Tag Archives: refinance

Business

Today’s Mortgage, Refinance Rates: August 6, 2022

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The average 30-year fixed mortgage rate is over half a percentage point lower now than it was two weeks ago. Rates have been volatile in recent weeks, but have generally trended down as markets prepare for a possible recession.

The Federal Reserve has been raising the federal funds rate to try to tame inflation, and many now fear that it won’t be able to do so without slowing the economy too much.

Some have even speculated that we’re already in a recession, pointing to the fact that the gross domestic product has fallen two quarters in a row. But on Friday, the Bureau of Labor Statistics announced that the US added 528,000 jobs in July, which was well above what many economists had been expecting.

Mortgage rates may remain volatile as the results of the Fed rate hikes continue to play out.

Current mortgage rates

Current refinance rates

Mortgage calculator

Use our free mortgage calculator to see how today’s mortgage rates would impact your monthly payments. By plugging in different rates and term lengths, you’ll also understand how much you’ll pay over the entire length of your mortgage.

Mortgage Calculator

$1,161
Your estimated monthly payment

  • 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

Click “More details” for tips on how to save money on your mortgage in the long run.

30-year fixed mortgage rates

The current average 30-year fixed mortgage rate is 4.99%, according to Freddie Mac. This is a decrease from last week, when it was at 5.3%, and the second week in a row this rate has gone down.

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 4.26%, a decrease from the prior week, according to Freddie Mac data. This is the second consecutive week this rate has decreased.

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.

5/1 adjustable mortgage rates

The average 5/1 adjustable mortgage rate is 4.25%, a slight decrease from the previous week. This is the third week in a row this rate has dropped.

Adjustable rate mortgages can look very attractive to borrowers when rates are high, because the rates on these mortgages are typically lower than fixed mortgage rates. A 5/1 ARM is a 30-year mortgage. For the first five years, you’ll have a fixed rate. After that, your rate will adjust once per year. If rates are higher when your rate adjusts, you’ll have a higher monthly payment than what you started with.

If you’re considering an ARM, make sure you understand how much your rate could go up each time it adjusts and how much it could ultimately increase over the life of the loan.

Are mortgage rates going up?

Mortgage rates started ticking up from historic lows in the second half of 2021 and have increased significantly so far in 2022. More recently, rates have been relatively volatile.

In the last 12 months, the Consumer Price Index rose by 9.1%. The Federal Reserve has been working to get inflation under control, and plans to increase the federal funds target rate three more times this year, following increases in March, May, June, and July.

Though not directly tied to the federal funds rate, mortgage rates are sometimes pushed up as a result of Fed rate hikes and investor expectations of how those hikes will impact the economy. If inflation remains elevated, mortgage rates may stay at their current levels or even trend up. But as a recession becomes more likely, mortgage rates could fall. 

How do I find personalized mortgage rates?

Some mortgage lenders let you customize your mortgage rate on their websites by entering your down payment amount, zip code, and credit score. The resulting rate isn’t set in stone, but it can give you an idea of what you’ll pay.

If you’re ready to start shopping for homes, you may apply for preapproval with a lender. The lender does a hard credit pull and looks at the details of your finances to lock in a mortgage rate.

How do I compare mortgage rates between lenders?

You can apply for prequalification with multiple lenders. A lender takes a general look at your finances and gives you an estimate of the rate you’ll pay.

If you’re farther along in the homebuying process, you have the option to apply for preapproval with several lenders, not just one company. By receiving letters from more than one lender, you can compare personalized rates.

Applying for preapproval requires a hard credit pull. Try to apply with multiple lenders within a few weeks, because lumping all of your hard credit pulls into the same chunk of time will hurt your credit score less.

Molly Grace

Mortgage Reporter

Laura Grace Tarpley, CEPF

Personal Finance Reviews Editor

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Business

Mortgage refinance demand plunges 60%, as rates hit their highest level since 2018

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Mortgage rates took another jump higher last week, taking their toll on current borrowers who might have wanted to refinance. Demand from homebuyers, however, appears to be hanging in for now.

Total mortgage application volume decreased 6.8% last week compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. This, as the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) increased to 4.80% from 4.50%, with points decreasing to 0.56 from 0.59 (including the origination fee) for loans with a 20% down payment.

“Mortgage rates jumped to their highest level in more than three years last week, as investors continue to price in the impact of a more restrictive monetary policy from the Federal Reserve,” said Michael Fratantoni, MBA’s chief economist.

Driving the downturn in overall mortgage demand was a 15% weekly drop in refinance applications. They are now down a whopping 60% from a year ago. The refinance share of mortgage activity decreased to 40.6% of total applications from 44.8% the previous week.

Mortgage applications to purchase a home increased 1% for the week but were 10% lower than the same week one year ago. Homebuyers today continue to face sky-high prices and record low supply, in addition to rising mortgage rates. Affordability is weakening dramatically, but some real estate agents say the competition is not letting up.

“I will say I have had more cash buyers this this year than I’ve ever had, and they’re borrowing from parents. They’re just finding that cash because they know that it’s more competitive with cash offers,” said Kelly Theriot McMahon, a real estate agent with Compass in Dallas.

At an open house held last Sunday, she said buyers were steeling themselves for a bidding war.

“You have to look at it knowing you’re probably going to have to offer like $40,000 over asking price,” said Lauren Poey, a potential buyer touring the home.

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Business

Mortgage refinance demand continues its free fall, as interest rates rise again

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Real estate agents leave a home for sale during a broker open house in San Francisco, California.

Justin Sullivan | Getty Images

Rising mortgage interest rates continue to take their toll on demand, especially in the refinance market. Total mortgage application volume fell 2.8% last week compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($548,250 or less) increased to 3.20% from 3.16%, with points rising to 0.43 from 0.34 (including the origination fee) for loans with a 20% down payment.

As a result, refinance demand fell 5% for the week and was 31% lower than the same week one year ago. Refinance applications have dropped in seven of the past eight weeks. The refinance share of mortgage activity decreased to 62.9% of total applications from 63.5% the previous week.

“Activity has been particularly sensitive to rate movements, and last week’s decline was driven by a drop in conventional and FHA refinance applications, which offset an increase in VA refinance applications.” said Joel Kan, MBA’s associate vice president of economic and industry forecasting.

Mortgage applications to purchase a home, which are less sensitive to weekly rate moves, rose 2% for the week but were 6% lower than the same week one year ago. Buyers appear to be coming back to the market after a brief lull. Builders reported strong buyer traffic in a sentiment report out this week from the National Association of Home Builders.

“Purchase applications increased for both conventional and government loan segments, as housing demand continues to show resiliency at a time – late fall – when home buying activity typically slows. The second straight increase in purchase applications suggests that stronger sales activity may continue in the weeks to come,” said Kan.

Mortgage rates continued to move higher to start this week and are now at the highest level in more than three weeks. Rates were influenced Tuesday by a report on October’s retail sales, which rose by 1.7%, making it the strongest month in several years. 

“In general, strong economic data puts upward pressure on rates. Economists were only expecting a 1.4% increase after last month’s 0.8% improvement,” said Matthew Graham, chief operating officer at Mortgage News Daily.

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Business

Borrowers rush to refinance, as mortgage rates drop for a second week

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A property for sale in Monterey Park, California

Frederic J. Brown | AFP | Getty Images

Mortgage rates fell for the second straight week last week, and that helped boost refinance demand for the first time in a while. As a result, total mortgage application volume rose 5.5% last week compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($548,250 or less) decreased to 3.16% from 3.24%, with points remaining unchanged at 0.34 (including the origination fee) for loans with a 20% down payment. The rate is now down 14 basis points in the past two weeks, but still 18 basis points higher than the same week one year ago.

Refinance demand, which is highly sensitive to weekly rate moves, rose 7% last week from the previous week. It was, however, 28% lower year over year. The refinance share of mortgage activity increased to 63.5% of total applications from 61.9% the previous week.

“Although overall activity remains close to January 2020 lows, homeowners acted on the decrease in rates,” said Joel Kan, an MBA economist. “Additionally, the average loan balance for a refinance application was the highest in a month.”

Mortgage applications to purchase a home increased 3% for the week but were 4% lower than the same week one year ago. The housing market is well into its slower season, and while demand is stronger than usual, homebuyers are still facing a lean and pricey market. The brief drop in rates may have brought some buyers back, but given how high the costs are today, it didn’t give them much more purchasing power.

Mortgage rates did drop slightly lower to start this week. They are now at the best levels since late September.

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Business

As mortgage rates shoot even higher, refinance demand plummets 10%

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A sharp jump in mortgage interest rates over the past few weeks is taking its toll on mortgage demand. Total application volume fell nearly 7% last week compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. 

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($548,250 or less) increased to 3.14% from 3.10%, with points rising to 0.35 from 0.34 (including the origination fee) for loans with a 20% down payment. That is the highest level since July. 

Refinance demand, which is especially sensitive to weekly interest rate movements, fell to the lowest level in three months, down 10% last week compared with the previous week. Volume was 16% lower than the same week one year ago. 

“Higher rates are reducing borrowers’ incentive to refinance, as declines were seen across all loan types,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting. 

Mortgage applications to purchase a home declined 2% for the week and were 13% lower than the same week one year ago. It was driven by a drop in conventional loan applications. Government loans, which are mostly used by lower-income borrowers, saw a 1% increase in demand. 

“But that was still not enough to bring down the average loan balance of $410,000. With home-price appreciation and sales prices remaining very elevated, applications for higher balance, conventional loans still dominate the mix of activity,” added Kan. 

Rates fell back a little bit to start this week, but then moved higher again Tuesday. The bond market, which dictates daily rate movement, reacted to economic data.

“After an important report on the services sector came out stronger than expected, bonds continued to deteriorate,” said Matthew Graham, chief operating officer at Mortgage News Daily. “When bonds lose enough ground in the middle of a trading day, mortgage lenders occasionally make mid-day adjustments to their rate offerings.”

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