RESIDENTIAL BUILDERS ASSOCIATION
Current Mortgage Rates Are Closing in on 7%
Mortgage rates made another big leap this week.
The 30-year fixed rate mortgage is averaging 6.92%, up a substantial 0.26 percentage points for the week ending October 13, according to Freddie Mac's weekly survey. The last time the 30-year rate was this high was in April 2002.
Compared to the same week a year ago, mortgage rates are nearly 4 percentage points higher. The rapid rise has put a strain on potential homebuyers as mortgage payments have increased by more than 50% year-over-year.
"We continue to see a tale of two economies in the data: strong job and wage growth are keeping consumers' balance sheets positive while lingering inflation, recession fears and housing affordability are driving housing demand down precipitously," said Sam Khater, chief economist at Freddie Mac.
"The next several months will undoubtedly be important for the economy and the housing market," Khater added.
Rates are higher for other loan categories. The average rate on a 15-year fixed-rate loan moved up 6.09% while the rate on a 5/1 adjustable-rate mortgage increased to 5.81%.
If you are offered a rate that is higher than you expect, make sure to ask why, and compare offers from multiple lenders.
Freddie Mac's average mortgage rates are higher this week—
The current rate for a 30-year fixed-rate mortgage is 6.92% with 0.8 points paid, 0.26 percentage points higher compared to last week. A year ago, the 30-year rate averaged 3.05%.
The current rate for a 15-year fixed-rate mortgage is 6.09% with 1.1 points paid, an increase of 0.19 percentage points from a week ago. The 15-year rate averaged 2.30% a year ago.
The current rate on a 5/1 adjustable-rate mortgage is 5.81% with 0.2 points paid, up 0.45 percentage points week-over-week. The average rate on a 5/1 ARM was 2.55% a year ago this week.
For its rate survey, Freddie Mac looks at rates offered for the week ending each Thursday. The average rate represents roughly the rate a borrower with strong credit and a 20% down payment can expect to see when applying for a mortgage right now. Borrowers with lower credit scores will generally be offered higher rates.
Money's average mortgage rates for October 13, 2022
Mortgage rates remain volatile. Borrowers looking for a 30-year fixed-rate loan can expect rates averaging 7.818%, 0.055 percentage points higher than yesterday.
Rates on adjustable-rate mortgages also continued to make big day-to-day changes. The 5/6 ARM is averaging 7.199%, an increase of 0.201 percentage points.
The latest rate on a 30-year fixed-rate mortgage is 7.818%. ⇑
The latest rate on a 15-year fixed-rate mortgage is 6.839%. ⇓
The latest rate on a 5/6 ARM is 7.199%. ⇑
The latest rate on a 7/6 ARM is 7.37%. ⇑
The latest rate on a 10/6 ARM is 7.494%. ⇑
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 he or she 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 individual 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 3% interest rate = $843 in monthly payments (not including taxes, insurance, or HOA fees)
At 4% interest rate = $955 in monthly payments (not including taxes, insurance, or HOA fees)
At 6% interest rate = $1,199 in monthly payments (not including taxes, insurance, or HOA fees)
At 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.
Other factors that determine how much you'll pay each month include:
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 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.
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.
How are mortgage rates impacting home sales?
The number of mortgage applications continues to decline for the week ending October 7. Overall applications were down by 2% week-over-week, according to the Mortgage Bankers Association, falling even further behind last year's levels.
Purchase applications decreased a seasonally adjusted 2% from the previous week and were 39% lower than the same week a year ago.
The number of refinancing applications was also down by 2% week-over-week. Compared to the same week a year ago, applications were 86% lower.