, 3.61 per cent in Belgium and 3.89 per cent in Germany.
Labour said this means that for a £200,000 loan paid back over 25 years, annual UK mortgage payments are around £1,100 higher than in Belgium and Ireland, and about £800 more than in Germany and the Netherlands.
Chancellor Jeremy Hunt last week agreed measures with banks to help abate the panic being felt by homeowners, including giving people struggling with repayments a 12-month grace period before repossessions begin.
In recent weeks, mortgage lenders have increased rates and withdrawn offers rapidly, raising expenses for homeowners looking for new agreements.
Since the majority of households have fixed rate agreements, this won’t instantly have an impact on everyone. However, as these agreements end, homeowners will face an increase in borrowing prices of an average of £2,900, predicted think tank the Resolution Foundation.
Between July and September, over 400,000 people will see their current fixed packages expire. Many will have to plan their finances to accommodate monthly repayments that are several hundred pounds more expensive than they are used to.
Why are mortgage rates rising?
The Bank of England base rate is the key factor in setting mortgage rates.
Recent high inflation and pay increases indicate that interest rates will probably rise more than anticipated, increasing borrowing expenses.
How are mortgage rates linked to interest rates?
Only some mortgage rates are affected by interest rates. How much these will affect your mortgage depends on what type you have. Take a look at our guide to mortgage types for first-time buyers for more information.
If you are on a fixed-rate mortgage, you don’t need to be immediately concerned about an increase in interest rates. Regardless of whether interest rates increase or decrease over the agreed-upon time frame, whether that’s two years, three years, five years or more, your mortgage rate and monthly payments will not change.
You will, however, automatically switch to your mortgage lender’s standard variable rate (SVR), which is determined by the Bank of England base rate, after your fixed term expires. You’ll probably pay a higher interest rate on your mortgage if this has increased and your monthly payments will go up.
Discounted, tracker or SVR mortgages are usually affected by interest rates, therefore, if you are on one of these mortgages you can expect increases.
What is the next interest rate decision?
The Bank of England’s Monetary Policy Committee will next convene on Thursday, August 3, 2023, to determine the appropriate level for interest rates.
The current bank rate is 5 per cent. It is expected that this will increase even further in 2023.
When might mortgage rates go down?
Mortgage rates decreased after reaching their peak in the autumn of last year, but due to inflation that has remained close to a record high, they have recently increased once again.
As a result, some experts now predict that the Bank of England will keep raising interest rates in 2023, and several lenders such as Natwest are preparing for this by raising mortgage rates.
In a sign that even higher rates could be on the way, the number of products on the market fell by 300 in the space of a day, to the lowest since February.
Top lenders such as Halifax, Nationwide and NatWest have all repeatedly pulled mortgages from the market this year in order to reprice them at higher rates.
Today, representatives from some of the UK’s top banks and building societies said the Bank of England’s base rate was likely to keep rising for the rest of the year, meaning little sign of a let-up for mortgage holders in the short term.
Henry Jordan, home commercial director at Nationwide said: “The market-implied view is that the base rate is to rise to 6.5% and then they might be reduced to about 4% over the next couple of years.”
What is the government doing about it?
Former Bank of England deputy governor Sir Charlie Bean said earlier this month that it would be “risky” for the government to intervene in order to protect mortgage holders from increasing interest rates.
Instead of discussing new ways to help, Rishi Sunak pointed to existing support for first-time buyers that has been introduced to help get them on the property ladder.
The prime minister said: “There is also support available for people – we have the mortgage guarantee scheme for first-time buyers, we have the support for mortgage interest scheme to help people as well. That’s why one of my first priorities is to halve inflation.”
The best person to speak to about your mortgage is your lender or a mortgage broker to find out the rates at which you can remortgage.
Here we go with another week. We’re seeing some positive results in the stock market today, while Treasury yields remain mostly flat, keeping mortgage rates steady.
It could be a busy week, though, with several important inflation reports out that could impact the direction of mortgage rates. If you’re thinking about a purchase or refinance, we believe it’s most likely that your best option is to lock in a rate soon. Read on for more details.
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Market Outlook 2.12.18 from Total Mortgage on Vimeo.
Where are mortgage rates going?
Treasury yields flat to start the week – inflation data in focus
After a brutal week last week, all of the major stock market indexes are on the rise. There’s no significant economic data out today, but President Trump is expected to unveil a major, $200 billion infrastructure spending plan.
Click here to get today’s latest mortgage rates (Jul. 15, 2023).
His excitement over the matter was reflected in a tweet his sent out this morning stating, “This will be a big week for Infrastructure.” Typically, spending plans like this are a boon for stocks and put upward pressure on Treasury yields.
If we check in with the yield on the 10-year Treasury note (the best market indicator of where mortgage rates are going), we can see that it’s at about 2.85%. That’s basically unchanged from where it was at the close of trading on Friday afternoon.
In early trading on Monday we did see the 10-year yield move up to a four-year high of 2.89%, but it has since retreated back down to its current position.
Mortgage rates have a tendency to follow in the footsteps of the 10-year yield, so rates are moving sideways as we kick off the week. Looking ahead to the rest of the week, there are a number of opportunities for rates to adjust.
Inflation has been a hot topic, and one of the cited culprits in last week’s stock market decline, so it will be interesting to check in with the multiple inflation reports out this week and see what the numbers say.
First up, we’ll get three different reports on Wednesday: the Consumer Price Index, Retail Sales, and the Atlanta Fed Business Inflation Expectations. CPI and Retail Sales will get most of the attention, and they could certainly create a stir if they show inflation higher than levels that analysts expect.
Then on Thursday we’ll get another key inflation reading with the Producer Prices Index. On top of these inflation readings, we’ll also get several other economic reports out this week, including the Industrial Production report for January, and the Consumer Sentiment reading for February.
Rate/Float Recommendation
Lock now before rates move higher
Mortgage rates have steadily risen throughout 2018, and there are no signs that they will stop doing so anytime soon.
Already, we’ve seen the average rate on a 30-year fixed rate mortgage rise thirty three basis points (one basis point = 0.01) since the start of the year in the Freddie Mac Primary Mortgage Market Survey.
If you’re considering buying a home or refinancing your current mortgage, we strongly recommend that you lock in a mortgage rate sooner rather than later in order to try and get the best rate possible. It only takes a couple minutes online or a quick phone call to one of our mortgage specialists to get started.
Find out how to get the best rate possible with our in-depth video series.
Today’s economic data:
Nothing
There are no significant economic reports out today.
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Notable events this week:
Monday:
Tuesday:
NFIB Small Business Optimism Index
Fedspeak
Wednesday:
Consumer Price Index
Retail Sales
Atlanta Fed Business Inflation Expectations
Business Inventories
EIA Petroleum Status Report
Thursday:
Jobless Claims
Philadelphia Fed Business Outlook Survey
PPI-FD
Empire State Mfg Survey
Industrial Production
Housing Market Index
Friday:
Housing Starts
Import and Export Prices
Consumer Sentiment
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Carter Wessman
Carter Wessman is originally from the charming town of Norfolk, Massachusetts. When he isn’t busy writing about mortgage related topics, you can find him playing table tennis, or jamming on his bass guitar.
Mortgage applications fell 1.7% in the week ending July 30, according to the latest report from the Mortgage Bankers Association. That’s despite the 30-year fixed rate falling to its lowest level in roughly six months.
It’s an about-face from the prior week, in which applications increased 5.7% on the strength of descending mortgage rates.
Mike Fratantoni, MBA’s senior vice president and chief economist, said this past week’s drop in mortgage applications can be attributed to the market’s assessment of the latest COVID-19 delta variant.
“Thirty-year mortgage rates dropped below 3% in our survey for the first time since February, presenting an opportunity for many homeowners who have not yet refinanced to lower their rate and payments,” he said. “Refinance application volume slightly decreased following an 11% jump last week, and purchase application volume decreased again, reflecting the ongoing lack of inventory that continues to drive rapid home-price appreciation across the country.”
The refinance share of activity of total mortgage applications increased slightly to 67.6% from 67.5% the previous week. On an unadjusted basis, the market composite index decreased 2% compared with the previous week (when it increased 6%). The seasonally adjusted purchase index decreased as well, down 2% from the previous week.
How mid-year market shifts are impacting originators
The greater need for cash-out refinances drives originators to prepare with diverse product offerings. Additionally, originators will now need to have a way to qualify self-employed borrowers who may need to rely on bank statements to qualify for a mortgage.
Presented by: FGMC
The FHA share of total mortgage applications remained unchanged at 9%, and the VA share of total mortgage applications increased to 9.9% from 9.8%.
Here is a more detailed breakdown of this week’s mortgage applications data:
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($548,250 or less) decreased to 2.97% from 3.01% — the first time since February that 30-year rates sank below 3%
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $548,250) increased to 3.12% from 3.11%
The average contract interest rate for 30-year fixed-rate mortgages increased to 3.08% from 3.03%
The average contract interest rate for 15-year fixed-rate mortgages decreased to 2.33%, the lowest level in the history of the survey, from 2.36%
The average contract interest rate for 5/1 ARMs increased to 2.93% from 2.81%, with points decreasing to 0.20 (including the origination fee) from 0.23 for 80% LTV loans