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A number of important mortgage rates rose over the last seven days. The average 15-year fixed and 30-year fixed mortgage rates both grew fairly quickly. We also saw an increase in the average rate of 5/1 adjustable-rate mortgages.

On the heels of cooling inflation, the Federal Reserve announced on May 3 a 25-basis-point increase to its benchmark short-term interest rate. The Fed’s May meeting marks what could be the last increase we see for the time being. The central bank has signaled that it may soon be time to pause on rate hikes. Depending on incoming inflation data, the next step would be to hold rates where they are for an extended period of time in order to bring inflation down to its 2% target.

As long as inflation continues to trend downward, experts say a pause in rate hikes from the Fed could bring some stability to today’s volatile mortgage rate market.

Mortgages hit a 20-year high in late 2022, but now the macroeconomic environment is changing again. Rates dipped significantly in January before climbing back up in February. Throughout March and April, rates fluctuated in the 6% range.

“Ultimately, more certainty about the Fed’s actions will help to smooth out some of the volatility we have seen with mortgage rates,” says Odeta Kushi, deputy chief economist at First American Financial Corporation.

While rates don’t directly track changes to the federal funds rate, they do respond to inflation. Overall, inflation remains high but has been slowly but consistently falling every month since it peaked in June 2022.

After raising rates dramatically in 2022, the Fed opted for smaller, 25-basis-point rate increases in its first three meetings of 2023. The decision to hike by 0.25% on May 3 suggests that inflation is cooling and the central bank may soon be able to pause its rate hiking regime. While the central bank is unlikely to cut rates any time soon, positive signaling from the Fed and cooling inflation may ease some of the upward pressure on mortgage rates.

“If inflation keeps coming down, that will be the biggest driver, outside of the Fed, that’s really going to help bring rates down to a better level and improve affordability for home buyers,” says Scott Haymore, head of capital markets and mortgage pricing at TD Bank.

However, mortgage rates remain well above where they were a year ago. Fewer buyers are willing to jump into the housing market, driving demand down and causing home prices in some regions to ease, but that’s only part of the home affordability equation.

“Even though home prices in many parts of the country have fallen since the start of the year, high rates make buying prohibitively expensive for many,” says Jacob Channel, senior economist at loan marketplace LendingTree. It’s still difficult for many buyers, particularly those looking for their first home, to afford a monthly payment.

What does this mean for homebuyers this year? Mortgage rates are likely to decrease slightly in 2023, although they’re highly unlikely to return to the rock-bottom levels of 2020 and 2021. However, rate volatility may continue for some time. “Expect mortgage rates to yo-yo up and down in the first half of the year, at least until there is a consensus about when the Fed will conclude raising interest rates,” says Greg McBride, CFA and chief financial analyst at Bankrate. (Like CNET Money, Bankrate is owned by Red Ventures.) McBride expects rates to fall more consistently as the year progresses. “Thirty-year fixed mortgage rates will end the year near 5.25%,” he predicts.

Rather than worrying about market mortgage rates, homebuyers should focus on what they can control: getting the best rate they can for their situation.

“The most important thing is that they find the right home. The second most important thing is obviously to find the most efficient way to finance it,” says Melissa Cohn, regional vice president of William Raveis Mortgage.

Take steps to improve your credit score and save for a down payment to increase your odds of qualifying for the lowest rate available. Also, be sure to compare the rates and fees from multiple lenders to get the best deal. Looking at the annual percentage rate, or APR, will show you the total cost of borrowing and help you compare apples to apples.

30-year fixed-rate mortgages

The 30-year fixed-mortgage rate average is 6.99%, which is a growth of 15 basis points from one week ago. (A basis point is equivalent to 0.01%.) Thirty-year fixed mortgages are the most frequently used loan term. A 30-year fixed rate mortgage will usually have a smaller monthly payment than a 15-year one — but usually a higher interest rate. Although you’ll pay more interest over time — you’re paying off your loan over a longer timeframe — if you’re looking for a lower monthly payment, a 30-year fixed mortgage may be a good option.

15-year fixed-rate mortgages

The average rate for a 15-year, fixed mortgage is 6.38%, which is an increase of 25 basis points from the same time last week. Compared to a 30-year fixed mortgage, a 15-year fixed mortgage with the same loan value and interest rate will have a bigger monthly payment. But a 15-year loan will usually be the better deal, if you can afford the monthly payments. These include usually being able to get a lower interest rate, paying off your mortgage sooner, and paying less total interest in the long run.

5/1 adjustable-rate mortgages

A 5/1 adjustable-rate mortgage has an average rate of 5.85%, an addition of 6 basis points from the same time last week. For the first five years, you’ll usually get a lower interest rate with a 5/1 ARM compared to a 30-year fixed mortgage. However, changes in the market might cause your interest rate to increase after that time, as detailed in the terms of your loan. For borrowers who plan to sell or refinance their house before the rate changes, an ARM might be a good option. But if that’s not the case, you may be on the hook for a much higher interest rate if the market rates shift.

Mortgage rate trends

Mortgage rates were historically low throughout most of 2020 and 2021 but increased steadily throughout 2022. Now, mortgage rates are roughly twice what they were a year ago, pushed up by persistently high inflation. That high inflation prompted the Fed to raise its target federal funds rate seven times in 2022. By raising rates, the Fed makes it more expensive to borrow money and more appealing to keep money in savings, suppressing demand for goods and services.

Mortgage interest rates don’t move in lockstep with the Fed’s actions in the same way that, say, rates for a home equity line of credit do. But they do respond to inflation. As a result, cooling inflation data and positive signals from the Fed will influence mortgage rate movement more than the most recent 25-basis-point rate hike.

We use data collected by Bankrate to track rate changes over time. This table summarizes the average rates offered by lenders across the US:

Average mortgage interest rates

Product Rate Last week Change
30-year fixed 6.99% 6.84% +0.15
15-year fixed 6.38% 6.13% +0.25
30-year jumbo mortgage rate 7.04% 6.87% +0.17
30-year mortgage refinance rate 7.09% 6.98% +0.11

Rates as of May 19, 2023.

How to shop for the best mortgage rate

You can get a personalized mortgage rate by reaching out to your local mortgage broker or using an online calculator. Make sure to consider your current financial situation and your goals when looking for a mortgage.

Things that affect the interest rate you might get on your mortgage include: your credit score, down payment, loan-to-value ratio and your debt-to-income ratio. Generally, you want a good credit score, a higher down payment, a lower DTI and a lower LTV to get a lower interest rate.

The interest rate isn’t the only factor that affects the cost of your home. Be sure to also consider other costs such as fees, closing costs, taxes and discount points. Be sure to talk to several different lenders — like local and national banks, credit unions and online lenders — and comparison-shop to find the best mortgage for you.

How does the loan term impact my mortgage?

When picking a mortgage, it’s important to consider the loan term, or payment schedule. The most common loan terms are 15 years and 30 years, although 10-, 20- and 40-year mortgages also exist. Another important distinction is between fixed-rate and adjustable-rate mortgages. The interest rates in a fixed-rate mortgage are stable for the duration of the loan. For adjustable-rate mortgages, interest rates are stable for a certain number of years (most frequently five, seven or 10 years), then the rate adjusts annually based on the current interest rate in the market.

When deciding between a fixed-rate and adjustable-rate mortgage, you should think about the length of time you plan to live in your home. For people who plan on living long-term in a new house, fixed-rate mortgages may be the better option. While adjustable-rate mortgages can sometimes offer lower interest rates upfront, fixed-rate mortgages are more stable in the long term. If you don’t plan to keep your new house for more than three to 10 years, however, an adjustable-rate mortgage might give you a better deal. There is no best loan term as a rule of thumb; it all depends on your goals and your current financial situation. Be sure to do your research and think about your own priorities when choosing a mortgage.

Source: cnet.com

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Lender Price, a leading provider of mortgage loan product and pricing technology, has launched Base Price Solution (BPS), a new pricing tool designed to help banks, lenders, and credit unions optimize their pricing strategies.

With the new product, lenders have the ability to quickly generate base pricing, which eliminates the need for multiple spreadsheets used to calculate pricing market swings. The solution not only provides full transparency for regulators and auditors, but it also helps reduce manual processes, improve accuracy, and get pricing out faster when the market changes.

BPS is specifically designed for capital markets and secondary marketing teams that want to ensure they are priced competitively while maximizing their profits, Lender Price said in a statement. Users can also set custom pricing rules based on factors such as seasonality, demand, and competitive pressures.

The pricing tool is directly integrated with top market data providers, enabling lenders to set up pricing plans for different types of products, reference buy-up or buy-down tables as well as MSR servicing grids, and manage and adjust pricing for multiple products or services. Additionally, BPS allows manual channel-based subsidies at the coupon level and complete traceability for regulatory or audit reasons.

With Base Price Solution, lenders can quickly reprice within minutes during market swings and recall any committed pricing date to the history screen for reference or audit purposes. By automating the process, pricing updates save time and reduce the risk of manual errors.

“We are excited to launch Base Price Solution, a powerful pricing tool that will help banks, lenders, and credit unions improve their pricing strategies and drive profitability,” said Dawar Alimi, CEO at Lender Price. “BPS offers a unique combination of insights and custom pricing rules, providing businesses with the ability to enhance process, drive efficiency and optimize their pricing strategies.”

Source: housingwire.com

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About our Mortgage Rate Tables: The above mortgage loan information is provided to, or obtained by, Bankrate. Some lenders provide their mortgage loan terms to Bankrate for advertising purposes and Bankrate receives compensation from those advertisers (our “Advertisers”). Other lenders’ terms are gathered by Bankrate through its own research of available mortgage loan terms and that information is displayed in our rate table for applicable criteria. In the above table, an Advertiser listing can be identified and distinguished from other listings because it includes a “Next” button that can be used to click-through to the Advertiser’s own website or a phone number for the Advertiser.

Availability of Advertised Terms: Each Advertiser is responsible for the accuracy and availability of its own advertised terms. Bankrate cannot guaranty the accuracy or availability of any loan term shown above. However, Bankrate attempts to verify the accuracy and availability of the advertised terms through its quality assurance process and requires Advertisers to agree to our Terms and Conditions and to adhere to our Quality Control Program. Click here for rate criteria by loan product.

Loan Terms for Bankrate.com Customers: Advertisers may have different loan terms on their own website from those advertised through Bankrate.com. To receive the Bankrate.com rate, you must identify yourself to the Advertiser as a Bankrate.com customer. This will typically be done by phone so you should look for the Advertisers phone number when you click-through to their website. In addition, credit unions may require membership.

Loans Above $726,200 May Have Different Loan Terms: If you are seeking a loan for more than $726,200, lenders in certain locations may be able to provide terms that are different from those shown in the table above. You should confirm your terms with the lender for your requested loan amount.

Taxes and Insurance Excluded from Loan Terms: The loan terms (APR and Payment examples) shown above do not include amounts for taxes or insurance premiums. Your monthly payment amount will be greater if taxes and insurance premiums are included.

Consumer Satisfaction: If you have used Bankrate.com and have not received the advertised loan terms or otherwise been dissatisfied with your experience with any Advertiser, we want to hear from you. Please click here to provide your comments to Bankrate Quality Control.

Source: thesimpledollar.com

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Save more, spend smarter, and make your money go further

“Apparently, I’m a financial unicorn,” says Lance Cairns of Georgia, Vermont. Cairns has worked his whole adult life to build a credit score higher than 800, a feat achieved by only 5.7% of all Americans, according to CreditKarma.com. That’s not exactly mythical, but is quite rare.

Cairns has maintained excellent credit since he began building his credit history in his early 20s. His 811 FICO score paid off when he secured low-interest rates on his mortgage and credit cards. But can someone who has accrued substantial revolving debt or made poor financial decisions in the past achieve such a score? Experts – and people who’ve done it – say yes.

Perks of the Credit Elite

Cairns was recently approved for a credit card with a 5.15% interest rate – lower than that of many fixed-rate conventional mortgages. The APR, or annual percentage rate, on his other major credit card is 7.25%. Thanks to his high credit score, Cairns also saves money on his car insurance.

Julie White, another member of the credit elite (her score is 813), enjoys multiple money-saving perks, as well as bragging rights. “My husband’s score is 793 and I lord those 20 points over him,” she jokes.

To start with, White recently obtained a 15-year mortgage with a 4.5% interest rate. “We also got lower fees on some closing costs associated with the bank, and lower homeowners’ insurance costs. Apparently, people with excellent credit are less likely to burn the house down,” she quips.

From 600 to 800+


Unlike Cairns, who has always had impeccable credit, White had a credit score in the low 600s in her early 20s. “When I was making less money, it was harder. I regularly carried balances until about 10 years ago,” she says.

Since debt utilization makes up 30 percent of your credit score – the second biggest factor after timely payments – carrying a balance can keep you out of the credit-elite category.

Once White was able to pay off those balances, her credit score spiked. She keeps it high by using Outlook reminders and online bill-paying so she never misses a payment. “Most of our household bills go on a cash-rewards credit card I pay off each month. I write only a few checks. This reduces the chance of a slipup,” she says.

Randy Mitchelson, owner of the Daily Dollar Newsletter personal finance blog, says White’s experience isn’t unusual. “Time heals all credit issues,” he says. “Assuming the consumer has perfect credit behavior for a 24-month period following bad credit behavior, he can earn a dramatically different score.”

Taking Your Credit from Excellent to Elite

Once you hit the 750 mark, it takes careful credit management to make the jump to 850. Some experts say there’s no real difference in 50 points when you reach the top of the pack, but others say that in today’s lending environment, every point helps. “A FICO score of 750 is great, but it’s no longer a guarantee for the best rates available,” says Wayne Sanford of YourCreditSpecialist.com.

Sanford points to the all-important debt-to-available-credit ratio as one way to give your score a nudge. “If you have a perfect payment history for six to 12 months, you may be able to get a credit line increase just by asking,” he says. That way, a credit inquiry won’t negatively affect your score, but you can lower your debt-to-credit ratio to gain points. “Credit unions and smaller banks are more likely to do this based on your credit history alone,” Sanford advises.

Another way to raise your score is to develop a variety of credit – a mixture of revolving and installment loans. “A good ratio is two revolving loans for every installment,” Sanford says. “So if you have a mortgage and a car loan, you should have four credit cards.”

Of course, you shouldn’t buy a new car just to improve your credit score. Sanford suggests adding your name to a spouse’s existing installment loan – another move you can make without a credit inquiry.

Credit inquiries account for 10 percent of your FICO score, so it’s a good idea to limit them if you intend to join the credit elite. “Retail store cards we apply for to get a discount, cell phone plans, auto loans, apartment rentals… these all count against our FICO score,” says Denise Winston, a money and time-saving expert. “I limit mine to no more than two per year.”

In general, the rules to join the credit elite are simple: make timely payments, keep your credit utilization up to about 25 to 35 percent of your available credit, and minimize credit inquiries.

In addition to the cost savings available to members of the credit elite, there’s another key benefit: peace of mind. The higher your score, the easier it is to stay within the “excellent” category should you make a small mistake. Mitchelson explains: “One late payment may bring you from 810 to 760 and keep you in the ‘A’ credit range, whereas a 720 person with a late payment will fall into the 600s and out of the ‘A’ range,” he says.

For more tips on improving your credit score, check out MintLife‘s Credit Score Primer.

Can You Increase Your Credit Score to 850 is provided by Experian.com

Save more, spend smarter, and make your money go further

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  1. Calculators
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  3. Student Loan Calculator

student loan calculator

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How to use Credit Karma’s student loan calculator

If you’re applying for student loans or getting ready to start repaying your existing loans, Credit Karma’s student loan calculator is a useful tool to have on hand. The calculator can help you determine how much your potential monthly payments will be and how soon you may be able to pay off your loans. Keep in mind, the calculator only provides an estimate based on the information you provide. The calculator can’t account for additional factors like fees or alternative payment plans.

Here’s the information you’ll need to calculate your estimated monthly student loan payments.

Loan amount

Start by manually entering how much you borrowed or plan to borrow. If you’re not sure what the total cost of attendance will be, you can enter a ballpark estimate. You can use national averages to start or check out your college’s website to see its estimated costs.

Estimated interest rate

Next, you’ll enter your estimated interest rate, which is the cost you pay each year to borrow the money, expressed as a percentage rate.

For federal student loans, the interest rate is set by federal law. You can find this information by logging into your Federal Student Aid account. If you took out private loans, you may need to contact your loan servicer to get this information.

An annual percentage rate comprises the interest rate and fees. If you enter an estimated interest rate instead of an APR, this calculator may estimate a monthly payment that’s different from what you may be responsible for under the terms of your loan.

Life of loan (in years)

The life of your loan, also known as the loan term, is the number of years it’s expected to take you to repay the loan. For instance, if you took out federal student loans, the standard repayment plan is 10 years. But depending on your loan amount, your loan term could be more or less than 10 years.

What are the different types of student loans?

There are two main types of student loans — federal loans and private loans. Federal loans are offered by the U.S. Department of Education, while private loans are offered by private lenders, which include banks and credit unions.

You might want to begin by applying for federal loans since they come with fixed interest rates and typically include more borrower protections. When you apply for federal loans, you may qualify for either subsidized or unsubsidized loans.

Direct subsidized loans are designed to help borrowers facing financial need. Your college determines the loan amount, which can’t exceed your financial need. The main benefit of subsidized loans is that the government will pay for the interest while you’re in school.

In comparison, direct unsubsidized loans are available to undergraduate and graduate students whether they have a financial need or not. The amount you can borrow is based on your college’s total cost of attendance and other financial aid you receive. You’re responsible for paying any interest that accumulates while you’re still in school.

If your federal loans don’t cover the full cost of your education, you may decide to supplement them with private loans. Private loans are distributed by private lenders like banks or credit unions.

The terms of private loans are set by the lenders, and these loans tend to be more expensive than federal loans. Private loans are credit-based, so if you don’t have any credit history you’ll typically need to apply with a co-signer.

Is it smart to pay off student loans early?

If you’re financially able, you may decide to pay off your student loans early. There are typically no penalties to paying your student loans off early, but you’ll want to check with your lender or loan servicer to be sure.

Before you pay off your student loans, you’ll want to contact your lender or loan servicer to get a payoff quote so you’ll know how much you need to pay off your loans in full.

Do I have to pay my student loans if I’m unemployed?

If you’re unemployed or face financial difficulties in the future, you may want to pause your student loan payments. Whether this is an option may depend on if you have federal or private loans.

If you have federal loans, you may qualify for deferment or loan forbearance. Both options temporarily suspend your loan payments while you get back on your feet. But interest will likely accrue, so your loan balance will continue to increase.

If you have private loans, you may be able to postpone your payments. In general, your options with private loans may be less favorable than what you’d get with federal loans.

The rules around deferment or forbearance vary among lenders. After you apply for deferment or forbearance, make sure you continue making your loan payments until your lender decides whether to approve your application.

Learn more about student loans.

Source: mint.intuit.com

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