This week, mortgage rates made a small decline, relieving pressure on prospective homebuyers.
According to Freddie Mac’s weekly rate survey, the national average for a 30-year fixed-rate mortgage decreased by 0.08 percentage points week over week and is currently at 6.71%.
A 15-year fixed-rate mortgage’s rate decreased as well, and is now, on average, 6.07%, down 0.11 percentage points.
Although this is good news for the housing market, homebuyers still have difficulties. According to Sam Khater, chief economist at Freddie Mac, the dearth of accessible inventory is still a “major obstacle” for prospective homeowners.
Ask why if the rate offered is more than you anticipated and make sure to compare offers from different lenders. (Money’s list of the Best Mortgage Lenders is a good place to start. Homeowners considering a mortgage refinance should consider our list of the Best Mortgage Refinance Companies.)
- How are mortgage rates impacting home sales?
- What credit score do mortgage lenders use?
- What is a good interest rate on a mortgage?
- How are mortgage rates determined?
- How to get the best mortgage rate
- Difference between APR and interest rate
- What’s been happening in the housing market
Here’s a round-up of the latest news in housing and the economy:
Rising mortgage rates may be making it more expensive to finance a home purchase, but well-heeled buyers have a workaround. A third of all homes bought in April were paid in cash, the highest rate in almost a decade, according to brokerage Redfin.
Potential buyers may not be able to do much about mortgage rates, but they can find ways to make buying a home a little less expensive. One option is to negotiate some of the homebuying fees to cut down on upfront costs. Many of these fees can be reduced if you know how to negotiate.
Home prices continue to cool down from last summer’s peak. Year-over-year, prices were down by almost 2% in May. The biggest drops happened in towns that saw huge price gains during the pandemic (NOT thinking of you, Austin and Las Vegas).
Almost two-thirds of potential homebuyers are putting their homebuying plans on hold because of high mortgage rates, many of them deciding to wait until 2024 or beyond to buy, according to a new study. It’s not specified how low rates would have to go before much rates would have to drop in order to lure them back, which means the housing market is going to be really slow for a while.
Money’s average mortgage rates for June 13, 2023
Mortgage rates for most loan types moved lower yesterday. Borrowers considering a 30-year fixed-rate mortgage found rates averaging 7.566%, down by 0.08 percentage points. The only rate that moved higher was the 10/6 adjustable-rate mortgage, which ticked up by 0.007 percentage points.
The latest rate on a 30-year fixed-rate mortgage is 7.566% ⇓ 0.08%
The latest rate on a 15-year fixed-rate mortgage is 6.472% ⇓ 0.018%
The latest rate on a 5/6 ARM is 7.318%. ⇓ 0.009%
The latest rate on a 7/6 ARM is 7.428%. ⇓ 0.008%
The latest rate on a 10/6 ARM is 7.598%. ⇑ 0.007%
Money’s daily mortgage rates are a national average and reflect what a borrower with a 20% down payment, no points paid, and a 700 credit score — roughly the national average score — might pay if they applied for a home loan right now. Each day’s rates are based on the average rate 8,000 lenders offered to applicants the previous business day. Your rate will vary depending on your location, lender and financial details.
These rates are different from Freddie Mac’s rates, which represent a weekly average based on a survey of quoted rates offered to borrowers with strong credit, a 20% down payment and discounts for points paid.
Today’s mortgage rates and your monthly payment
The rate on your mortgage can make a big difference in how much home you can afford and the size of your monthly payments.
If you bought a $250,000 home and made a 20% down payment — $50,000 — you would end up with a starting loan balance of $200,000. On a $200,000 home loan with a fixed rate for 30 years:
At a 3% interest rate = $843 in monthly payments (not including taxes, insurance, or HOA fees)
At a 4% interest rate = $955 in monthly payments (not including taxes, insurance, or HOA fees)
At a 6% interest rate = $1,199 in monthly payments (not including taxes, insurance, or HOA fees)
At an 8% interest rate = $1,468 in monthly payments (not including taxes, insurance, or HOA fees)
You can experiment with a mortgage calculator to find out how much a lower rate or other changes could impact what you pay. A home affordability calculator can also give you an estimate of the maximum loan amount you may qualify for based on your income, debt-to-income ratio, mortgage interest rate and other variables. The Consumer Financial Protection Bureau can also provide a range of rates being offered by lenders in each state.
Other factors determine how much you’ll pay each month, which are detailed in the loan disclosures provided by your lender. These factors include:
Loan Term:
Choosing a 15-year mortgage instead of a 30-year mortgage will increase monthly mortgage payments but reduce the amount of interest paid throughout the life of the loan.
Fixed vs. ARM:
The mortgage rates on adjustable-rate mortgages reset regularly (after an introductory period) and monthly payments change with it. With a fixed-rate loan payments remain the same throughout the life of the loan.
Taxes, HOA Fees, Insurance:
Homeowners’ insurance premiums, property taxes and homeowners association fees are often bundled into your monthly mortgage payment. Check with your real estate agent to get an estimate of these costs.
Mortgage Insurance:
Mortgage insurance costs up to 1% of your home loan’s value per year. Borrowers with conventional loans can avoid private mortgage insurance by making a 20% down payment or reaching 20% home equity. FHA borrowers pay a mortgage insurance premium throughout the life of the loan.
Closing Costs:
Some buyers finance their new home’s closing costs into the loan, which adds to the debt and increases monthly payments. Closing costs generally run between 2% and 5% and the sale prices.
Current Mortgage Rates Guide
Mortgage rates are an important part of the homeownership puzzle. Our guide answers some of the most common questions surrounding mortgage rates and how they affect the housing market.
How are mortgage rates impacting home sales?
There was another dip in home sales in April, as high mortgage rates and a lack of homes for sale continued to limit perspective buyers’ options.
The volume of existing home sales, which include closed contracts for single-family homes, townhouses, condos and co-ops, decreased by 3.4% compared to March, and by about 23% year-over-year, according to the National Association of Realtors.
The housing market is experiencing a lot of ups and downs as a result of the “combination of job gains, limited inventory and fluctuating mortgage rates over the last several months,” said Lawrence Yun, NAR’s chief economist, in a press release.
There was one bright spot last month. Inventory, or the lack of it, has been one of the main reasons why prices haven’t dropped significantly in many cities. In April, inventory finally increased — compared to March, it was up by more than 7% or 1.04 million homes.
Still, at the current pace of sales, this represents a less than 3-month supply of homes, which is well below the 6-month supply most experts consider “normal.”
