If you’re thinking about buying or refinancing a home, you might be wondering how mortgage rates are doing this week. Well, the answer is: they’re still high, but not much higher than last week.
Mortgage rates have been on a steady rise since 2022, when inflation surged to its highest level in decades. To curb inflation, the Federal Reserve has been raising its key interest rate, which affects the cost of borrowing for consumers and businesses. The Fed hiked its rate by 0.25% at its July meeting, and it could do so again at its September meeting.
However, mortgage rates are not directly tied to the Fed’s rate. They are influenced by many other factors, such as the supply and demand for mortgages, the economic outlook, and the expectations of investors. That’s why mortgage rates can sometimes move in different directions from the Fed’s rate.
For example, last week, mortgage rates soared to their highest levels in 21 years, reaching 7.37% for a 30-year fixed loan1. But this week, they have cooled down slightly, averaging 7.51% for a 30-year fixed loan2. That’s still close to the highest level since 2002, but not a new record.
The reason for this slight drop is that inflation data showed some signs of easing in June, when the annual inflation rate fell to 3% from 9.1% in May3. This gave some hope that inflation might not be as persistent as feared, and that the Fed might not need to raise rates as aggressively as expected.
However, inflation is still above the Fed’s target of 2%, and some experts think that it could rise again in the coming months due to supply chain disruptions, labor shortages, and rising energy prices4. If that happens, mortgage rates could resume their upward trend.
So what does this mean for you if you’re looking for a mortgage? Well, it means that you should be prepared to pay more interest than you would have a year ago, when mortgage rates were below 4%. It also means that you should shop around for the best rate available for your situation, as different lenders may offer different terms and fees.
One way to save money on your mortgage is to choose a shorter loan term, such as a 15-year fixed loan instead of a 30-year fixed loan. A shorter loan term typically comes with a lower interest rate and less interest paid over the life of the loan. However, it also means a higher monthly payment, so you need to make sure you can afford it.
Another way to save money on your mortgage is to make a larger down payment, which reduces the amount you need to borrow and lowers your loan-to-value ratio. A lower loan-to-value ratio can help you qualify for a lower interest rate and avoid paying private mortgage insurance (PMI), which is an extra fee that lenders charge if you put less than 20% down.
Of course, saving money on your mortgage is not the only factor to consider when buying or refinancing a home. You also need to think about your budget, your income, your credit score, your debt-to-income ratio, your home value, and your long-term goals. A mortgage is a big financial commitment that should not be taken lightly.
If you need help finding the right mortgage for you, you can use our online tool to compare rates from multiple lenders in minutes. You can also contact me for personalized advice on any of your mortgage needs.
I hope this blog post has given you some useful information about mortgage rates and how they affect your home buying or refinancing decision. Stay tuned for more updates on the housing market industry in our next blog post.
2: Today’s Mortgage and Refinance Rates: August 22, 2023 | 30-Year Rates Hit New High – MSN 1: Mortgage rates for August 21: How high will mortgage rates go? – MSN 4: Mortgage Rates Forecast: How Housing Market Will Change in the Near Future – Newsweek 3: Mortgage Rate Forecast August 2023 | Bankrate
