Mortgage 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 RatesAverage 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. 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.

Author: Brian McKay
December 13th, 2017

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.

3 percent down paymentIf 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.

  • You must live in the home and it must be your primary residence.
  • Your income can’t exceed 100 percent 0f your area’s median income. If you live in an underserved area, income limits do not apply. Read more: Home Possible Income
  • Must be a purchase loan or no cash out refinance loan.
  • Conventional fixed rate mortgages of 30 years or less.
  • Adjustable rate mortgages, 5/1, 7/1 or 10/1 (only 1 or 2 unit properties)
  • 1 to 4 unit property – Home Possible Loan up to 95% Loan to Value (LTV)
  • 1 unit property – Home Possible Advantage up to 97% LTV

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.

Author: Brian McKay
October 17th, 2017

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

Weekly Mortgage Rates Survey

  • 30 year fixed jumbo mortgage rates today are currently averaging 4.19 percent. An increase from last week’s average 30 year jumbo rate of 4.13 percent.
  • Jumbo 15 year mortgage rates today are averaging 3.88 percent. Up from the previous week’s average 15 year jumbo rate of 3.82 percent.
  • 5 year adjustable jumbo mortgage rate are averaging 3.69 percent. An increase of 11 basis points from the prior week’s average 5 year rate of 3.58 percent.

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?

Author: Brian McKay
September 25th, 2017

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.

Author: Brian McKay
September 7th, 2017

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.

  • Leveraging proprietary models
  • Using data from multiple listing services and public records
  • Looking at historical home values to determine collateral risks

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:

By leveraging big data and advanced analytics, as well as 40+ years of historical data, we’re cutting costs and speeding up the closing process for borrowers. At the same time, we’re providing immediate collateral representation and warranty relief to lenders. This is just one example of how we are reimagining the mortgage process to create a better experience for consumers and lenders.”

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.

Author: Brian McKay
August 21st, 2017