Mortgage rates have been in a narrow range for more than a month now with the average top tier 30yr fixed rate staying within striking distance of the 7.0% mark for the entirety. The number was 7.01 yesterday and it’s down to 6.99 today. This matches the level last seen on June 14th and you’d have to go back to March to see anything much lower.
Despite the incredibly uneventful performance of the past month, rates face another opportunity for (or “threat of”) a much bigger change tomorrow. The direction of the move will depend entirely on the results of the Consumer Price Index (CPI).
CPI is the most important economic report as far as rates are concerned because it’s the first major look at inflation data on any given month and inflation is the biggest problem for rates at the moment.
Looked at another way, the Fed has repeatedly communicated that rate cuts will happen when CPI suggests inflation is decidedly heading back to 2.0% in year over year terms. The last CPI was a step in the right direction. If tomorrow’s follows suit, the conversation about rate cuts would get serious.
The Fed doesn’t directly dictate mortgage rates, but the entire rate market tends to react to the same things the Fed says it will react to.
As always, keep in mind that data can go both ways. If CPI shows higher inflation than expected, rates could move higher just as quickly as they could drop. Last but not least, there’s always a chance that the data and the market’s reaction to it can be balanced enough to “thread the needle” (i.e. another day without much change in rates).
Bottom line: in terms of POTENTIAL volatility, tomorrow is about as high stakes as it gets.
Buying a home in Alaska is increasingly challenging for residents, as home prices are higher than during their 2022 and 2023 peaks and mortgage rates have risen by more than 50 percent in the past six years, according to a new study by the Alaska Housing Finance Corporation (AHFC).
Read more: What Is Mortgage Refinancing? How Does It Work?
Between 2018 and 2024, the average principal and interest payment for homes purchased in Alaska increased by 52 percent, the study released on June 19 found. Newsweek contacted AHFC for comment by phone on Wednesday morning.
Higher mortgage rates are likely to be another factor in making homes unaffordable for many aspiring buyers in the state, on top of relatively high home prices.
A summer view of large wooden residential houses in Ketchikan, Alaska. Between 2018 and 2024, mortgage rates rose by more than 50 percent in Alaska, according to a recent study. A summer view of large wooden residential houses in Ketchikan, Alaska. Between 2018 and 2024, mortgage rates rose by more than 50 percent in Alaska, according to a recent study. Getty Images
According to the latest Redfin data, the median sale price of a home in Alaska was $388,400 in May, up 2.2 percent compared to a year earlier. In May 2022, it was $363,000. Anchorage, the state’s largest city, was the number one metropolitan area in the state with the fastest-growing sale price, up 3.8 percent in May compared to a year earlier.
Read more: How to Calculate How Much House You Can Afford
Prices are still climbing despite inventory growing significantly in the past year, with 2,230 homes for sale in Alaska in May, up 19.8 percent year-over-year. Newly listed homes were up 21.3 percent compared to a year earlier. But the average month of supply is only two months—far from the six months that is considered enough for the market to turn in favor of buyers.
The situation isn’t any easier for people renting in the state. Since 2018, average rents have increased by 24 percent, reaching an average of $1,325 statewide in 2024, up from $1,250 a year earlier.
All seven communities analyzed by the AHFC experts saw rents increases, including the Municipality of Anchorage (+7.84 percent), Fairbanks North Star Borough (+4.17 percent), Juneau (+3.85 percent), Kenai Peninsula Borough (+4.71 percent), Ketchikan Gateway Borough (+8.41 percent), Kodiak (+20.83 percent), and Matanuska Susitna Borough (+6.38 percent).
Daniel Delfino, the director of planning and program development for AHFC, told Alaska News Source that the housing situation in Alaska is complicated, with “a lot of things moving at the same time.”
“We don’t have a ‘it’s this’ or ‘it’s that’ answer anymore to some of the housing challenges that people are facing,” Delfino said. “It’s an expensive place to build, Alaska. Most of our communities are expensive to build, and before the pandemic and the challenges after the pandemic, inflation and interest costs of land made those challenges harder.”
Are you an Alaska resident trying to get a mortgage, or struggling to buy a home? Have you been affected by the recent increases in mortgage rates? Tell us about your experience by contacting [email protected].
Uncommon Knowledge
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
In case you haven’t heard, there’s talk of a “refinance boom” as soon as 2025. Yes, you read that right.
While it seemed like high mortgage rates were going to spoil the party for a long time, things can change quickly.
Thanks to the millions who took out high-rate mortgages over the past couple years, even a slight improvement in rates could open the floodgates.
But now more than ever it’s going to be important to go with the right lender, the one who ultimately offers the lowest rate with the fewest fees.
This is especially true now that banks and lenders are working hard to improve recapture rates for past customers.
A Refinance Boom in 2025? What?
First let’s talk about that supposed refinance boom. This hopeful news comes courtesy of the latest Mortgage Lender Sentiment Survey® (MLSS) from Fannie Mae.
The GSE surveyed over 200 senior mortgage executives and found that almost three in five (58%) expect a refinance boom to start in 2025.
And some even believe it could kick off later this year, though that would take a pretty big move lower for mortgage rates in a hurry.
Either way, many are now anticipating that the Fed will cut their own rate in September as inflation continues to cool.
This expectation may lend itself to lower mortgage rates as bond yields drop and take the 30-year fixed down with it.
Assuming this all plays out according to plan, we could see a nice uptick in mortgage refinance applications.
After all, some four million mortgages originated since 2022 have interest rates above 6.5%, with about half (1.9M) having rates of 7%+.
If the 30-year fixed makes its way down closer to say 6%, or even lower, many recent home buyers will be clamoring for a rate and term refinance to save some money.
Loan Servicer Retention Has Surged Higher Recently
Now let’s talk about something called “servicer retention.” In short, once your home loan funds, it is typically sold off to an investor on the secondary market, such as Fannie Mae or Freddie Mac.
Along with the sale of the loan are the servicing rights, which can either be retained or released.
If they’re retained, the originating lender collects monthly payments and keeps in touch with the customer for the life of the loan (unless servicing is transferred at a later date).
If the servicing rights are released, payment collection is handed off to a third-party loan servicer.
Lately, banks and lenders have been opting to keep servicing in house to take advantage of a possible future transaction.
It allows them to keep an open line of communication with the homeowner, pitch them new products, such as a refi or home equity loan, cross-sell, and more.
In the meantime, they also make money via servicing fee income, which can supplement earnings when new loans are hard to come by (as they have been lately).
Anyway, what many mortgage companies are realizing is that with servicing retained, they can mine their book of business for refinance opportunities.
So instead of you calling a random lender when the thought crosses your mind, they might be calling you first.
Will You Still Shop Around If They Call You First?
While it might sound nice to have a built-in reminder to refinance when rates drop, it might also deter shopping around.
The latest Mortgage Monitor report from ICE found that retention rates on recent loan vintages have surged, as seen in the chart above.
Loan servicers retained a staggering 41% of borrowers who refinanced out of 2022 vintage loans and 47% of those who refinanced out of 2023 loans.
In other words, they’re snagging nearly half of the refinance business on loans they funded just a year or two ago.
And the retention rate among rate and term refis on FHA loans and VA loans tripled from around 15% in the fourth quarter of 2023 to 46% in the first quarter of 2024.
This means you’re more likely than ever to hear about refinance offers from the bank that currently services your mortgage.
That’s great for the mortgage companies, since they get to earn money on loan origination fees, lender fees, and possibly selling the loan and/or servicing rights again.
But it might not be great for you if you just go with the first quote you hear. Speaking of, ICE also noted that 36% of borrowers “considered” just one lender before making a selection.
And 48% considered just two. Did they consider two or actually speak to two? Remember, shopping around has been proven to save borrowers money. Actual studies by Freddie Mac prove this.
So if you just say sure, let’s work together again, you could possibly miss out on much better offers in the process, even if it is convenient.
Personally, I’d rather get a lower mortgage rate than save a tiny amount of time.
Before creating this site, I worked as an account executive for a wholesale mortgage lender in Los Angeles. My hands-on experience in the early 2000s inspired me to begin writing about mortgages 18 years ago to help prospective (and existing) home buyers better navigate the home loan process.
Best Efforts Trading, DPA Options, Marketing, Dashboard, Online App Tools; Correspondent and Wholesale Products
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Best Efforts Trading, DPA Options, Marketing, Dashboard, Online App Tools; Correspondent and Wholesale Products
By: Rob Chrisman
Wed, Jul 10 2024, 11:48 AM
“The only time I get asked for sex is on application forms.” Ba-dum-ching! Speaking of applications, most lenders will agree that the loan officer should be the first point of contact for a home buyer, not the real estate agent. But over the years real estate agents have done a great job of becoming the starting point of a homebuyer’s quest. But heck, how much house can they afford, what with current rates, homeowner’s insurance, utilities, etc.? Yes, good originators know the psychology of their clients under the “Know your borrower” basic tenant, especially first time home buyers: most homebuyers remain homeowners and the FHFA tells us that the persistence has increased over time across all homeowner demographics like race or ethnicity, regions of the country, and mortgage lending submarkets. (Today’s podcast is found here and this week’s is sponsored by nCino, makers of the nCino Mortgage Suite for the modern mortgage lender, uniting the people, systems, and stages of the mortgage process. Hear an interview with attorney Peter Idziak on last week’s Supreme Court vote to overturn the Chevron doctrine that called on judges to rule in favor of government agencies in instances where the law is ambiguous, and its impact on the mortgage industry.)
Lender and Broker Software, Services, and Products
Curious about what’s new in Encompass® by ICE Mortgage Technology®? ICE recently shared an article which dives into new innovations within the platform that are enabling the lending community to improve both productivity and efficiency. Read the full article here.
nCino and Talk’uments team up to provide lenders with multilanguage tools to more effectively reach more borrowers! Talk’uments, the premier digital language and limited English proficiency (LEP) technology provider for the mortgage industry, announced its integration with nCino’s Mortgage Suite technology solution. At a time when emerging markets like LEP continue to grow, this new partnership enhances multi-language resources to nCino’s users to provide borrowers with seamless, multi-language resources from originations to the final closing. Ben Miller, EVP of U.S. Mortgage for nCino, summed it up best. “We are proud to continue pioneering transformation in the financial services industry with the addition of Talk’uments to our Mortgage Solution, using multilanguage tools to help our customers and their applicants understand, access and trust the process and overcome a key challenge in buying a home.” For more information on Talk’uments’ capabilities, visit talkuments.com.
Have you been using expensive third-party tools for sales automation or paying your CRM extra money? Usherpa just changed all that with Pipelines, exciting new functionality that offers built-in, best-practice marketing and lead generation workflows that can easily be customized. Usherpa users get Pipelines at no extra cost and can build as many as they want. “The nation’s top LOs consistently outperform their peers because they have a better sales process. Now, every LO can have a winning process and win more business,” said Usherpa CEO Chris Harrington. Corporate stakeholders can create Pipelines with call scripting and push to their LOs. Usherpa delivers the daily tasks to loan officers via in-platform dashboard, email, and mobile app, and provides detailed reporting on each LO’s usage for management purposes. Schedule a demo with Usherpa to see this groundbreaking new tech.
You know how annoying it is when you have to create an account to buy something online? That’s how “Checkout as Guest” was born. Now imagine how annoyed your prospective borrowers are when you force an account on them as the FIRST STEP of an online mortgage application. So annoyed they might not do it? Probably, and it’s costing you business. Check out the world’s most borrower-friendly online application with LiteSpeed. Beautifully integrated with Encompass® by ICE Mortgage Technology™, no more account creation headaches or lost business.
“Are you trying to do more with less? Leverage a business intelligence platform to see how you’re performing in vital production and operational areas in comparison to your peers and highlight where you can reduce costs. For half the cost of a full-time employee, with RM Analyze + Peer View Ops you’ll gain access to a strong bench of mortgage industry experts and a suite of pre-built dashboards completely customizable to your needs. Our latest enhancements allow you to schedule email reports, so the most relevant KPIs are delivered straight to your inbox on a regular cadence so you don’t miss a beat. Use our valuable industry data to understand where to focus your efforts to be more effective and achieve sustainable growth. Empower your efforts, contact Spencer Smoot today!”
“With Total Expert, it’s significantly faster and easier for our loan officers to develop outreach emails and find flyers and social media posts for the individualized marketing they do on behalf of Castle & Cooke Mortgage,” said Scott Kirkessner, Castle & Cooke Mortgage Vice President of Marketing and Business Development. And that’s just scratching the surface of how Total Expert is helping Castle & Cooke build deeper customer relationships, uncover more loan opportunities, and drive growth in a stubborn market. Read our full Castle & Cooke Mortgage case study to learn more.
During Disability Pride Month in July, Down Payment Resource challenges lenders to help more home buyers with disabilities and their family caregivers qualify for a mortgage with the help of down payment assistance. Eighteen programs within DPR’s extensive database of 2,300+ offer funds ranging from $2,000 to $117,000 to help people with disabilities fund down payments, closing costs, pay down their interest rate or make accessibility modifications. Many can be combined with other homebuyer assistance programs, providing individuals with disabilities with additional financial support and resources. DPR can help you unleash this power with its suite of lender tools that provide easy access to DPA programs in your footprint. Schedule a demo today to learn more.
Wholesale and Correspondent Products
“Citi Correspondent Lending is thriving in 2024! While remaining dedicated to the support of diverse markets and continued responsible, sustainable growth, we’re seeing record production volume. With a growing product suite that includes expansion of our Community Lending platform, a robust set of CRA incentives, and a quality-focused pre-purchase loan review process, Citi is well positioned to help you grow your business. Complete our Prospective Correspondent Questionnaire or schedule some time with a Citi Account Executive at the Western Secondary Market Conference coming up next month. We would welcome the opportunity to chat with you about all that Citi Correspondent Lending has to offer.”
LoanStream wants you to heat up your pipeline this summer with specials on Prime with 25 BPS price improvement on all Conventional loans >= to $400,000 including High Balance/Super Conforming and 25 BPS Price Improvement on FHA/VA/MaxONE (DPA) loans 620+ FICO (excludes CalHFA), plus 50 BPS price improvement on Non-QM Purchase (excludes Non-QM select), and a 25 BPS price improvement on all Closed End Seconds. Restrictions apply, specials are valid for loans locked 7/1/24 through 7/31/24. Talk with your AE for details. Non-QM Specials also available through our Correspondent lending channel, Home – LoanStream Mortgage Correspondent (lscorrespondent.com), contact your Regional Sales Executive for more information. Plus, make a Splash by closing more Non-QM loans, join LoanStream’s NEW Bank Statement and P&L Webinar. Reserve your spot for this informative webinar for you or your entire team.
FHA, VA, Government Program and Policy Updates
As the USDA Mortgage Recovery Advance (MRA) is a federal lien, USDA Rural Development issued a bulletin on 07/03/2024 providing guidance for servicers completing foreclosures impacted by the 8th Circuit “Show Me” ruling.
USDA is offering up “Top Tips for Successfully Navigating Appraisal and Property Requirements” tomorrow. “Don’t miss this LIVE, virtual training opportunity! This training is available at no cost to all USDA Single Family Housing Guaranteed Loan Program (SFHGLP) lenders and real estate agents.”
The Federal Housing Administration (FHA) is announced updates to its FHA Connection (FHAC) system and an industry stakeholder briefing webinar as part of the implementation of its Appraisal Review and Reconsideration of Value Updates Mortgagee Letter (ML) 2024-07 published on May 1, 2024. The ML established standards for appraisal reviews and FHA’s Reconsideration of Value (ROV) policies, including requirements for a process by which borrowers may request an ROV if they identify a problem with the appraisal. The ML required mortgagees to offer a borrower-initiated ROV process meeting certain minimum requirements, including delivery of disclosures to borrowers at loan application and upon delivery of the appraisal with instructions on how to request an ROV.
Recall that the FHA issued a proposal, in the form of a draft mortgagee letter, to update its origination defect taxonomy to include fraud or misrepresentation involving sponsored third-party originators. The FHA suggested that if the FHA determines a mortgagee knew or should have known that an employee of the mortgagee or its third-party originator was involved in fraud or should have questioned red flags in a loan file, it will be considered a Tier 1 severity and subject to penalties of that severity level. “Based on this update, FHA will seek life-of-loan indemnification from mortgagees when there is evidence of fraud or material misrepresentation involving a sponsored TPO, regardless of whether FHA identifies specific red flags that should have been questioned at underwriting.”
FHA is updating guidelines to expand and clarify requirements and expectations for gift funds transferred prior to settlement and gift funds transferred at settlement. These changes may be implemented immediately but are required for casefiles assigned on or after August 19, 2024. Pennymac is aligning with these changes effectively immediately, view Pennymac Announcement 24-66 for more information.
Capital Markets
An exclusive Conforming investor is joining the MAXEX loan exchange next week, but that’s just the start. On July 15, MAXEX sellers will have access to multiple investors offering up to 90 percent LTV for agency-eligible second home loans, and 85 percent LTV on NOO loans, without being subject to punitive Agency LLPAs. MAXEX offers best efforts flow trading, mandatory bids and works with many popular hedging platforms to give you plenty of ways to trade. Take a closer look at the MAXEX Conforming program and get better execution today.
No one owns a crystal ball… Without any market-moving economic data yesterday, Fed Chair Powell’s semi-annual testimony before the U.S. Senate took center stage. His appearance was a rather lackluster affair, as he was careful not to send any signals about the timing of future monetary policy actions. Sticking to the recent Fed script, he stated that while he was encouraged by recent signs of disinflation, there needs to be further evidence before the FOMC pivots towards a more accommodative monetary policy. He was careful not to offer a timeline for rate cuts, which investors are currently betting will begin in September.
Overall, inflation remains on a downward trajectory through the month-to-month noise. It dovetails nicely with the cooling employment picture in the overall narrative that the Fed is almost ready to cut rates. Average employment growth over the last three months slowed to the lowest since the start of 2021, there has been a sharp decline in job openings this year, and a growing number of people filing for unemployment benefits.
Measures of consumer confidence remain low and are tied largely to uncertainty surrounding this year’s presidential election. Small business sentiment remains sour amid a downshift in economic momentum. We learned yesterday that the NFIB Small Business Optimism Index improved modestly in June. However, high uncertainty and poor economic outlooks have cemented the index below its 50-year average.
Chair Powell is back on the Hill today, this time before the House Financial Services Committee. Other Fed speakers around the country include Governor Bowman, Chicago President Goolsbee, and Governor Cook. The economic calendar began with mortgage applications decreasing 0.2 percent from one week earlier, according to data from the Mortgage Bankers Association. Last week’s results included an adjustment for the July 4th holiday. Later today brings wholesale inventories and sales and a couple of Treasury auctions that will be headlined by $39 billion reopened 10-year notes. We begin the day with Agency MBS prices a few ticks better than Tuesday’s close, the 10-year yielding 4.28 after closing yesterday at 4.30 percent, and the 2-year down to 4.61.
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High prices and elevated interest rates, combined with low inventory, are discouraging homebuyers in the Charleston region, as demonstrated by the double-digit percent decline in sales last month.
June should have been one of the busiest months for the residential market, but sales across the nation slumped for the third month in a row.
While Charleston tends to be insulated as a popular move-to destination, Berkeley, Charleston and Dorchester counties’ home sales fell 13.1 percent, according to preliminary data the Charleston Trident Association of Realtors released July 9.
And much of that has to do with buyers struggling to sell their homes elsewhere to relocate to the Lowcountry, said Jarrett Hodson, banker with Sweetgrass Capital in Charleston.
“People were getting aggressive coming into summer wanting to move, but for a lot of people it didn’t work out,” Hodson said.
In June, 1,587 homes changed hands in the region, a notable drop from the 1,923 sales in June 2019, the year before the pandemic. Sales volume is still higher for the first six months of 2024 compared to the same period of 2023 but barely, by less than 1 percent.
“What’s happening is if somebody can’t sell their house in Ohio, they can’t move to Charleston,” Hodson said. “There’s been a heavy, heavy movement from the Northeast, the West, but as those markets take a hit (so does Charleston).”
As a result, home sale contingencies — where a would-be buyer can walk away from a sale if they can’t sell their home by a certain date — are rising, he added.
While some can’t move, other potential sellers are unwilling give up their low-interest mortgages in the 3 percent range that they locked in during and before the pandemic, said Tara Bittl, an agent with Realty One Group Coastal in Mount Pleasant.
“We used to say people moved every five to seven years; now we’re trending closer to 11 because of that interest rate change,” she said.
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The lack of movement contributed to the local inventory level rising for the fifth month in a row to 3,813 properties, which is still considered low. A balanced market would have about 7,000 listings.
Bittl said the reduced inventory has a number of impacts, from bidding wars in certain areas to casual buyers putting their moving plans on hold.
Without genuine motivation, they really need their “heart to swoon” to commit in this market and there aren’t enough options out there right now, she said.
The Federal Reserve has yet to take action that would ease mortgage rates, which are making it more expensive for buyers to borrow at a time when real estate prices and home insurance premiums also are rising.
The average 30-year-fixed mortgage rate sits at 6.95 percent and 15-year FMRs are 6.25 percent as of July 3, per Freddie Mac.
Median home prices in the Charleston area continued to rise in last month, increasing 4 percent to $425,000 and up 57 percent since mid-2019. Insurance runs about $3,400 on average in South Carolina, according to the National Association of Realtors.
“You have to consider the cost of everything, not just the interest rates,” said Stacy Smith, broker in charge of Smith Spencer Real Estate in Charleston. “A young person buying a home is now totally pushed and it’s daunting.”
Turnkey homes are selling quickly at every price point, she added.
Homes where sellers want top-of-the-market prices for even what they consider minimal work are sitting, pushing the average days on market in June to 35 days, up 25 percent year over year, according to the June sales report.
Homebuyers want houses they don’t have to fix up, Smith said. Borrowing money to replace a roof or refurbish floors comes at a higher cost, too.
The new week is one day less new today, but no less sideways so far. Yields rose microscopically in the overnight session, but even that is a generous assessment considering the range in the 10yr was less than 3bps. Domestic hours are off to a sleepy start with yields in an even narrower 1bp range (essentially 4.29 to 4.30).
MBS have been a bit more willing to move with 6.0 coupons back into positive territory after a weaker start.
The Treasury yield curve helps explain the outperformance with 2yr yields unchanged and 10yr yields up 1.5bps on the day.
Against this boring backdrop, there’s nothing to do but wait to see if Powell has something interesting to say in the 10am congressional testimony. Apart from that, the Treasury auction cycle is another source of potential volatility starting at 1pm, but tomorrow’s 10yr auction is far more capable than today’s 3yr auction in that regard.
Today’s average mortgage rates on Jul. 10, 2024, compared with one week ago. We use rate data collected by Bankrate as reported by lenders across the US.
Mortgage rates constantly change, but there’s a good chance they’ll fall this year. To get the lowest rate, shop around and compare offers from different lenders. Enter your information below to get a custom quote from one of CNET’s partner lenders.
About these rates: Like CNET, Bankrate is owned by Red Ventures. This tool features partner rates from lenders that you can use when comparing multiple mortgage rates.
Current refinance rate trends
When mortgage rates hit historic lows during the pandemic, there was a refinancing boom, as homeowners were able to nab lower interest rates. But with current average mortgage rates around 7%, getting a new home loan isn’t as financially viable.
Early in the year, hopes were high for a summer rate cut from the Fed. But over the past few months, inflation has remained high and the labor market strong, making it clear to investors that the Fed will take longer than expected to lower rates.
Higher mortgage rates make refinancing less attractive to homeowners, making them more likely to hold onto their existing mortgages.
Where refinance rates are headed in 2024
“The odds are good that rates will end 2024 lower than they are now,” said Keith Gumbinger, vice president of mortgage site, HSH.com. But predicting exactly where mortgage rates will end up is difficult because it hinges on economic data we don’t yet have.
If inflation continues to improve and the Fed is able to cut rates, mortgage refinance rates could end the year between 6% and 6.5%.
But data showing higher inflation could cause investors to reconsider the likelihood of Fed rate cuts and send mortgage rates higher, according to Orphe Divounguy, senior economist at Zillow Home Loans.
If you’re considering a refinance, remember that you can’t time the economy: Interest rates fluctuate on an hourly, daily and weekly basis, and are influenced by an array of factors. Your best move is to keep an eye on day-to-day rate changes and have a game plan on how to capitalize on a big enough percentage drop, said Matt Graham of Mortgage News Daily.
What does it mean to refinance?
When you refinance your mortgage, you take out another home loan that pays off your initial mortgage. With a traditional refinance, your new home loan will have a different term and/or interest rate. With a cash-out refinance, you’ll tap into your equity with a new loan that’s bigger than your existing mortgage balance, allowing you to pocket the difference in cash.
Refinancing can be a great financial move if you score a low rate or can pay off your home loan in less time, but consider whether it’s the right choice for you. Reducing your interest rate by 1% or more is an incentive to refinance, allowing you to cut your monthly payment significantly.
How to choose the right refinance type and term
The rates advertised online often require specific conditions for eligibility. Your personal interest rate will be influenced by market conditions as well as your specific credit history, financial profile and application. Having a high credit score, a low credit utilization ratio and a history of consistent and on-time payments will generally help you get the best interest rates.
30-year fixed-rate refinance
The average 30-year fixed refinance rate right now is 7.03%, a decrease of 2 basis points over this time last week. (A basis point is equivalent to 0.01%.) A 30-year fixed refinance will typically have lower monthly payments than a 15-year or 10-year refinance, but it will take you longer to pay off and typically cost you more in interest over the long term.
15-year fixed-rate refinance
The current average interest rate for 15-year refinances is 6.59%, a decrease of 7 basis points from what we saw the previous week. Though a 15-year fixed refinance will most likely raise your monthly payment compared to a 30-year loan, you’ll save more money over time because you’re paying off your loan quicker. Also, 15-year refinance rates are typically lower than 30-year refinance rates, which will help you save more in the long run.
10-year fixed-rate refinance
The current average interest rate for a 10-year refinance is 6.43%, a decrease of 25 basis points over last week. A 10-year refinance typically has the lowest interest rate but the highest monthly payment of all refinance terms. A 10-year refinance can help you pay off your house much quicker and save on interest, but make sure you can afford the steeper monthly payment.
To get the best refinance rates, make your application as strong as possible by getting your finances in order, using credit responsibly and monitoring your credit regularly. And don’t forget to speak with multiple lenders and shop around.
When to consider a mortgage refinance
Homeowners usually refinance to save money, but there are other reasons to do so. Here are the most common reasons homeowners refinance:
To get a lower interest rate: If you can secure a rate that’s at least 1% lower than the one on your current mortgage, it could make sense to refinance.
To switch the type of mortgage: If you have an adjustable-rate mortgage and want greater security, you could refinance to a fixed-rate mortgage.
To eliminate mortgage insurance: If you have an FHA loan that requires mortgage insurance, you can refinance to a conventional loan once you have 20% equity.
To change the length of a loan term: Refinancing to a longer loan term could lower your monthly payment. Refinancing to a shorter term will save you interest in the long run.
To tap into your equity through a cash-out refinance: If you replace your mortgage with a larger loan, you can receive the difference in cash to cover a large expense.
To take someone off the mortgage: In case of divorce, you can apply for a new home loan in just your name and use the funds to pay off your existing mortgage.
In a shift in attitude among mortgage lenders, talent management and leadership replaced cost cutting as the most important priority for their businesses, Fannie Mae found.
Talent management was cited as the No. 1 priority by 22% of respondents to the government-sponsored enterprises second quarter Mortgage Lenders Sentiment Survey, and a combined 31% that considered it their first or second in significance.
“Some lenders commented on a retiring workforce, as well as the difficulties of recruiting and retaining well-qualified personnel,” Doug Duncan, Fannie Mae’s chief economist wrote in an accompanying blog post. “Many pointed out the importance of strong leadership to help navigate market downturns.”
Last year cost cutting was the leading priority, cited by 20% of respondents as their first choice and another 15% as their second.
For this year’s survey, when combining the first and second choices, cost cutting was No. 2 at 31%. But, it slipped to just 12% of lenders saying it was their top priority in 2024, which ranked fifth, not just behind talent management and leadership, but also consumer facing technology, new products or services and business process streamlining.
The 2023 results for talent management ranked it at No. 3, with 24% saying it was the No. 1 or 2 priority, tied with consumer facing technology but behind business process streamlining at 32%.
“In the latest MLSS, nearly two-thirds of respondents reported downsizing their workforce in 2023 — though only a slim minority expect that trend to continue through 2024,” Duncan said.
More than half of the lenders surveyed this year, 54%, expect to make no staff changes. Another 28% said they planned to add staff, with independent mortgage bankers more likely than banks to feel this way, Duncan said. Meanwhile, 18% said they should be reducing staff size this year.
In 2023, mortgage lenders were dealing with significant declines in origination volume. Including the first quarter of this year, the industry has suffered through eight consecutive periods of net production losses, according to Mortgage Banker Association data.
Today, staff sizes are normalizing and lenders are less pessimistic now than they were a year ago about the direction of the economy. While 66% of respondents said a recession is somewhat or very likely to happen in the next two years, that was down from 93% in the 2023 survey.
“As a result, we believe some mortgage lenders are now preparing their workforces to meet potential growth in mortgage originations should the slow recovery of the housing market continue through the rest of this year and into 2025,” Duncan said.
The biggest risk to lenders’ businesses remains the available for sale inventory, with 64% naming it as one of their top three, up 5 percentage points from a year ago.
Mortgage rate changes was second at 59%, 4 percentage points more than in 2023.
At No. 3 this year was household debt levels, named by 35% of respondents, a gain of 15 percentage points over the 2023 survey.
On the other hand, only 11% of this year’s participants were concerned about bank liquidity risk as one of their top 3 worries, compared with 38% in 2023.
When it comes to the possibility of a refinance boom, one-third of respondents do not see one happening in the foreseeable future.
Another 32% expect one in the second half of 2025 and 26% in the first half of next year. Just 6% believe a refi boom is possible anytime from now until the end of 2024.
Fannie Mae said 198 lending institutions completed the survey between April 30 and May 10. The largest share was smaller institutions (based on volume sold to the government-sponsored enterprises) at 117, with 35 mid-sized and 46 larger.
Banks made up 80 of the respondents, with 65 being independent mortgage banks and 39 credit unions.
Bonds are finding their range in a perfectly inoffensive way to begin the new week. That’s a victory considering a bit of weakness is never a surprise at the start of Treasury auction weeks, but then again, current trading levels represent a modest amount of weakness versus the recent yield lows in late June. The overnight session was indeed slightly weaker, but domestic traders quickly got things back to “unchanged” after the 8:20am CME open. There are no big ticket economic reports on tap. Apart from Fed Chair Powell’s semi-annual congressional testimony (Tue/Wed), there’s not much to do except wait for Thursday’s CPI.
Editor’s Note: Parts of this story were auto-populated using data from Curinos, a mortgage research firm that collects data from more than 250 lenders. For more details on how we compile daily mortgage data, check out our methodology here.
Mortgage rates have moved very little over the past week. Today’s 30-year fixed rate is down to 7.28% APR, according to data from Curinos analyzed by the MarketWatch Guides team. The 15-year fixed rate is down to 6.61% APR.
The U.S. Bureau of Labor Statistics released its monthly jobs report on Friday. While there were 206,000 jobs created in June, one-third of new hires were for government jobs and fewer jobs were created in April and May than originally announced. Employment data can affect mortgage rates in two main ways: by influencing the Federal Reserve’s interest rate adjustments and affecting home demand, which in turn impacts rates and pricing.
The Federal Reserve has previously indicated that it will not cut the federal funds rate, the short-term interest rate that impacts mortgage rates and financial markets in the U.S., until it sees signs that the economy is slowing, with inflation that remains at or under 2% and steady unemployment rates around 4%. The next economic report that economists are closely watching is this week’s Consumer Price Index, which reports price levels around the country and is one major indicator of inflation rates.
Here are today’s average mortgage rates:
30-year fixed mortgage rate: 7.28%
15-year fixed mortgage rate: 6.61%
5/6 ARM mortgage rate: 7.01%
Jumbo mortgage rate: 7.18%
Current Mortgage Rates
Product
Rate
Last Week
Change
30-Year Fixed Rate
7.28%
7.30%
-0.02
15-Year Fixed Rate
6.61%
6.68%
-0.07
5/6 ARM
7.01%
7.06%
-0.05
7/6 ARM
7.10%
7.14%
-0.04
10/6 ARM
7.27%
7.27%
0.00
30-Year Fixed Rate Jumbo
7.18%
7.17%
+0.01
30-Year Fixed Rate FHA
6.94%
6.96%
-0.02
30-Year Fixed Rate VA
6.98%
7.01%
-0.03
Disclaimer: The rates above are based on data from Curinos, LLC. All rate data is accurate as of Tuesday, July 09, 2024. Actual rates may vary.
>> View historical mortgage rate trends
Mortgage Rates for Home Purchase
30-year fixed-rate mortgages are down, -0.02
The average 30-year fixed-mortgage rate is 7.28%. Since the same time last week, the rate is down, changing -0.02 percentage points.
At the current average rate, you’ll pay $684.21 per month in principal and interest for every $100,000 you borrow. You’re paying less compared to last week when the average rate was 7.30%.
15-year fixed-rate mortgages are down, -0.07
The average rate you’ll pay for a 15-year fixed-mortgage is 6.61%, a decrease of-0.07 percentage points compared to last week.
Monthly payments on a 15-year fixed-mortgage at a rate of 6.61% will cost approximately $877.17 per $100,000 borrowed. With the rate of 6.68% last week, you would’ve paid $881.03 per month.
5/6 adjustable-rate mortgages are down, -0.05
The average rate on a 5/6 adjustable rate mortgage is 7.01%, a decrease of-0.05 percentage points over the last seven days.
Adjustable-rate mortgages, commonly referred to as ARMs, are mortgages with a fixed interest rate for a set period of time followed by a rate that adjusts on a regular basis. With a 5/6 ARM, the rate is fixed for the first 5 years and then adjusts every six months over the next 25 years.
Monthly payments on a 5/6 ARM at a rate of 7.01% will cost approximately $665.97 per $100,000 borrowed over the first 5 years of the loan.
Jumbo loan interest rates are up, +0.01
The average jumbo mortgage rate today is 7.18%, an increase of+0.01 percentage points over the past week.
Jumbo loans are mortgages that exceed loan limits set by the Federal Housing Finance Agency (FHFA) and funding criteria of Freddie Mac and Fannie Mae. This generally means that the amount of money borrowed is higher than $726,200.
Product
Monthly P&I per $100,000
Last Week
Change
30-Year Fixed Rate
$684.21
$685.57
-$1.36
15-Year Fixed Rate
$877.17
$881.03
-$3.86
5/6 ARM
$665.97
$669.34
-$3.37
7/6 ARM
$672.03
$674.73
-$2.70
10/6 ARM
$683.53
$683.53
$0.00
30-Year Fixed Rate Jumbo
$677.43
$676.76
+$0.67
30-Year Fixed Rate FHA
$661.28
$662.62
-$1.34
30-Year Fixed Rate VA
$663.96
$665.97
-$2.01
Note: Monthly payments on adjustable-rate mortgages are shown for the first five, seven and 10 years of the loan, respectively.
Factors That Affect Your Mortgage Rate
Mortgage rates change frequently based on the economic environment. Inflation, the federal funds rate, housing market conditions and other factors all play into how rates move from week-to-week and month-to-month.
But outside of macroeconomic trends, several other factors specific to the borrower will affect the mortgage interest rate. They include:
Financial situation: Mortgage lenders use past financial decisions of borrowers as a way to evaluate the risk of loaning money.
Loan amount and structure: The amount of money that bank or mortgage lender loans and its structure (including both the term and whether its a fixed-rate or adjustable-rate).
Location: Mortgage rates vary by where you are buying a home. Areas with more lenders, and thus more competition, may have lower rates. Foreclosure laws can also impact a lender’s risk, affecting rates.
Whether borrowers are first-time homebuyers: Oftentimes first-time homebuyer programs will offer new homeowners lower rates.
Lenders: Banks, credit unions and online lenders all may offer slightly different rates depending on their internal determination.
How To Shop for the Best Mortgage Rate
Comparison shopping for a mortgage can be overwhelming, but it’s shown to be worth the effort. Homeowners may be able to save between $600 and $1,200 annually by shopping around for the best rate, researchers found in a recent study by Freddie Mac. That’s why we put together steps on how to shop for the best mortgage rate.
1. Check credit scores and credit reports
A borrower’s credit situation will likely determine the type of mortgage they can pursue, as well as their rate. Conventional loans are typically only offered to borrowers with a credit score of 620 or higher, while FHA loans may be the best option for borrowers with a FICO score between 500 and 619. Additionally, individuals with higher credit scores are more likely to be offered a lower mortgage interest rate.
Mortgage lenders often review scores from the three major credit bureaus: Equifax, Experian and TransUnion. By viewing your scores ahead of lenders considering you for a loan, you can check for errors and even work to improve your score by paying down balances and limiting new credit cards and loans.
2. Know the options
There are four standard mortgage programs: conventional, FHA, VA and USDA. To get the best mortgage rate and increase your odds of approval, it’s important for potential borrowers to do their research and apply for the mortgage program that best fits their financial situation.
The table below describes each program, highlighting minimum credit score and down payment requirements.
Though conventional mortgages are most common, borrowers will also need to consider their repayment plan and term. Rates can be either fixed or adjustable and terms can range from 10 to 30 years, though most homeowners opt for a 15- or 30-year mortgage.
3. Compare quotes across multiple lenders
Shopping around for a mortgage goes beyond comparing rates online. We recommend reaching out to lenders directly to see the “real” rate as figures listed online may not be representative of a borrower’s particular situation. While most experts recommend getting quotes from three to five lenders, there is no limit on the number of mortgage companies you can apply with. In many cases, lenders will allow borrowers to prequalify for a mortgage and receive a tentative loan offer with no impact to their credit score.
After gathering your loan documents – including proof of income, assets and credit – borrowers may also apply for pre-approval. Pre-approval will let them know where they stand with lenders and may also improve negotiating power with home sellers.
4. Review loan estimates
To fully understand which lender is offering the cheapest loan overall, take a look at the loan estimate provided by each lender. A loan estimate will list not only the mortgage rate, but also a borrower’s annual percentage rate (APR), which includes the interest rate and other lender fees such as closing costs and discount points.
By comparing loan estimates across lenders, borrowers can see the full breakdown of their possible costs. One lender may offer lower interest rates, but higher fees and vice versa. Looking at the loan’s APR can give you a good apples-to-apples comparison between lenders that takes into account both rates and fees.
5. Consider negotiating with lenders on rates
Mortgage lenders want to do business. This means that borrowers may use competing offers as leverage to adjust fees and interest rates. Many lenders may not lower their offered rate by much, but even a few basis points may save borrowers more than they might think in the long run. For instance, the difference between 6.8% and 7.0% on a 30-year, fixed-rate $100,000 mortgage is roughly $5,000 over the life of the loan.
Expert Forecasts for Mortgage Rates
Mortgage rates have cooled significantly over the past several months. After the 30-year fixed-rate mortgage hit 8% last October, it ended 2023 closer to 7%. In fact, the average for Q4 2023 was 7.3%.
Analysts with Fannie Mae and the Mortgage Bankers Association (MBA) both project that rates will fall going into 2024 and throughout next year.
Fannie Mae economists expect rates to drop more quickly, falling below 6% by Q4 2024. Meanwhile, the MBA’s forecast for Q4 2024 is 6.1% and 5.9% for Q1 2025.
More Mortgage Resources
Methodology
Every weekday, MarketWatch Guides provides readers with the latest rates on 11 different types of mortgages. Data for these daily averages comes from Curinos, LLC, a leading provider of mortgage research that collects data from more than 250 lenders. For more details on how we compile daily mortgage data, check out our comprehensive methodology here. Editor’s Note: Before making significant financial decisions, consider reviewing your options with someone you trust, such as a financial adviser, credit counselor or financial professional, since every person’s situation and needs are different.