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Mortgage rates dropped again this week, according to Bankrate’s national survey.
The average rate on 30-year fixed mortgages retreated to 7.23 percent this week, down from 7.41 percent the previous week, according to Bankrate’s weekly national survey of large lenders.
The recent reprieve could signal a prolonged drop in mortgage rates, housing economists say. The average rate on 30-year home loans in October topped 8 percent, but that’s changing because of a number of factors, including a slowing job market and signs that the Federal Reserve’s ongoing war on inflation is working.
“Part of it is the Federal Reserve is pausing on interest rate hikes,” says Lisa Sturtevant, chief economist at Bright MLS, a real estate listing service in the Mid-Atlantic region. “Of course, mortgage rates are affected by things other than what the Fed does. For example, mortgage applications are down, and lenders are competing for a shrinking pool of applicants.”
Meanwhile, yields on 10-year Treasury bonds, an informal benchmark for 30-year mortgage rates, have dropped from 5 percent to less than 4.2 percent in recent weeks.
The Fed doesn’t directly control mortgage rates, but it plays a pivotal role. The central bank sets policy that affects the cost of home loans. At the conclusion of its latest meeting on Nov. 1, the Federal Open Markets Committee decided to leave rates unchanged. Now, economists say, it appears that the central bank is done raising rates.
“Slower inflation and financial markets anticipating the potential end of the Fed’s hiking cycle are both behind the recent decline in rates,” says Joel Kan, deputy chief economist at the Mortgage Bankers Association.
The 30-year fixed mortgages in this week’s survey had an average total of 0.29 discount and origination points. (Discount points are a way for borrowers to reduce the mortgage rate, while origination points are fees a lender charges to create, review and process your loan.)
Over the past 52 weeks, the benchmark 30-year fixed-rate mortgage averaged 6.97 percent. A year ago, the 30-year fixed-rate mortgage was 6.62 percent. Four weeks ago, that rate was 7.69 percent. The 30-year fixed-rate average for this week is 0.96 percentage points higher than the 52-week low of 6.27 percent.
As for other types of loans:
The national median family income for 2023 is $96,300, according to the U.S. Department of Housing and Urban Development, and the median price of an existing home sold in October 2023 was $391,800, according to the National Association of Realtors. Based on a 20 percent down payment and a mortgage rate of 7.23 percent, the monthly payment of $2,134 amounts to 27 percent of the typical family’s monthly income.
The sharp rise in mortgage rates over the past two years has squeezed affordability and sparked a slowdown in home sales. First-time buyers are especially challenged by this market. Home prices haven’t fallen significantly, and values are unlikely to decline, given the shortage of homes for sale.
“Higher mortgage rates have a dual impact on the housing market: reducing affordability for buyers and strengthening the rate lock-in for sellers,” says Odeta Kushi, deputy chief economist at First American. “The combination of reduced affordability and increased strength of the rate lock-in effect is likely to continue to suppress home sales because you can’t buy what’s not for sale, even if you can afford it.”
Reflecting the affordability squeeze, the median household income for homebuyers jumped to $107,000 in 2023 from $88,000 last year, according to the National Association of Realtors’ 2023 Profile of Home Buyers and Sellers.
Economists expected to see mortgage rates decrease by the end of 2023, but the strength of the U.S. economy has thrown a wrinkle into those predictions. Now, though, things finally seem to be cooling, especially 10-year Treasury yields.
Lawrence Yun, chief economist at the National Association of Realtors, expects mortgage rates to fall below 7 percent during the winter months. “I believe consumer price inflation will be much lower, and that will allow the Federal Reserve to cut interest rates,” says Yun.
Mortgage rates are also chained to inflation, a metric the Fed has been moving to control. At its September and November meetings, the central bank opted to keep rates unchanged. While the Fed doesn’t directly set fixed mortgage rates, it does set the tone of the interest-rate environment — and as the central bank has boosted its policy rate from zero in early 2022 to a range of 5.25 percent to 5.5 percent now, mortgage rates have followed suit.
“There is room for mortgage rates to fall further,” Sturtevant says. “The gap between the 10-year Treasury yield and the 30-year fixed rate mortgage rate is historically around 180 basis points. While the gap has narrowed somewhat, the 30-year mortgage rate remains 280 basis points higher than the bond yield.”
Learn more about where rates could be headed in our December 2023 mortgage rate forecast.
The Bankrate.com national survey of large lenders is conducted weekly. To conduct the National Average survey, Bankrate obtains rate information from the 10 largest banks and thrifts in 10 large U.S. markets. In the Bankrate.com national survey, our Market Analysis team gathers rates and/or yields on banking deposits, loans and mortgages. We’ve conducted this survey in the same manner for more than 30 years, and because it’s consistently done the way it is, it gives an accurate national apples-to-apples comparison. Our rates differ from other national surveys, in particular Freddie Mac’s weekly published rates. Each week Freddie Mac surveys lenders on the rates and points based on first-lien prime conventional conforming home purchase mortgages with a loan-to-value of 80 percent. “Lenders surveyed each week are a mix of lender types — thrifts, credit unions, commercial banks and mortgage lending companies — is roughly proportional to the level of mortgage business that each type commands nationwide,” according to Freddie Mac.
Source: bankrate.com
JOLTS, the job openings and labor turnover survey, used to be a very forgettable report. On a scale of potential market movers, we’ve always assigned it the lowest possible rank. But that changed over the past year and a half. As the Fed and the market searched for signs that an ultra tight labor market might be loosening, job openings have emerged as a highly tradeable metric despite the fact that they run a full month behind nonfarm payrolls. Today’s count came in at the lowest levels since mid-2021, when job openings were still in the process of surging to all-time highs. Outright levels are still quite high, but definitely moving in the right direction as far as interest rates are concerned.
Source: mortgagenewsdaily.com
It’s almost that time, when everyone resolves to do better and achieve more in the coming year. And a new survey suggests that some people may be fueling their 2024 resolutions with the financial regrets of 2023.
About two-thirds (67%) of Americans have financial regrets for 2023, according to a NerdWallet survey conducted online by The Harris Poll on Oct. 10-12. And three-fourths (75%) of that group say those regrets will lead to new resolutions in 2024.
Every year we face obstacles to our money goals. We may start out with plans to save more and spend less, but life happens. This year began with expenses taking bigger bites out of paychecks, in the form of high inflation. And as the year progressed, increasingly high interest rates added costs to credit card balances and loans, making it more expensive to borrow. Macroeconomic factors like these can be enough to derail financial goals alone, but if they’re paired with job loss, unexpected expenses or other household circumstances, they can push goals further and further out of reach.
If you have financial regrets, you’re in good company. And if your hope is to turn them into successes in 2024, plenty of other Americans have the same plan. Here’s how some of those regrets may have come about and what to expect in the year ahead.
Nearly one-fourth (23%) of Americans regret not saving enough for their financial goals in 2023, according to the NerdWallet survey. And about one in five (21%) regret not saving for emergencies.
Government relief payments paired with constrained spending during COVID shutdowns to bring the personal saving rate to all-time highs in 2020 and 2021. In 2023, that rate, which measures the percentage of disposable income that can be saved, on average, settled below historic averages, making it more difficult to save for big purchases or unexpected emergencies.
In 2024: The personal saving rate, as a national average, is likely to stay on the low side. However, with inflation continuing to come down, you may find it easier to set aside funds in 2024 than you did in 2023. If you don’t have an emergency fund, start there — having a cushion set aside for unexpected expenses can insulate many of your other financial objectives. Then, set measurable and specific benchmarks — such as setting aside a certain portion of every paycheck — to get you toward your longer-term savings goals.
More than one in five (22%) Americans regret overspending on entertainment in 2023; 11% regret overspending on travel and 11% regret overspending on a big event (such as a wedding or party), according to the survey.
Consumer spending in 2023 has been surprisingly resilient in the face of inflation and high interest rates. This consumer resilience has been credited with keeping the economy strong when many expected a recession. But there is also evidence that this spending in the face of adversity has been achieved by busting household budgets.
In 2024: Overspending is a risk every year — it’s hard not to splurge on things like entertainment, travel and parties (we all enjoy a good time). The first step to reining in these urges, however, is setting a clear budget. Whether it’s a weekly entertainment budget or a wedding budget, setting a clear expectation for yourself beforehand can help ensure you’re not left with remorse when the dust settles.
Equal shares of Americans (16%) regret not reducing/or paying off their credit card debt and taking on too much credit card debt in 2023, according to the survey.
Credit card debt levels fell during 2020 and early 2021, as people had excess money thanks to relief payments and student loan forbearance, for example, and were generally spending less due to COVID lockdowns. But since then, debt levels have been surpassing pre-pandemic normal. If you used your cards less in 2021 and even paid off some debt, this return to “normal” can feel especially bad.
In 2024: When your finances are in good shape, using credit cards as a tool — to earn points and cash back, for instance — can help you reach money goals more quickly. However, when you’re in debt or have to turn to a credit card to cover an emergency expense, the interest can pile up quickly and make it difficult to dig yourself out. Interest rates will likely remain high throughout 2024, so getting those balances under control is even more important. Make a concrete debt payoff plan, and if you’re struggling to make payments, consider debt relief options such as consolidation and debt management.
Lest 2023 sound like nothing more than money woes: More than three in five (62%) Americans say they achieved financial goals they set out to reach in 2023. Financial headwinds are always present in one form or another. Preparing for them and learning from mistakes may set you up for a greater chance of success in the near future.
METHODOLOGY
This survey was conducted online within the United States by The Harris Poll on behalf of NerdWallet from Oct. 10-12, 2023, among 2,096 U.S. adults ages 18 and older. The sampling precision of Harris online polls is measured by using a Bayesian credible interval. For this study, the sample data is accurate to within +/- 2.7 percentage points using a 95% confidence level. For complete survey methodology, including weighting variables and subgroup sample sizes, please contact [email protected].
Disclaimer
NerdWallet disclaims, expressly and impliedly, all warranties of any kind, including those of merchantability and fitness for a particular purpose or whether the article’s information is accurate, reliable or free of errors. Use or reliance on this information is at your own risk, and its completeness and accuracy are not guaranteed. The contents in this article should not be relied upon or associated with the future performance of NerdWallet or any of its affiliates or subsidiaries. Statements that are not historical facts are forward-looking statements that involve risks and uncertainties as indicated by words such as “believes,” “expects,” “estimates,” “may,” “will,” “should” or “anticipates” or similar expressions. These forward-looking statements may materially differ from NerdWallet’s presentation of information to analysts and its actual operational and financial results.
Source: nerdwallet.com
As couples prepare holiday marriage proposals, Northwestern Mutual study finds 1 in 3 Americans believe serious discussions about financial dreams – and debt – should happen in the early stages of dating Almost half of Gen Z say financial compatibility is more important than physical compatibility MILWAUKEE, Dec. 5, 2023 /PRNewswire/ — December is, by … [Read more…]
Indiana, known as the Hoosier State, has been highly recognized for its low-cost living, especially for renters. According to our data, several cities in Indiana offer affordable living conditions while offering a bounty of recreational and cultural activities. The cities of Bedford, Richmond, Marion, Terre Haute, and Logansport particularly stand out as the cheapest places to live for renters. Each of these cities has its unique charm, community spirit, and cost-effective living options that make them attractive for both individuals and families.
Located in Lawrence County, Bedford, IN, with a population of 13,246, offers not only an affordable median rent of $500, but also a pleasant living environment. The median income in Bedford is $42,893, with a reasonable median home value of $107,200. The city is known for its limestone quarries, and the close-knit community often gathers at the popular Wilson Park or enjoys outdoor activities at the nearby Hoosier National Forest. The city’s score of 93.6716 is a testament to its affordability and quality of life.
With a population of 35,467, Richmond, IN offers a perfect blend of affordability and attractive amenities. The city has a median income of $40,871, and the median home value stands at $86,300, making it an affordable place to live in Indiana. Renters can find a 2-bedroom place for an ask rent of $740. Richmond is known for its historic architecture, beautiful parks like the Glen Miller Park, and the Whitewater Gorge Trail. The city’s overall score is 86.4834.
Marion, IN, home to 27,730 residents, is another affordable city in the Hoosier State. With a median income of $35,252 and a median home value of $69,800, Marion offers a low-cost yet comfortable living. The city’s 2-bed asking rent stands at $757, making it an attractive option for renters. Marion is famous for hosting the largest WWII reenactment in the US and features a variety of activities at the Matter Park. The city’s score is 85.6289.
Terre Haute, IN, with a population of 60,690, is a city that combines affordability and a vibrant lifestyle. The median income is $37,299, and the median home value is $83,800. Rent prices are also affordable, with a 2-bedroom unit’s asking rent at $785. Terre Haute is home to Indiana State University and boasts numerous attractions like the Terre Haute Children’s Museum and the Deming Park. The city’s score is 82.2566.
Home to 17,968 people, Logansport, IN offers an affordable lifestyle with a median income of $38,053 and a median home value of $66,800. The city’s 2-bedroom ask rent is slightly higher at $895, but still well within reach for many. Logansport is known for its historic downtown area and the beautiful Riverside Park. Outdoor enthusiasts enjoy the France Park and its scenic waterfall. The city’s overall livability score is 81.1075.
The cheapest cities in each state were ranked based on its median home price and median asking rents for studio, one-, two-, and three-bedroom units. Prior to ranking, inputs were normalized, and weights were applied using a 1.25:1 ratio of asking rents to home prices.
Data on home prices are from the U.S. Census 2016-2020 American Community Survey 5-year estimates. Data on asking rents are from Rent.
Cities without data for one- or two-bedroom asking rents or a population of less than 10,000 were removed from this ranking. Any other missing values were zeroed and did not impact the final score.
Oregon, located on the Pacific coast, is a state that offers a variety of lifestyles. From bustling cities to quiet, scenic rural areas, this state has something for everyone. However, Oregon’s rents can be quite disparate, with some areas being quite affordable and others much less so. For renters seeking economical living options, our research indicates that five cities in Oregon stand out for their affordability. These cities are La Grande, Klamath Falls, Dallas, Forest Grove, and Lebanon. Each of these locations offers a unique set of attractions and advantages for residents beyond just affordable rent.
With a population of 13,380, La Grande is a small city that provides a friendly, close-knit community atmosphere. The median income here is $45,573 and the median home value is $183,600. The average asking rent for a 2-bedroom apartment is quite affordable at $945. One of the main attractions of La Grande is its beautiful location in the Blue Mountains, providing abundant opportunities for outdoor activities. It’s situated along I-84, offering easy access to other parts of the state and beyond. The city also boasts a historic downtown with a variety of shops and restaurants.
Klamath Falls is a charming city with a population of 21,509, and it offers residents the best of both city and country living. The median income in the city is $40,783, with a median home value of $180,900. The rent for a 2-bedroom apartment is only $1,100 on average. The city offers multiple recreational activities given its location near Klamath Lake and Crater Lake National Park. The downtown area is a hub for local businesses, events, and the Oregon Institute of Technology.
Dallas, home to 16,612 residents, is an affordable city that scores high on livability. With a median income of $58,398 and a median home value of $253,400, the city offers economic advantages. The average asking rent for a 2-bedroom apartment is $1,360. Located in the heart of Willamette Valley, Dallas residents enjoy a variety of outdoor activities while being only a short drive from Salem, the state capital. The city features a historic courthouse, an aquatic center, and the beautiful Central Bark Dog Park.
Forest Grove, with a population of 24,847, is a city that combines affordability with a range of amenities. It has a median income of $69,513 and a median home value of $346,400. The rent for a 2-bedroom apartment is an average of $1,340. Forest Grove is home to Pacific University and offers a rich, educational atmosphere. It is located near the Tualatin Valley, which is known for its wineries. Residents also enjoy the city’s numerous parks and its proximity to Portland.
Lebanon, a city of 17,144 residents, offers a cost-effective and comfortable lifestyle. It has a median income of $45,215 and a median home value of $193,200. Despite the affordable 2-bedroom apartment rent of $1,505, Lebanon offers many attractions. The city has an abundance of parks and outdoor recreational facilities, including Waterloo County Park. Additionally, it’s located along Highway 20, allowing for easy navigation to and from the city. The city is also home to Western University of Health Sciences, contributing to a vibrant and intellectual community.
The cheapest cities in each state were ranked based on its median home price and median asking rents for studio, one-, two-, and three-bedroom units. Prior to ranking, inputs were normalized, and weights were applied using a 1.25:1 ratio of asking rents to home prices.
Data on home prices are from the U.S. Census 2016-2020 American Community Survey 5-year estimates. Data on asking rents are from Rent.
Cities without data for one- or two-bedroom asking rents or a population of less than 10,000 were removed from this ranking. Any other missing values were zeroed and did not impact the final score.
Maine, known for its picturesque landscapes and serene environment, is quickly becoming a hot spot for renters due to its affordability. As the Pine Tree State flourishes with opportunities, it provides affordable living for individuals from all walks of life. Rental prices vary greatly across the state, yet Maine sustains an appealing cost of living for many. Particularly, three cities have marked their places as the cheapest for renters; South Portland, Portland, and Yarmouth. These cities not only offer affordable rent but also present a high quality of living with their unique characteristics.
With a population of 25,665, South Portland is not just an affordable city but also a great place to live. The city offers a median income of $67,198 and a median home value of $276,100. Life in South Portland comes with more than just affordable living, it’s a city that thrives on its local community and stunning coastal views. You’re never far from a stunning view, with the city’s unique location on the coast of Maine. The city also has plenty of green spaces, including Mill Creek Park and Willard Beach, providing the perfect backdrop for a Maine lifestyle.
As the most populous city in Maine with 66,706 residents, Portland offers a balance between an affordable cost of living and a vibrant city life. The city has a median income of $61,695, and a median home value of $302,700. Of note to renters, the asking price for a 2-bedroom is around $4,412. Portland’s Old Port district, with its cobblestone streets, 19th-century brick buildings, and fishing piers, is a hub of activity. Plus, there are numerous recreational areas in the city, including East End Beach and the Eastern Promenade.
Although smaller with a population of 5,752, Yarmouth is a charming town that offers an affordable lifestyle. Here, the median income stands at $69,576 with a median home value of $347,300. Renters can find a 2-bedroom place for an asking price of around $2,915. Yarmouth’s Main Street is a testament to its historical charm, while Royal River Park provides a great outdoor experience for residents. Yarmouth also hosts the famous annual Clam Festival, which offers a glimpse into the friendly community spirit of the town.
The cheapest cities in each state were ranked based on its median home price and median asking rents for studio, one-, two-, and three-bedroom units. Prior to ranking, inputs were normalized, and weights were applied using a 1.25:1 ratio of asking rents to home prices.
Data on home prices are from the U.S. Census 2016-2020 American Community Survey 5-year estimates. Data on asking rents are from Rent.
Cities without data for one- or two-bedroom asking rents or a population of less than 10,000 were removed from this ranking. Any other missing values were zeroed and did not impact the final score.
Tennessee is a hidden gem in the Southeast United States, known for its vibrant music scene, delicious food, and beautiful landscapes. However, one often overlooked aspect is the affordability of living in the Volunteer State. Particularly for renters, there are various cities in Tennessee that offer low costs of living without compromising on quality of life. Seymour, Union City, Clinton, Crossville, and Kingsport exemplify this balance, offering affordable rents, along with access to amenities and facilities that make them attractive places to live. Now, let’s delve into what each of these cities has to offer.
Seymour, with a population of 15,444, is a peaceful and affordable place to live in Tennessee. Besides its relatively low median rent of $615 for a two-bedroom property, Seymour also boasts a substantial median income of $61,490. This makes it a great place to live and save money. The city is conveniently located between Knoxville and Sevierville, offering easy access to the attractions and amenities of both regions. The nearby Chapman Highway also provides fast and easy access to surrounding areas. Seymour’s residential appeal is further complemented by its local parks and amenities, making it an attractive and affordable place to live.
Union City, despite its smaller population of 10,426, is another affordable location in Tennessee, with its median rent for a two-bedroom dwelling at $850. Here, you can enjoy a wide range of amenities and recreational activities. The city is home to Discovery Park of America, a world-class museum and park with exhibits spanning fields like history, science, art, and much more. In terms of transportation, Union City is served by State Routes 5, 22, and 216, making travel within and beyond the city convenient.
Clinton, with a population of 10,006, offers its residents reasonably priced housing with a median rental rate of $825 for a two-bedroom home. The city offers a rich history, with numerous historic sites and museums, such as the Museum of Appalachia and the Green McAdoo Cultural Center. Moreover, Clinton’s location near Andersonville Highway and Interstate 75 makes commuting and traveling an ease, further enhancing its appeal to renters looking for affordable accommodations.
Crossville is a modest-sized city of 11,704 residents, where a two-bedroom home typically rents for $820. Home to the Cumberland County Playhouse, one of the state’s largest professional theaters, and the stunning Cumberland Mountain State Park, there’s plenty of entertainment and outdoor activities for residents to enjoy. Accessible via Interstate 40 and U.S. Route 70, Crossville is a convenient and affordable location to call home.
Kingsport, with a sizable population of 53,699, offers a median rent of $845 for a two-bedroom home. Known for its outdoor amenities, Kingsport is home to Bays Mountain Park and Planetarium providing hiking, biking trails, and wildlife viewing opportunities. Further, it is part of the Kingsport-Bristol metropolitan area, lending it big-city advantages while maintaining its small-town charm. Its location via Interstate 26 also makes for easy commutes, increasing its desirability as an affordable place to live.
The cheapest cities in each state were ranked based on its median home price and median asking rents for studio, one-, two-, and three-bedroom units. Prior to ranking, inputs were normalized, and weights were applied using a 1.25:1 ratio of asking rents to home prices.
Data on home prices are from the U.S. Census 2016-2020 American Community Survey 5-year estimates. Data on asking rents are from Rent.
Cities without data for one- or two-bedroom asking rents or a population of less than 10,000 were removed from this ranking. Any other missing values were zeroed and did not impact the final score.
hikesterson/Getty Images; Illustration by Issiah Davis/Bankrate
After topping 8 percent in October, mortgage rates beat a hasty retreat in November. The average rate on 30-year loans fell under 7.5 percent in Bankrate’s most recent survey of lenders.
“Market sentiment has significantly shifted over the last month, leading to a continued decline in mortgage rates,” says Sam Khater, chief economist at mortgage company Freddie Mac.
One key reason for the reversal: Investors bid down 10-year Treasury yields, the main indicator for 30-year fixed mortgage rates.
Another factor is inflation, which was down to 3.2 percent for October. While that’s still above the Federal Reserve’s official target of 2 percent, forecasters think the Fed is done raising rates, a shift that will relieve some of the pressure on mortgages.
“If the Fed signals an end to interest rate hikes and takes on a dovish tone, there may be some downward pressure on mortgage rates,” says Odeta Kushi, economist at title insurer First American. “But don’t expect any large declines in mortgage rates until inflation is much closer to the Fed’s 2 percent target or there’s a decline in economic activity.”
The downward momentum in mortgage rates will be sustained, albeit modestly, as the Federal Reserve signals they are done raising interest rates and projects slower inflation in 2024. Cautious projections from the Fed about the timing of rate hikes, along with the elevated volume of Treasury issuance, will be offsetting factors that limit the extent of decline in mortgage rates.
— Greg McBride, Bankrate Chief Financial Analyst
Many forecasts now call for rates to stick in the 7 percent range, either at 7.5 or higher.
“While mortgage rates have trended down from their peak in October, they remain above 7 percent and will likely stay there for some time,” says Ruben Gonzalez, chief economist at real estate brokerage Keller Williams.
As inflation cools and the Federal Reserve stands down, rates should drift down to 7 percent, says Lisa Sturtevant, chief economist at Bright MLS, a real estate listing service in the Mid-Atlantic region.
“Part of it is the Federal Reserve is pausing on interest rate hikes,” says Sturtevant. “Of course, mortgage rates are affected by things other than what the Fed does. For example, mortgage applications are down, and lenders are competing for a shrinking pool of applicants.”
After rising sharply through late October, mortgage rates have trended back down. The average rate on a 30-year mortgage was 7.4 percent as of Nov. 29, according to Bankrate’s survey. This represents a departure from 8.01 percent on Oct. 25.
While the experts we talked to don’t expect rates to come down significantly this month, they do forecast an eventual easing in 2024. The Mortgage Bankers Association projects rates to fall to 6.1 percent late next year. The National Association of Realtors estimates rates will be at 6.3 percent in a year, while Fannie Mae forecasts they’ll be at 7.1 percent.
Still, mortgage rates aren’t easy to predict.
“A lot of us forecasted we’d be down to 6 percent at the end of 2023,” says Sturtevant. “Surprise, surprise, we’re not.”
One wild card has been the unusually large gap between mortgage rates and 10-year Treasury yields. Normally, that spread is about 1.8 percentage point, or 180 basis points. This year, the gap has been more like 280 basis points, pushing mortgage rates a full percentage point higher than the 10-year benchmark indicates.
“There is room for that gap to narrow,” says Sturtevant, “but I’m not sure we’ll get back to those old levels. In this post-pandemic economy, the old rules don’t seem to apply in the same ways. We’re sort of figuring out what the reset is. Investors have a different outlook on risk now than they did before the pandemic. We’re just in this weird transition economy.”
Mortgage rates are at generational highs, but the basic advice for getting a mortgage applies no matter the economy or market.
The Federal Reserve doesn’t directly set mortgage rates, but it does set the overall tone. The closest proxy for mortgage rates is the 10-year Treasury yield. Historically, the typical 30-year mortgage rate is about 2 percentage points higher than the 10-year Treasury yield. In 2023, that “spread” has been more like 3 percentage points.
Deciding when to refinance is based on many factors. If rates have fallen since you originally took out your mortgage, refinancing might make sense. A refi can also be a good idea if you’ve improved your credit score and could lock in a lower rate or lower fees. A cash-out refinance can accomplish that as well, plus give you the funds to pay for a home renovation or other expenses.
Source: bankrate.com