Mortgage Interest Rates

 

If you are thinking of buying or refinancing a home, you may be wondering what are today’s mortgage interest rates and how they affect your borrowing costs. In this blog post, we will give you an overview of the current trends and factors that influence mortgage rates in 2023.

## What are mortgage interest rates?

Mortgage interest rates are the cost of borrowing money to buy or refinance a home. They are expressed as a percentage of the loan amount and vary depending on the type, term and size of the loan, as well as your credit score, down payment and other factors.

Mortgage interest rates are influenced by several factors, including:

– The Federal Reserve’s monetary policy: The Fed sets the federal funds rate, which is the interest rate that banks charge each other for overnight loans. This affects short-term interest rates such as adjustable-rate mortgages (ARMs) and home equity products.

– The bond market: Mortgage lenders often sell their loans to investors in the secondary market, where they are bundled into securities called mortgage-backed securities (MBS). These securities compete with other bonds such as Treasury notes and bonds for investors’ demand. When bond yields rise, MBS prices fall and vice versa. This affects long-term interest rates such as fixed-rate mortgages.

– The economy: Economic indicators such as inflation, unemployment, gross domestic product (GDP) and consumer confidence affect investors’ expectations about future economic conditions and demand for bonds. When inflation rises or economic growth slows down, investors tend to seek safer assets such as bonds, which lowers their yields and mortgage rates. When inflation falls or economic growth picks up, investors tend to seek higher returns in riskier assets such as stocks, which raises their yields and mortgage rates.

– The housing market: Supply and demand for homes also affect mortgage rates. When there is high demand for homes and low inventory, home prices tend to rise faster than incomes, making homes less affordable for buyers. This can reduce demand for mortgages and lower their rates. When there is low demand for homes and high inventory, home prices tend to fall or stagnate, making homes more affordable for buyers. This can increase demand for mortgages and raise their rates.

## What are today’s mortgage interest rates?

According to Bankrate.com, as of March 20th 2023:

– The average 30-year fixed-rate mortgage rate was 7%, falling 5 basis points over the last week.

– The average 15-year fixed-rate mortgage rate was 6.28%, falling 11 basis points over the last week.

– The average 5/1 ARM rate was 5.79%, rising 12 basis points over the last week.

These averages reflect national trends based on data from large lenders across different regions of the country. However, your actual mortgage rate may vary depending on your location, lender, loan type and personal qualifications.

## How to get the best mortgage rate?

To get the best mortgage rate possible for your situation:

– Compare offers from multiple lenders: Shopping around can help you find a lender that offers competitive terms and fees for your loan type.

– Improve your credit score: A higher credit score can help you qualify for lower interest rates because it shows lenders that you are a reliable borrower who pays back debts on time.

– Increase your down payment: A larger down payment can reduce your loan-to-value ratio (LTV), which is the percentage of your home’s value that you borrow. A lower LTV can lower your risk profile in lenders’ eyes and help you get a better rate.

– Choose a shorter loan term: A shorter loan term means less time to pay back your debt with interest. Therefore, lenders may offer lower interest rates on shorter-term loans than longer-term ones because they face less uncertainty about future market conditions.

– Lock in your rate: Once you find a favorable offer from a lender, you can lock in your rate for a certain period of time (usually between 30 to 60 days) before closing on your loan. This protects you from potential increases in market rates while you finalize your transaction.

Mortgage interest rates change daily based on various factors that affect supply and demand in the financial markets. By understanding these factors and following some tips to improve your chances of getting a good deal, you can save money on your home purchase or refinance in today’s market.