2023-08-18 03:48:11
A variety of notable mortgage rates have risen in the past seven days. Average interest rates for 15-year fixed and 30-year fixed mortgages increased. We also saw an upward trend in the average rate on 5/1 adjustable rate mortgages.
As inflation rose in 2022, so did mortgage rates. To curb price growth, the Federal Reserve began raising its federal funds rate, a short-term interest rate that determines what banks charge each other to borrow money. By making loans more expensive, the central bank’s goal is to lower prices by reducing consumer spending.
During its meeting on July 26, the Fed kicked off a 25 basis point (or 0.25%) hike in its federal funds rate, marking its 11th hike in the current rate-raising cycle. The most recent increase could have an impact on mortgage rates, but experts say the markets may have factored it into rates already.
Current Mortgage Rates for August 2023
Mortgage rates change every day. Experts recommend shopping around to make sure you get the lowest rate. By entering your information below, you can get a personalized quote from one of CNET’s partner lenders.
About these rates: Like CNET, Bankrate is owned by Red Ventures. This tool features rates from lender partners that you can use when comparing multiple mortgage rates.
“Mortgage rates will continue to go up and down week after week, but ultimately, I think rates will stay in that 6% to 7% range that we’re seeing now,” said Jacob Channel, a senior economist at LendingTree lending market.
The Fed doesn’t set mortgage rates directly, but it does play an influential role. Mortgage rates vary daily in response to a variety of economic factors, including inflation, employment, and the general outlook for the economy. A lower inflation rate is good news for mortgage rates, but the potential for further increases by the central bank this year will keep upward pressure on already high rates.
However, instead of worrying about mortgage rates, homebuyers should focus on what they can control: getting the best rate they can for their financial situation.
To increase your chances of qualifying for the lowest rate available, take steps to improve your credit score and save for a down payment. Also, be sure to compare rates and fees from multiple lenders to get the best deal. Looking at the annual percentage rate, or APR, will show you the total cost of the loan and help you do an apples-to-apples comparison between lenders.
30-year fixed-rate mortgages
The average interest rate on a standard 30-year fixed mortgage is 7.58%, which represents a growth of 18 basis points compared to a week ago. (One basis point equals 0.01%). 30-year fixed mortgages are the most commonly used loan term. A 30-year fixed-rate mortgage will typically have a lower monthly payment than a 15-year mortgage, but typically a higher interest rate. You won’t be able to pay off your house as quickly and you’ll pay more in interest over time, but a 30-year fixed mortgage is a good option if you’re looking to minimize your monthly payment.
15-year fixed-rate mortgages
The average rate for a 15-year fixed mortgage is 6.79%, which is an increase of 15 basis points from the same period last week. Compared to a 30-year fixed mortgage, a 15-year fixed mortgage with the same loan value and interest rate will have a higher monthly payment. However, as long as you can afford the monthly payments, a 15-year loan has several benefits. These typically include being able to get a lower interest rate, paying off your mortgage sooner, and paying less total interest in the long run.
5/1 Adjustable Rate Mortgages
A 5/1 ARM has an average rate of 6.45%, an increase of 5 basis points compared to last week. You’ll typically get a lower interest rate (compared to a 30-year fixed mortgage) with a 5/1 ARM in the first five years of the mortgage. But you could end up paying more after that time, depending on the terms of your loan and how the rate aligns with the market rate. Because of this, an adjustable-rate mortgage might be a good option if you plan to sell or refinance your home before the rate changes. Otherwise, changes in the market can significantly increase your interest rate.
Mortgage Rate Trends
Mortgage rates were historically low for most of 2020 and 2021, but rose steadily throughout 2022 as the Federal Reserve began aggressively raising interest rates. Mortgage rates are now well above where they were a year ago. What does this mean for homebuyers this year?
“Mortgage rates have been in the 6-7% range for the last 10 months. Although home prices have softened slightly nationally, the still-high cost of borrowing means hopeful homebuyers have felt little relief,” said Hannah Jones, economic researcher. Analyst at Realtor.com.
However, if inflation continues to fall and the Fed can keep rates where they are and eventually lower them, mortgage rates are likely to decline slightly in 2023. However, it is highly unlikely that they will return to the lows of just a few years ago. years.
Fannie Mae’s most recent housing forecast calls for the average 30-year fixed mortgage rate to close the year at around 6.6%.
“Mortgage rates have been volatile for some time now and while they could eventually start to trend lower over the next six months to a year as inflation growth continues to cool, their path will likely be bumpy,” he said. Channel.
We use the rates collected by Bankrate to track changes in these rates on a daily basis. This table summarizes the average rates offered by lenders across the country:
Average Mortgage Interest Rates
Product Rate Last Week Change 30 Year Fixed 7.58% 7.40% +0.18 15 Year Fixed 6.79% 6.64% +0.15 30 Year Jumbo Mortgage Rate 7.64% 7.43% +0.21 Rate 30-year mortgage refinancing 7.74% 7.46% +0.28
Rates as of August 17, 2023.
How to find the best mortgage rates
When you’re ready to apply for a loan, you can connect with a local mortgage broker or search online. Be sure to think about your current financial situation and your goals when shopping for a mortgage.
Specific interest rates will vary based on factors including credit score, down payment, debt-to-income, and loan-to-value ratio. Having a higher credit score, higher down payment, low DTI, low LTV, or any combination of those factors can help you get a lower interest rate.
Beyond the interest rate, factors including closing costs, fees, discount points, and taxes can also affect the cost of your home. Be sure to shop around with various lenders, such as credit unions and online lenders, as well as local and national banks, to get a home loan that’s right for you.
How does the term of the loan affect my mortgage?
When choosing a mortgage, remember to consider the loan term or payment schedule. The most common loan terms are 15 and 30 years, although there are also 10, 20 and 40-year mortgages. Mortgages are further divided into fixed-rate and adjustable-rate mortgages. For fixed-rate mortgages, interest rates stay the same for the life of the loan. Unlike a fixed-rate mortgage, interest rates on an adjustable-rate mortgage are only locked in for a certain period of time (commonly five, seven, or 10 years). After that, the rate fluctuates annually based on the current market interest rate.
One factor to consider when choosing between a fixed-rate and adjustable-rate mortgage is how long you plan to stay in your home. If you plan to live long-term in a new home, fixed-rate mortgages may be the best option. Fixed-rate mortgages offer greater stability over time compared to adjustable-rate mortgages, but adjustable-rate mortgages can offer lower interest rates up front. However, if you don’t plan on keeping your new home for more than three to 10 years, an adjustable rate mortgage may offer you a better deal. There is no best loan term as a general rule; it all depends on your goals and your current financial situation. It’s important to do your research and know your own priorities when choosing a mortgage.
#Mortgage #Interest #Rates #August #Rates