Home buyers taking on record-high monthly payments also lost out on additional nearly $200 billion in equity because of soaring mortgage rates, according to Black Knight.
Borrowers in July paid an average monthly principal and interest payment of $2,306 under a 30-year fixed-rate loan, the firm said Wednesday in its July Mortgage Monitor report. It took 38.3% of the median household income to pay the monthly P&I for an average-priced home, the highest share since 1984.
“We’ve been talking about affordability for quite some time now, but this puts the situation in stark relief,” said Andy Walden, vice president of enterprise research strategy at Black Knight, in a press release. The company is already identifying itself as an Intercontinental Exchange company after their heavily scrutinized merger recently closed.
For comparison, the 30-year conforming rate was 13.2% in December 1984, Black Knight said, showing how home price growth has outpaced income growth. Mortgage rates today sit at over 7%.
A return to a 25-year average affordability level would require either home prices falling around 27%, rates dropping by more than 4%, or 60% growth in median household income, Black Knight said. The average purchase price for rate locks through the first three weeks of August was $453,000, according to the firm.
Adding to the pain, 23% of July purchase originations carried monthly P&I of $3,000 or more. Only 5% of borrowers paid $3,000 or more monthly in 2021. Black Knight’s figures don’t include the average $550 monthly payment for taxes and insurance, with homeowner’s coverage itself also facing financial headwinds.
Escalating mortgage rates have decimated the refinance market, but also the home equity line of credit opportunity for homeowners. Borrower equity withdrawals have fallen 55% in the past two years, from 0.92% of mortgage holders tapping equity in 2020-2021 to just 0.4% in the past three quarters, Black Knight said.
“In essence, over the last 15 months, there’s been nearly $200B less equity withdrawn – and reinjected into the broader economy – than might otherwise have been, due in large part to elevated interest rates,” Walden said.
HELOCs, which rose and fell in popularity in the past 12 months, today tout rates above 8.5%, the firm found. Refis meanwhile only accounted for 14% of lock activity at the beginning of August. The originations reached record-lows earlier this year and account for just 30% of total application volume, the Mortgage Bankers Association said Wednesday.
Borrowers continue to pay their bills on time with a low 3.21% delinquency rate, although 30 day and 60 day delinquencies rose slightly, the report said. Cure rates are also declining from spring peaks, but remain up 7% year-over-year.
Despite the rise in late payments, foreclosure starts fell 6% in July to 26,000. Prepayments also fell 12.2% in July, Black Knight said. The number of homes for sale remains muted, although the cost of homebuying has lifted some inventory pressure.
“Slow market speeds mean there is currently a 3.2 month supply of houses on the market, the highest that metric has been since mid-2020,” the report said. “But not for the reasons you would like to see.”
The average U.S. mortgage rate for a 30-year fixed loan fell to 2.8% this week, another record low, Freddie Mac said in a report on Thursday. The rate fell one basis points from the week prior and is now six basis points lower than the original all-time low set in mid-September.
The average fixed rate for a 15-year mortgage was 2.33%, falling from last week’s 2.35%.
After this week’s dip, there have now been 13 consecutive weeks when average mortgage rates have been below 3%, and rates have broken records 11 times this year.
“Mortgage rates remain very low, providing homeowners who have not already taken advantage of this environment ample opportunity to do so,” said Sam Khater, Freddie Mac’s chief economist. “Mortgage rates today are on average more than a full percentage point lower than rates over the last five years.”
In March, in an effort to buffer the economic blows from the shutdown, Federal Reserve Chairman Jerome Powell announced the Fed would start buying bonds to prevent a credit crunch and make borrowing cheaper. According to Fed data, the central bank has bought over $1 trillion in bonds backed by home loans since then.
While purchase loans are seeing record-low rates, the adverse market fee imposed on refinance loans by the FHFA in August make record lows for those loans unlikely.
During this week’s Mortgage Bankers Association annual event, the heads of Fannie Mae and Freddie Mac discussed the adverse market fee.
“As you know, safety and soundness is one, two, and three for us,” said Fannie Mae CEO Hugh Frater. “And for us to play our role in all markets, good and bad, markets small and large, we have to do it safely and soundly with long-term risk management in mind. And that’s the rationale for this change, as the GSEs are shouldering significant risks associated with the pandemic — as the principal risk taker, we have to price that risk appropriately.”
He added that while the housing market has demonstrated real resiliency, “many millions of borrowers are under stress, there’s still significant risk caused by economic uncertainty both in the near term and the longer term. And we’re required by law and regulation to be compensated for these risks and these costs.”
Freddie Mac CEO David Brickman struck a similar tone, saying that the GSEs have provided “extraordinary support” to the market.
“Costs have changed, risks have changed. What we put in place is an appropriate and prudent response to that change in the external environment for us to support struggling homeowners.”
They both noted that with interest rates still low, borrowers will realize savings, even with the 50 basis point refinance fee factored in. “But obviously, anybody who’s refinancing their mortgage at a lower rate is already beginning to save in terms of their mortgage payments, this only means they save just a little bit less than they would have otherwise,” said Brickman.
The 10-year yield closed today above my key level of 4.25%: Does that mean mortgage rates will hit 8%? To understand what’s happening, here’s how I look at the bond market and mortgage rates in my forecast for 2023.
In my 2023 forecast, the range on the 10-year yield was between 3.21%-4.25%, emphasizing that the bond yields can go lower than 3.21% only if the labor market breaks — which would require jobless claims to go over 323,000 on a four-week moving average.
That 10-year yield channel equates to 5.75%- 7.25% mortgage rates. And since the labor market isn’t breaking and the economy is doing well, mortgage rates are at the higher end of my range for this year. In fact, mortgage rates today were as high as they have been since December of 2000.
The big surprise in 2023 has been that the spreads with mortgage rates got worse, not better — all due to the banking crisis.
As you can see in the chart below, spreads were getting better, then the banking crisis hit and they got worse. This new variable is our 2023 reality until the Federal Reserve cries uncle.
Now let’s look at the 10-year yield: We closed today at 4.28%. For intraday action, I wanted to see if we could reach the highest level of last year at 4.34%. We didn’t, and in fact, yields headed lower toward the end of the day from the high peaks. For now, keep an eye out for that 4.34% level because breaking above that could cause more short-term bond selling.
As we can see below with a longer timeline chart, the 10-year yield has stayed in my range this year for 99.9% of the time. Considering where the economic data has been recently, it makes sense that we are at the higher end of the range because there is no recession in the data lines currently.
The critical time was early this year when it looked like the bond market wanted to go lower due to the banking crisis, but my Gandalf line (the red line below) held. I believe as long as the economy isn’t breaking, the 10-year yield shouldn’t go under 3.37% — and the chart below shows that line has held up eight times.
I started forecasting 10-year yield ranges and mortgage rates in the previous expansion: It was a very boring channel. Every year starting from 2015, it was the same forecast; the 10-year yield would be between 1.60%-3% which meant mortgage rates between 3.50%-4.75%, roughly.
As the chart below shows, before the COVID-19 recession, bond yields mostly stayed in that range, although there were times between 2015-2020 when they broke below 1.60% and over 3%. Currently, we are slightly above 4.25%.
When COVID-19 hit, I had a 10-year yield range for the recession at -0.21%-0.62. My COVID-19 recovery model began on April 7, 2020, as the 10-year yield was above 0.62% on that day.
In 2021, even though I was calling for higher mortgage rates because home prices could explode higher, the 10-year yield forecast was 0.62%-1.94% with an emphasis on creating a range between 1.33%-1.60%. That happened and we spent a good amount of time there in 2021.
In 2022, my 10-year yield call peaked at 1.94%, but I said that if global bond yields rose, we could hit 2.42%. March of 2022 brought a Fed pivot and the Russian invasion of Ukraine and we were off to the races with bond yields getting as high as 4.33% intraday in 2022.
So will mortgage rates go to 8%?
The inflation growth rate has been falling, but my bond yields range for 2023 was based on the economic data staying firm, meaning if economic data gets better, yields should be at the higher end. This week’s economics data, retail sales, and industrial production data beat estimates and the Atlanta GDP data is at 5.8%. The economic data hasn’t just stayed firm — it’s gotten better so bond yields are now above the range.
We also have to consider the Federal Reserve. The Fed now believes its policy is restrictive, which wasn’t case last year, so this is a reason why they’re not talking about more aggressive rate hikes.
How much higher can bond yields and mortgage rates go before the Fed starts talking about it? Hopefully, this chart below gives you an idea, because if the inflation growth rate cools even more, the Fed might step in to cut rates or stop their balance sheet reduction, which is another form of tightening policy.
So, can mortgage rates hit 8%?
Yes, they can, but it would require the economic data to stay firm. Short-term, as long as the economy outperforms, 8% is in the works. However, you can see the limits of mortgage rates now because the Federal Reserve has told us they believe their policy stance is restrictive. They don’t want to push the lever too much because one of their goals is to keep the Fed funds rate higher for longer.
The one thing that can change the Fed’s mindset is the labor market breaking, but for now they don’t have to worry about that.
Our experts answer readers’ home-buying questions and write unbiased product reviews (here’s how we assess mortgages). In some cases, we receive a commission from our partners; however, our opinions are our own.
Mortgage rates climbed throughout the first half of July, with average 30-year mortgage rates nearing 7%. But they’re ending the month a tad lower, and they could start trending down more substantially throughout the second half of this year.
Inflation has been slowing this year, and it should continue to decelerate as the economy cools in the coming months. This will take some of the upward pressure off of mortgage rates and allow them to fall somewhat.
The Mortgage Bankers Association’s latest forecast predicts that 30-year rates will drop to 5.9% by the end of the year, and will trend down even further in 2024 and 2025.
Lower mortgage rates will provide some affordability to potential homebuyers who have been waiting to enter the market. If you’re currently waiting for rates to drop before you start shopping for homes, you should have an opportunity to jump into the market later this year.
Mortgage Rates Today
Mortgage type
Average rate today
This information has been provided by
Zillow. See more
mortgage rates on Zillow
Real Estate on Zillow
Mortgage Refinance Rates Today
Mortgage type
Average rate today
This information has been provided by
Zillow. See more
mortgage rates on Zillow
Real Estate on Zillow
Mortgage Calculator
Use our free mortgage calculator to see how today’s mortgage rates will affect your monthly and long-term payments.
Mortgage Calculator
$1,161 Your estimated monthly payment
Total paid$418,177
Principal paid$275,520
Interest paid$42,657
Paying a 25% higher down payment would save you $8,916.08 on interest charges
Lowering the interest rate by 1% would save you $51,562.03
Paying an additional $500 each month would reduce the loan length by 146 months
By plugging in different term lengths and interest rates, you’ll see how your monthly payment could change.
30-Year Fixed Mortgage Rates
The average 30-year fixed mortgage rate is currently 6.81%, according to Freddie Mac. This is an 3-basis-point increase from the week before.
The 30-year fixed-rate mortgage is the most common type of home loan. With this type of mortgage, you’ll pay back what you borrowed over 30 years, and your interest rate won’t change for the life of the loan.
The lengthy 30-year term allows you to spread out your payments over a long period of time, meaning you can keep your monthly payments lower and more manageable. The trade-off is that you’ll have a higher rate than you would with shorter terms or adjustable rates.
15-Year Fixed Mortgage Rates
The average 15-year fixed mortgage rate is 6.11% right now, according to Freddie Mac data. This is a 5-basis-point increase from the previous week.
If you want the predictability that comes with a fixed rate but are looking to spend less on interest over the life of your loan, a 15-year fixed-rate mortgage might be a good fit for you. Because these terms are shorter and have lower rates than 30-year fixed-rate mortgages, you could potentially save tens of thousands of dollars in interest. However, you’ll have a higher monthly payment than you would with a longer term.
Are Mortgage Rates Going Up?
Mortgage rates started ticking up from historic lows in the second half of 2021 and increased significantly in 2022. But mortgage rates are expected to trend down this year.
In the last 12 months, the Consumer Price Index rose by 3%. This is a dramatic slowdown compared to recent months, and a sign that mortgage rates will likely start falling soon.
For homeowners looking to leverage their home’s value to cover a big purchase — such as a home renovation — a home equity line of credit (HELOC) may be a good option while we wait for mortgage rates to ease. Check out some of our best HELOC lenders to start your search for the right loan for you.
A HELOC is a line of credit that lets you borrow against the equity in your home. It works similarly to a credit card in that you borrow what you need rather than getting the full amount you’re borrowing in a lump sum. It also lets you tap into the money you have in your home without replacing your entire mortgage, like you’d do with a cash-out refinance.
Current HELOC rates are relatively low compared to other loan options, including credit cards and personal loans.
How Do Fed Rate Hikes Affect Mortgages?
The Fed has been increasing the federal funds rate to try to slow economic growth and get inflation under control.
Mortgage rates aren’t directly impacted by changes to the federal funds rate, but they often trend up or down ahead of Fed policy moves. This is because mortgage rates change based on investor demand for mortgage-backed securities, and this demand is often impacted by how investors expect Fed hikes to affect the broader economy.
As inflation comes down, mortgage rates should, too. But the Fed has indicated that it’s watching for sustained signs of slowing inflation, and it’s not going to lower rates again any time soon.
The monthly jobs report for December fell a little short of what was expected, so that took some upward pressure off of mortgage rates today.
We still think, however, that mortgage rates will continue to rise over the coming weeks and months. If you’re thinking of a purchase or refinance, you should try to act soon. Read on for more details.
[embedded content]
Market Recap 1.5.18 from Total Mortgage on Vimeo.
Where are mortgage rates going?
Rates flat after soft jobs report
Well, we made it to the first Friday of the month and that means the monthly jobs report got released. According to the Bureau of Labor Statistics, 148,000 private sector jobs were added in December.
Click here to get today’s latest mortgage rates (Jul. 31, 2023).
That’s well below the 191,000 that analysts had expected, but the report isn’t a total disappointment, with the unemployment rate staying at 4.1%, and average hourly earnings increasing by 0.3%.
In the end, it’s kind of a wash with the good and bad adding up to a big nothing-burger in the markets. The yield on the 10-year Treasury note (the best market indicator of where mortgage rates are going) is up a little over one basis point right now.
Mortgage rates typically move in the same direction as the 10-year yield, so rates are flat to ever so slightly higher as we approach the weekend.
Rate/Float Recommendation
Lock now while rates are low
Today’s monthly jobs report showed enough strength to push Fed officials into raising rates at upcoming FOMC meetings. Therefore, our outlook remains for mortgage rates to rise over the coming months.
It only makes sense then, that anyone looking to buy a home or refinance should try to lock in a rate sooner rather than later.
Click here to head to our Mortgage Builder and figure out how much you could save.
Today’s economic data:
Employment Situation
The monthly jobs report for December showed 148,000 jobs were added. The unemployment rate remained unchanged at 4.1%.
International Trade
The nation’s trade deficit widened to $50.5 billion in November.
Factory Orders
Factory orders for November rose 1.3%.
ISM Non-Mfg Index
The composite index for December came in at a 55.9. That’s a little lower than expectations.
Fedspeak
Cleveland Fed President Loretta Mester at 12:30pm.
Get the GreenLight and close in 21 days*
Notable events this week:
Monday:
Markets Closed: New Year’s Day
Tuesday:
PMI Manufacturing Index
Wednesday:
ISM Mfg Index
Construction Spending
FOMC Minutes
Thursday:
ADP Employment Report
Jobless Claims
PMI Services Index
EIA Petroleum Status Report
Fedspeak
Friday:
Employment Situation
International Trade
Factory Orders
ISM Non-Mfg Index
Fedspeak
*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.
The yield on the 10-year Treasury note surpassed a notable marker for investors today. As a result, we’re seeing some upward pressure on mortgage rates today.
If you’ve been considering getting a refinance or purchasing a home, we strongly recommend that you take action now in order to try and get the best rate. Read on for more details.
[embedded content]
Market Outlook 1.8.17 from Total Mortgage on Vimeo.
Where are mortgage rates going?
Treasury yields move higher
We’ve got some overseas news that’s affecting the domestic bond market today.
The Bank of Japan announced that they are reducing their bond buying program, which investors anticipate as a first step in a new direction for the BOJ. With less demand for bonds, yields are rising.
The yield on the 10-year Treasury note (the best market indicator of where mortgage rates are going), has now crept up almost five basis points on the day, bringing it to 2.52%. This is the first time that its moved over 2.50% since March.
Mortgage rates typically move in the same direction as the 10-year yield, so we’re seeing some upward pressure on rates today. The way things are going, it seems as though this trend could continue into the weekend.
Click here to get today’s latest mortgage rates (Jul. 29, 2023).
Federal Reserve
It’s a big week for the Federal Reserve with a handful of speaking engagements from Fed officials. Yesterday, we started off the week hearing from three different Fed Bank Presidents.
Boston Fed President Eric Rosengren made some interesting inflation comments, stating that “My own view is that we should be focused on an inflation range, with the potential to move within the range as the optimal inflation rate changes.”
This is in contrast to the current policy, in which the Fed has a set target of 2.00% inflation.
We also heard from the Atlanta Fed President Raphael Bostic yesterday who said that the Fed might actually only need to increase the federal funds rate two or fewer times in 2018. That goes against the current belief that the Fed will hike four or more times this year.
Rate/Float Recommendation
Lock now while rates are low
Mortgage rates moving higher, which is something we’ve been anticipating for some time. We expect them to continue rising over the coming weeks and moving, so it makes sense for most borrowers to try to lock in a rate now.
Getting a free rate quote is simple and fast with our Mortgage Builder. If you don’t feel like filling out a form, you can always call one of our loan specialists for a quick conversation.
Click here to head to our Mortgage Builder and figure out how much you could save.
Today’s economic data:
Fedspeak
Minneapolis Fed President Neel Kashkari at 10:00am.
JOLTS
The Labor Department is reporting 5.879 million job openings in November. That’s almost 1% lower than the prior month.
Get the GreenLight and close in 21 days*
Notable events this week:
Monday:
Tuesday:
Fedspeak
JOLTS
Wednesday:
Import and Export Prices
Fedspeak
EIA Petroleum Status
10-Yr Note Auction
Thursday:
Jobless Claims
PPI-FD
Friday:
Consumer Price Index
Retail Sales
Business Inventories
*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.
Avoid applying for new credit before shopping for your mortgage, so you can maintain the best possible credit score.
Getty Images
Mortgage rates today are far from the historic lows that new homebuyers were able to score through 2020 and 2021. You can find competitive mortgage rates around 6% to 7% APR on average today, depending on the loan term.
But that doesn’t mean you’re out of luck if you’re shopping for a home in 2023. Even small differences in your mortgage interest rate can save you money over the lifetime of your loan. By taking the following steps to prepare a solid loan application and score the best possible rate you can, you’ll reap the benefits for years to come.
Like federal interest rates, there’s a chance mortgage rates could continue rising this year. Don’t wait to start comparing the best mortgage rates you can qualify for now.
3 ways to get the best mortgage rates
Here are three things you can do now to make sure you get a great mortgage rate.
Boost your credit score
The information you include on your loan application can make a huge difference in the loan terms you qualify for.
“Your credit score is still going to be the biggest factor in determining if you will get the best rate,” says Colin Zizzi, CFP, founder of Zizzi Investments.
Before you apply for a mortgage, check both your credit score (which you can often find online from your bank or credit card company) and your credit report. You can access your full credit report for free from each of the three major credit bureaus.
Comb through the reports for any errors that could be hurting your credit score. If it’s still not where you’d like it to be, start taking steps now to improve it — like reducing your overall debt balance and paying all your bills in full and on time. Also, remember to avoid applying for any new credit or loans before taking out a mortgage. The hard credit check could temporarily bring down your credit score and keep you from getting a top rate.
Explore the best mortgage rates available today that you may be eligible for now.
Consider different loan details
If you’re flexible on the details of your mortgage loan, you may be rewarded with the potential to get a lower interest rate.
For one, your loan term is a big factor to consider. Many lenders offer slightly lower rates on shorter 15-year mortgages than on 30-year mortgages. In fact, the average mortgage rate for a 15-year mortgage as of July 10 is more than half a percentage point lower than what’s offered for a 30-year mortgage, according to data from Bankrate. While a 15-year mortgage may carry higher monthly payments, you could pay less over the lifetime of the loan.
Another type to consider is an adjustable-rate mortgage or ARM. This type of mortgage generally starts with a lower rate that adjusts (up to a cap) over time. Certain types of homebuyers may also qualify for government-backed loans, which tend to offer among the lowest possible rates. However, these loans may have strict specifications that you’ll need to meet before you can qualify.
Shop around and compare
If you’re quoted an unfavorable loan rate from one lender, there’s no reason to settle for it — at least not without comparing what else you may qualify for. Plus, the earlier you get started, the better off you may be.
“As always, shop around with different banks and brokers, and do this well before starting to look at houses,” says Quinn Arnold, CFP, co-founder of Arnold and Mote Wealth Management.
Once you’ve settled on the best type of mortgage loan for you, start getting preapprovals and loan estimates from different lenders. It helps to do this after you’ve settled on your preferred term and loan type, so you can make a consistent comparison across different lenders. When you shop around for your mortgage within a 45-day window all the different credit checks that lenders make are also recorded as a single inquiry on your credit report, according to the Consumer Financial Protection Bureau.
Compare the top mortgage rates you may be eligible for today here.
The bottom line
Today’s mortgage rates are higher across the board than they once were. But taking steps to make sure you apply with the best possible credit score, researching the type of mortgage that best fits your needs and comparing multiple lenders can help you get a solid mortgage even in today’s higher rate environment.
With mortgage interest rates consistently rising, timing is also important. Locking in a great mortgage rate sooner rather than later can help you ensure you get the rates you’re pre-approved for before they increase again. Start your search by exploring today’s best rates here!
A person walks past multiple for-sale and sold real estate signs in Mississauga, Ont., on May 24.Nathan Denette/The Canadian Press
We’ve heard this before, but it looks like interest rates are close to peaking.
Coincidentally, so has the complexity of choosing the right term if you’re negotiating or renewing a mortgage. The cheapest mortgage rates today are for a fixed term of five years. Who wants to lock in for five years when rates are thought to be peaking?
One-year mortgages make sense because interest rates should be heading lower by then, especially if the long-anticipated recession arrives. Renewing a mortgage in 12 months lets you tap into those lower rates, but the premium you’ll pay for having that opportunity is huge. Is there a compromise between short and long?
“I find that the sweet spot is a three-year fixed-rate mortgage,” said Victor Tran, a mortgage broker with True North Mortgage and an analyst with the website RATESDOTCA. “That has definitely been by far the most popular choice for the past year now for pretty much all my clients.”
True North’s website showed a three-year fixed rate of 5.74 per cent at the beginning of this week, which is middle ground in today’s market. Its other fixed rates were 6.84 per cent for one year, 6.19 per cent for two years, 5.29 per cent for four years and 5.14 per cent for five years.
Mortgage calculator: Here’s how rising interest rates affect the cost of your mortgage
A five-year variable-rate mortgage went for 6 per cent, but Mr. Tran said that option has been chosen only by a small minority of people who value the comparatively low penalty – three months of interest – for paying it off early. With fixed-rate mortgages, you pay the greater of three months of interest or a calculation called the interest rate differential (IRD), which is designed to compensate the lender for lost interest.
Variable-rate mortgages were popular during the pandemic housing boom because interest rates were ultra-low. The subsequent surge in rates has either added hundreds of dollars to monthly payments or put homeowners in a position where their amortization period has ballooned to 50 years or more. As a result, they’ll have to increase their payments upon renewal and possibly pay down their mortgage balance.
The risk in taking a variable-rate mortgage right now is that inflation is sticky enough to prompt the Bank of Canada to either raise interest rates again or leave them in place for an extended period. In any case, the variable-rate mortgage is out of favour right now with homeowners.
A one-year fixed-rate mortgage might normally be a second choice for homeowners who think rates will fall and don’t want to lock in for a long period of time. But one-year rates today are astronomically high by the standards of recent decades. If you have a conventional mortgage, where the down payment was 20 per cent or more, your rate could be around 7 per cent. Mortgages with smaller down payments must be insured against default, which allows lenders to offer slightly lower rates.
The unusual current relationship between short- and long-term mortgage rates is the result of what people in finance call an inverted yield curve. For borrowers, this means a reversal of the usual rule that borrowing for a longer term means paying a higher rate.
The five-year fixed-rate mortgage is actually the low-cost bargain right now. Locking in for five years is worth a thought for people who are confident they will remain in their homes for the full term of the mortgage and value rate certainty above all. But Mr. Tran said many homeowners are balking at longer terms such as four and five years because they don’t want to lock in for that long.
Some perspective on today’s five-year rates that makes them seem a little less bad: “I started in the mortgage industry in July, 2007,” Mr. Tran said. “I remember the first product that I sold was a five-year fixed mortgage at 5.79 per cent.” Today’s rate is well below that level.
Are you a young Canadian with money on your mind? To set yourself up for success and steer clear of costly mistakes, listen to our award-winning Stress Test podcast.
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.
Mortgage rates continue to tick higher in 2018. Fed Chair Jerome Powell is back on Capitol Hill today, so there’s the potential for him to make some comments that impact the direction of current mortgage rates today. Long-term, rates are expected to continue to move higher. Read on for more details.
Where are mortgage rates going?
Rates up again in Freddie Mac PMMS
Every Thursday at 10:00am the Freddie Mac Primary Mortgage Market Survey (PMMS) gets released, revealing where mortgage rates are at for borrowers in the U.S. For the past two months now, we’ve seen mortgage rates steadily climb higher. Here are the numbers from today’s survey:
The average rate on a 30-year fixed rate mortgage moved up three basis points to 4.43% (0.5 points)
The average rate on a 15-year fixed rate mortgage went up five basis points to 3.90% (0.5 points)
The average rate on a 5-year adjustable rate mortgage fell three basis points to 3.62% (0.4 points)
This is what the Freddie Mac Economic & Housing Research Group had to say about mortgage rates this week:
“An optimistic testimony on Capitol Hill from Federal Reserve Chairman Jerome Powell sent Treasury yields higher as Powell stated his outlook for the economy has strengthened since December. Following Treasurys, the 30-year fixed mortgage rate jumped 3 basis points to reach 4.43 percent. The benchmark 30-year rate has been on a tear in 2018, climbing 48 basis points since the start of the year and increasing for 8 consecutive weeks. The 30-year fixed mortgage rate averaged 4.33 percent in February, up 30 basis points from last month and the highest monthly average since April of 2014.
As we documented, historically when mortgage rates surge, housing swoons. But we think strength in the economy and pent up housing demand should allow U.S. housing markets to post modest growth this year even with higher mortgage rates. We really have to wait for housing markets to heat up in spring, but early indications are that housing demand remains robust to these rate increases. The MBA reported in their latest weekly applications survey that home purchase mortgage originations were up 3 percent from a year ago.”
Rate/Float Recommendation
Lock in a rate soon before they rise significantly
Mortgage rates have moved higher for two months. The average rate on a 30-year fixed has shot up forty-eight basis points since the first survey in January. Looking ahead to the rest of the year, the general consensus is that mortgage rates will continue to rise, potentially reaching past 5%.
Learn what you can do to get the best interest rate possible.
Given this expectation, it stands to reason that borrowers who take action on a purchase or refinance soon will likely get the better deal. The longer you wait, the more risk there is for a higher mortgage rate.
Today’s economic data:
Jobless Claims
Applications for U.S. unemployment benefits came in at 210,000 for the week of 2/24/18. That puts the four-week moving average at 220,500.
Personal Income and Outlays
The personal income and outlays report for January got released this morning showing the personal income rose 0.4% from the prior month. Consumer spending rose 0.2%. The PCE Price Index ticked up 0.4%, putting it at 1.7% year over year. Core PCE rose 0.3%, month over month, bringing it to 1.5% year over year.
PMI Manufacturing Index
The PMI Mfg Index hit a 55.3 for February. That’s slightly below the consensus for 55.7.
ISM Mfg Index
The ISM Mfg Index came in at 60.8 for February. That’s higher than both the consensus and prior reading.
Construction Spending
Construction spending was unchanged in January, putting it at 3.2% year over year.
Fedspeak
New York Fed President William Dudley will speak at 11:00am.
Jerome Powell Testimony
Fed Chair Jerome Powell will go before the Senate Banking Committee today.
Notable events this week:
Monday:
Fedspeak
Chicago Fed National Activity Index
New Home Sales
Dallas Fed Mfg Survey
Tuesday:
Durable Goods Orders
International Trade in Goods
Jerome Powell Testimony
FHFA House Price Index
Consumer Confidence
Richmond Fed Manufacturing Index
Wednesday:
GDP
Chicago PMI
Pending Home Sales Index
EIA Petroleum Status Report
Thursday:
Jobless Claims
Personal Income and Outlays
PMI Manufacturing Index
ISM Mfg Index
Construction Spending
Fedspeak
Jerome Powell Testimony
Friday:
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.