In addition to a sharp drop in sales of new and existing homes, fewer people apply for mortgages. Money's daily mortgage rates were mixed today. Homebuyers interested in a 30-year fixed-rate mortgage will find average rates of 7.6% without paying points, down 0.136 percentage points from yesterday. A mortgage discount point normally costs 1% of your loan amount and could lower your interest rate by up to 0.25 percentage points.
After two years with rates of around 3%, homebuyers have faced a rapid increase in rates this year. Mortgage experts see rates rise as the Federal Reserve takes an anti-inflationary stance, but the question is how much. Other types of loans saw increases, and interest rates on 15-year fixed-rate mortgages and 5-year adjustable-rate mortgages, for example, exceeded 5%. With the 10-year Treasury yield moving above 4 percent, mortgage rates are about to rise and are reaching 20-year highs, says Greg McBride, chief financial analyst at Bankrate.
But if you're determined to buy a home or prepare to buy it in the coming months, these next steps can put you in a great position to qualify for a better mortgage rate. These rates are different from Freddie Mac's rates, which represent a weekly average based on a survey of the quoted rates offered to borrowers with strong credit, a 20% down payment and discounts for points paid. The average 30-year fixed mortgage rate fell 4 basis points to 6.66% last week, and fell for the first time in six weeks as a result of continued economic uncertainty, Freddie Mac reported Thursday morning. Money's daily mortgage rates are a national average and reflect what a borrower with a 20% down payment, no points paid and a credit score of 700, approximately the national average score, could afford if they applied for a home loan right now.
So how should homebuyers approach a housing market with stagnant home prices, but with interest rates at 15-year highs? Select spoke to two experts about the latest interest rate hike and how consumers, especially homebuyers, should think about it. Your mortgage rate can make a big difference in the amount of housing you can afford and the amount of your monthly payments. Average mortgage rates are typically about 1.8 percentage points higher than the 10-year promissory note yield. Despite the fact that mortgage rates fell for the first time since mid-August, experts warn that the higher borrowing costs that have plunged the housing market this year could be maintained for at least another year and perhaps even longer, depending on how the Federal Reserve's battle against inflation unfolds in the coming months.
Projecting the trend in mortgage rates this month isn't particularly difficult, but it doesn't look like there's going to be any gifts either.
