Mortgage Rates- Search for Mortgage Rates and Refinance Rates
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Average 30 year mortgage rates are higher this week and are hovering just below 4.00 percent. Mortgage rates are higher this week because long term interest rates are increasing. 30 year mortgage rates are not the only rates moving higher this week.
Average mortgage rates were up across the board. 15 year rates are higher this week and short term adjustable mortgage rates are also higher. Long term interest rates and short term interest rates in general are moving higher. We expect the uptrend of higher rates to continue throughout 2018.
Average 30 Year Mortgage Rates
30 year rates are currently averaging 3.95 percent, up five basis points from last week’s average rate. Although the trend for mortgage rates is higher in the coming year, rates won’t increase that much from current levels.
The Mortgage Bankers Association’s forecast for 30 year rates to be around 4.50 percent by the second quarter of 2018. By the end of 2018, average 30 year rates are forecast to be only at 4.80 percent.
These forecasts were released in November and will likely be increased in the next forecast because Republicans in the House and Senate voted to cut taxes, which will likely lead to higher inflation and higher interest rates.
Average 15 Year Mortgage Rates
15 year mortgage rates today are averaging 3.36 percent, an increase over last week’s average 15 year rates of 3.31 percent. Back in late September, average 15 year rates were at 3.00 percent, only 36 basis points lower than the current level.
As you can see, the uptick for 15 year rates has also been gradual. MonitorBankRates.com forecast for 15 year rates by the 2nd quarter of 2018 is at 3.75 percent. By the end of 2018, we forecast 15 year rates to be just under the 4.00 percent level.
Average 5 Year Adjustable Mortgage Rates
The current average rate on 5 year adjustable mortgage loans is at 3.54 percent, up from the prior week’s average 5 year adjustable rate of 3.47 percent. Average 5 year adjustable rates are only 30 basis points higher than the average rate in late September.
Looking into 2018, short term adjustable rates will have a bigger gain than long term rates. The reason being is the Federal Reserve is expected to increase their key benchmark interest rate at least twice in 2018. These increases will force short term adjustable mortgage rates higher.
By the second quarter of 2018, average 5 year adjustable rates will probably be around 4.00 percent. By the end of 2018, 5 year adjustable rates will move towards 4.50 percent.
Did you know about Freddie Mac’s “Home Possible Advantage” Mortgage? It’s a mortgage loan program which will allow you to put down only a 3 percent down payment. Let’s face it, the biggest barrier to buying a first home for many people is the down payment. Coming up with the 20 percent down payment is extremely difficult for young first time home buyers.
You might be able to afford the monthly mortgage payments but can’t scrape together 20 percent of the purchase price. In addition, coming up with the closing costs is another factor to consider. Closing costs can run into the thousands of dollars. Now you have another option with only a 3 percent down payment.
If you put off buying a home because you haven’t saved enough of the down payment, this program might be for you. Since mortgage rates are still low, now is a good time to buy a home. Furthermore, mortgage rates are moving higher in the coming years.
The lower the mortgage rate on a loan, the lower the monthly mortgage payments will be. This program is also available if you’re looking to refinance an existing home loan.
3 Percent Down Payment Information
Freddie Mac has a checklist to see if you qualify for a Home Possible Advantage loan. You don’t have to have all of the boxes checked to qualify for a loan. Following are some guidelines for the Home Possible Advantage program.
There are other guidelines listed at Home Possible at a Glance.
Finally, you should talk to your lender to see if they offer Home Possible or Home Possible Advantage loans. Freddie Mac works with thousands of lenders nationwide so there’s a good chance your lender offers an option like Freddie Mac’s Home Possible Advantage mortgage.
Mortgage rates rose again this past week, the second consecutive week rates increased. Prior to the past two weeks of increases, average mortgage rates declined for almost two months straight. Mortgage rates were expected to rise again this week because 10 year bond yields rose 7 basis points.
Average 30 year mortgage rates increased to 3.79 percent, up from the prior week’s average rate of 3.76 percent. Despite the increases, 30 year rates are still only 10 basis points above the low for 2017, which was 2.69 percent. The all-time low for 30 year rates was 3.27 percent set in 2012, only about 0.50 percent below the current level.
Current interest rates on 15 year mortgage loans are averaging 3.00 percent, up 5 basis points from last week’s average 15 year rate of 2.95 percent. Average 15 year rates also came off a 2017 low last set just last week at 2.87 percent. 15 year rates are only 44 basis points above the all-time low of 2.56 percent.
As mortgage rates rise mortgage applications decline. The Mortgage Banks Association reported a decline in mortgage applications this past week.
Current Jumbo Mortgage Rates
Despite the fact that mortgage interest rates are higher again this week, we don’t anticipate long term rates to move much higher. In fact rates will remain near current levels for the rest of 2017. What we will see is more pressure on shorter term adjustable rates.
The Fed is expected to increase the fed funds rate once more this year by 25 basis points. This increase will put upward pressure on short term bond yields which will increase short term mortgage rates but not long term rates.
There are also other factors at play keeping a lid on long term interest rates. See our recent MBR article,”Why Are Long Term Interest Rates Low?“
Mortgage rates just hit a new low for 2017 on the heels of lower bond yields. Average 30 year mortgage rates are lower this week to 3.69 percent, down from last week’s average rate of 3.75 percent. 10 year bond yields fell to 2.13 percent, putting downward pressure on mortgage rates.
For a little perspective on how low rates are right now, the all-time low for average 30 year rates is 3.30 percent, set back in 2012. Forecasts for higher mortgage rates in 2017 were wrong. At the beginning of the year, forecasts were for 30 year rates to move towards 5.00 percent.
Why are mortgage rates moving lower despite GDP growth and employment growth being strong? In short, low inflation. Despite the unemployment rate falling to 4.3 percent in July and 2nd quarter GDP growth coming in at a strong 2.6 percent rate, inflation isn’t a concern.
Low inflation will keep the Federal Open Market Committee from raising interest rates. The Labor Department said July’s Consumer Price Index rose only 0.1 percent in July. Over the past 12 months, CPI rose 1.7 percent, below the FOMC’s target of 2.00 percent.
Where are Mortgage Rates Headed in 2017?
A lot will depend on whether or not the Fed increases the fed funds rate. The Fed has telegraphed three fed funds rate increases this year and has raised the rate twice already. This leaves one more rate increase in 2017. The Fed has three more meetings scheduled this year and the chances of that third rate increase happening are diminishing.
There is a slim chance of a rate hike during the next two Fed meetings, according to the CME Group’s FedWatch Tool. The likelihood of a rate increase during the September meeting is at 2.7 percent. The chance of a rate hike during the October meeting is lower, at 1.09 percent.
There is a higher chance of a rate hike during the December meeting but even that chance is diminishing. Last month the FedWatch Tool had a 42.8 percent chance of a rate hike in December, that has been lowered to 31.2 percent as of today.
It’s unlikely mortgage rates will move higher in 2017, especially if the Fed doesn’t raise rates any more this year. Long term bond yields are also falling because it’s unlikely the Fed will increase rates. These factors will put downward pressure on mortgage rates.
For the rest of 2017, average 30 year mortgage rates will remain under 4.00 percent and possibly under 3.75 percent. Average 15 year mortgage rates currently at 2.96 percent and will likely remain near the 3.00 percent level.
Freddie Mac has reduced closing times and closing costs through their Loan Advisor Suite®. Loan applicants who are buying a home or refinancing an existing mortgage loan may be eligible for an automated appraisal alternative. In some cases, borrowers may be able to save as much as $500, and more importantly, reduce closing times as much as seven to 10 days.
Freddie Mac’s automated collateral evaluation (ACE) assesses the need for a traditional appraisal by looking at several different factors.
Loan Advisor Suite is Freddie Mac’s smart end-to-end technology solution that assesses credit, capacity, and collateral to help lenders validate the quality of the loans they originate.
ACE for qualified refinances has been available since June 19 and ACE for qualified home purchases will be available starting Sept. 1, 2017.
David Lowman, Executive Vice President of Freddie Mac’s Single-Family Business, said the following about ACE:
Find out if your property is eligible for ACE
You will need to ask your lender to submit the loan data through Loan Product Advisor®. If ACE determines that the estimated value of your home is acceptable, the lender may receive immediate representation and warranty relief related to the value, condition, and marketability of the property upon delivery of the loan to Freddie Mac.
You can read more about Freddie Mac’s Loan Advisor Suite at Loan Advisor Suite. You can also search for and compare mortgage rates for both refinances and purchases by searching our database of lenders at Current Mortgage Rates.
Mortgage rates moved lower aging this week, following bond yields lower. This is the third consecutive week that mortgage rates have declined. Average 30 year mortgage rates fell back below 4.00 percent for the first time in the past three weeks.
Average 30 year mortgage rates fell to 3.95 percent this week, down from the prior week’s average 30 year rate of 4.01 percent. Since mid-March, average 30 year mortgage rates have fallen 35 basis points, down from 4.30 percent on March 15th.
This current downtrend for mortgage rates won’t last long because interest rates are forecast to move higher in 2017. The Federal Reserve is expected to increase their benchmark interest rate, the fed funds rate, at least twice in 2017.
The increases have put upward pressure on bond yields and in turn, mortgage rates will also move higher. If you’re thinking about buying a home or refinancing a mortgage, now is a good time. Current 30 year mortgage rates are still low, historically speaking, and not much higher from the all-time lows of around 3.25 percent set back in 2012.
If forecasts are correct and interest rates are moving higher we expect average 30 year mortgage rates to hit 4.50 percent by the end of 2017. Longer term, the trend for higher rates is expected to continue into 2018 and 2019.
The Mortgage Bankers Association’s Mortgage Finance Forecast puts average 30 year mortgage rate at 4.70 percent at the end of 2017. The current MBA’s forecast for 30 year rates at the end of 2018 is at 5.20 percent.
Even if 30 year rates do head towards 5.00 percent, rates are still low historically speaking. For most of the 2000s, before the financial crisis, 30 year rates were in the 6.00 percent to 7.00 percent range. Going back to the early 1980’s 30 year rates were in the double-digits and as high at 18 percent.
Mortgage rates slowly drifted higher this week. Average 30 year conforming mortgage rates increased to 4.16 percent, up from 4.10 percent last week. Overall, average 30 year mortgage rates haven’t changed since the beginning of 2017. On January 1st, average 30 year rates were at 4.16 percent, not far from today’s average.
Mortgage rates won’t stay low forever. In fact, rates may start creeping up as early as next week. The Fed meets next week and is widely expected to increase the federal funds rate by 0.25 percent, which will put upward pressure on mortgage rates.
Although mortgage rates are not directly tied to the federal funds rate, they usually move in tandem – either higher or lower because of bond yields. In this case, when the Fed increases the fed funds rate bond yields move higher and as a result, mortgage rates move higher.
If the fed funds rate is increased by 0.25 basis points, average mortgage rates won’t increase by the same amount. There will be more upward pressure on shorter term adjustable mortgage rates than long term fixed mortgage rates.
The Fed is also expected to increase the rate at least two more times in 2017. The end result is that mortgage rates are going up in 2017 and in the years to come. In the most recent MBR Mortgage Finance Forecast released by the Mortgage Bankers Association, average 30 year mortgage rates are expected to hit 4.70 percent by the end of 2017. By the end of 2018, 30 year rates are forecast to hit 5.10 percent.
The relentless rise in mortgage rates continues as 30 year mortgage rates hit another new high for 2016. Average 30 year mortgage rates increased to 4.16 percent this week, up 11 basis points from last week’s average rate.
For the first three quarters of 2016, average 30 year mortgage rates hovered around 3.50 percent, which is just above the historical low of 3.31 percent set in November 2012. During that time, you could find lenders quoting 30 year mortgage rates with points below the historical low and as low as 3.00 percent.
The lowest 30 year mortgage rates today in the rate database are still below the current average of 4.16 percent. The best 30 year mortgage refinance rate available right now is at 3.75 percent with 0.50 mortgage points.
When you apply for a mortgage, you can get a lower mortgage rate by paying points up front. 1 mortgage point is equal to 1 percent of the loan amount. For example, a $300,000 loan with 1 point would require you to pay $3,000 upfront at closing. You have to decide whether or not paying points makes financial sense for you.
The outlook for mortgage rates in 2017 and the coming years is unfortunately higher. The driving forces behind higher mortgage rates are a stronger economy and the Federal Reserve increasing interest rates. A higher fed funds rate will force U.S. Treasury yields higher which in turn will force mortgage rates higher.
If you’re interested in reading more about the correlation between Treasury yields and mortgage rates, Zacks did a good post on the subject at How Treasury Yields Affect Mortgage Interest Rates.
The Mortgage Bankers Association is forecasting average 30 year mortgage rates will hit 4.40 percent by the second quarter of 2017. Looking out to the end of 2018, the MBA is forecasting average 30 year mortgage rates to hit 4.90 percent. The last time average 30 year mortgage rates were that high was in early 2011.
Historically speaking, 30 year mortgage rates in the 4.00 percent to 5.00 percent range is still rather low. For most of the 2000s, before the financial crisis, average 30 year rates were in the 6.00 percent to 7.00 percent range. 6.00 percent to 7.00 percent also is still low historically speaking.
Ready for a shocker? In the early 1980s, a period of double digit inflation, average 30 year rates were also in the double digits. The absolute all-time high, as long as rates have been tracked, for 30 year mortgage rates was 18.53 percent set on October 13, 1981.
You can view average 30 year mortgage rates on a monthly basis since 1971 at 30 Year Fixed Mortgage Rates Since 1971.
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