The Community Home Lenders of America (CHLA) this week submitted a letter to the Federal Housing Administration (FHA) that urges the agency to “provide comparable down payment treatment for FHA borrowers, regardless of whether or not the seller is willing to pay the home buyer broker commission,” according to an announcement by the organization.
The letter is being sent in response to a series of real estate commission lawsuits and the recent $418 million settlement by the National Association of Realtors (NAR), with the association also agreeing to abolish the “Participation Rule” requiring sell-side agents to make an offer of compensation to buyer brokers.
CHLA contends that the settlement is “likely to result in a shifting from the home seller to the home buyer of the financial responsibility to pay buyer Realtor commissions,” and cites three key concerns in its letter addressed to FHA Commissioner Julia Gordon.
The first is a contention that large swaths of first-time homebuyers, who already face major challenges to enter the housing market, will not be able to meet higher down payment thresholds necessary to pay the buyer’s agent commission when using FHA financing.
“We believe that FHA borrowers should not have to make a much higher down payment merely because the seller is (arbitrarily) unwilling to fund the buyer agent commission,” the letter stated.
The CHLA also raises concerns about preexisting biases that may impact borrowers using FHA financing, a bias they contend has been demonstrated in the past.
“Existing (and well documented) home seller biases against buyers with FHA loans will be exacerbated, because of concerns over the buyer’s ability to make higher down payments,” the letter stated.
The third highlighted concern stems from the potential for inflated sales prices based on commission impacts, with CHLA contending that sellers “may use their leverage over the higher down payment levels to extract a higher sales price in exchange for agreeing to pay the buyer agent commission.”
The letter provides a series of prototype loan scenarios that could spin out of the settlement, illustrating CHLA’s arguments. Among the scenarios is one that CHLA hopes will become standard practice, in which “every home seller will be willing to pay the buyer agent commission, as a courtesy and without extracting a higher price in exchange for doing so,” the letter stated. “However, we do not have confidence that this will be the case.”
FHA borrowers are particularly vulnerable to sellers who may try to leverage a higher sales price, since “paying cash for their agent’s commission may not be economically feasible [for FHA buyers],” the letter read. “Having spent several years building up cash reserves for the down payment, the homebuyer will thus have to wait a few years longer to accumulate the cash necessary to fund this amount.”
Late last month, FHA addressed a common question the agency had received from interested stakeholders, who asked how the proposed settlement agreement will affect the treatment of seller-paid buyer broker fees in transactions that use FHA-insured mortgage financing.
“Under existing FHA policy, if sellers continue to pay buyer-side real estate agent commissions and fees as a manner of state and local law or custom, and if the commissions and fees are reasonable in amount, existing policy would not treat those payments as interested party contributions provided all other requirements are met,” the agency said in an informational notice distributed to professionals via email and published online.
Editor’s note: An FHA statement on a different matter was erroneously included in a previous version of this article.
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 gradually over the past few weeks, with the 30-year fixed-rate mortgage reaching 7.20% APR today, after standing at 7.45% a month ago, according to data from Curinos analyzed by MarketWatch Guides.
Rates moved upward just before last week’s meeting of the Federal Reserve. While the Fed kept interest rates steady, Chairman Jerome Powell indicated in a press conference Wednesday that the board still expected to cut interest rates three times in 2024 despite “seasonal effects” causing a temporary rise in inflation.
Last month’s home prices rose 9.5% month-over-month for February, the largest increase in a year. The median home price increased 5.7% from last year, to $384,500, the National Association of Realtors reported on Thursday.
Here are today’s average mortgage rates:
30-year fixed mortgage rate: 7.20%
15-year fixed mortgage rate: 6.46%
5/6 ARM mortgage rate: 6.99%
Jumbo mortgage rate: 7.10%
Current Mortgage Rates
Product
Rate
Last Week
Change
30-Year Fixed Rate
7.20%
7.19%
+0.01
15-Year Fixed Rate
6.46%
6.48%
-0.02
5/6 ARM
6.99%
6.98%
+0.01
7/6 ARM
7.17%
7.14%
+0.03
10/6 ARM
7.20%
7.22%
-0.02
30-Year Fixed Rate Jumbo
7.10%
7.09%
+0.01
30-Year Fixed Rate FHA
6.93%
6.90%
+0.03
30-Year Fixed Rate VA
6.98%
6.98%
0.00
Disclaimer: The rates above are based on data from Curinos, LLC. All rate data is accurate as of Friday, March 29, 2024. Actual rates may vary.
>> View historical mortgage rate trends
Mortgage Rates for Home Purchase
30-year fixed-rate mortgages are up, +0.01
The average 30-year fixed-mortgage rate is 7.20%. Since the same time last week, the rate is up, changing +0.01 percentage points.
At the current average rate, you’ll pay $678.79 per month in principal and interest for every $100,000 you borrow. You’re paying more compared to last week when the average rate was 7.19%.
15-year fixed-rate mortgages are down, -0.02
The average rate you’ll pay for a 15-year fixed-mortgage is 6.46%, a decrease of-0.02 percentage points compared to last week.
Monthly payments on a 15-year fixed-mortgage at a rate of 6.46% will cost approximately $868.91 per $100,000 borrowed. With the rate of 6.48% last week, you would’ve paid $870.01 per month.
5/6 adjustable-rate mortgages are up, +0.01
The average rate on a 5/6 adjustable rate mortgage is 6.99%, an increase of+0.01 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 6.99% will cost approximately $664.63 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 7.10%, 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
$678.79
$678.11
+$0.68
15-Year Fixed Rate
$868.91
$870.01
-$1.10
5/6 ARM
$664.63
$663.96
+$0.67
7/6 ARM
$676.76
$674.73
+$2.03
10/6 ARM
$678.79
$680.14
-$1.35
30-Year Fixed Rate Jumbo
$672.03
$671.36
+$0.67
30-Year Fixed Rate FHA
$660.61
$658.60
+$2.01
30-Year Fixed Rate VA
$663.96
$663.96
$0.00
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.
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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.
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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.
Sales of previously occupied U.S. homes rose in January from the previous month to the strongest pace in a year with homebuyers encouraged by a modest pullback in mortgage rates and more properties on the market.
Existing home sales climbed 9.5% last month from January to a seasonally adjusted annual rate of 4.38 million, the National Association of Realtors® said Thursday.
The pickup in sales helped push up home prices compared with a year earlier for the eighth month in a row. The national median sales price climbed 5.7% from a year earlier to $384,500. That’s the highest median sales price for February on records going back to 1999.
At the end of last month, there were 1.07 million unsold homes on the market, a 5.9% increase from January and up 10.3% from a year earlier. That’s the highest inventory of homes for sale for February since 2020, the NAR said.
“Additional housing supply is helping to satisfy market demand,” said Lawrence Yun, the NAR’s chief economist.
National mortgage rates edged higher for all loan terms compared to a week ago, according to data compiled by Bankrate. Rates for 30-year fixed, 15-year fixed, 5/1 ARMs and jumbo loans increased.
While it’s expected that rates will gradually come down this year, it may not be a straight downward path.
“Where the 10-Year Treasury yield goes, mortgage rates will follow,” says Ken Johnson of Florida Atlantic University. “In roughly the last two months, the 10-year Treasury yield is up 50 basis points. Depending on the source, the 30-year mortgage rate is up 48 basis points. Treasurys’ path remains a coin toss at this point.”
Rates last updated March 26, 2024.
The rates listed above are Bankrate’s overnight average rates and are based on the assumptions indicated here. Actual rates listed on-site may vary. This story has been reviewed by Suzanne De Vita. All rate data accurate as of Tuesday, March 26th, 2024 at 7:30 a.m.
30-year mortgage rate trends upward, +0.10%
The average rate for a 30-year fixed mortgage for today is 6.98 percent, an increase of 10 basis points over the last seven days. Last month on the 26th, the average rate on a 30-year fixed mortgage was higher, at 7.15 percent.
At the current average rate, you’ll pay a combined $663.96 per month in principal and interest for every $100,000 you borrow. That’s $6.70 higher compared with last week.
There are various advantages to choosing a fixed-rate mortgage when buying new house, including predictable mortgage payments.
Learn more: What is a fixed-rate mortgage and how does it work?
15-year mortgage rate trends higher, +0.06%
The average 15-year fixed-mortgage rate is 6.47 percent, up 6 basis points over the last seven days.
Monthly payments on a 15-year fixed mortgage at that rate will cost $869 per $100,000 borrowed. Yes, that payment is much bigger than it would be on a 30-year mortgage, but it comes with some big advantages: You’ll save thousands of dollars over the life of the loan in total interest paid and build equity much more rapidly.
5/1 adjustable rate mortgage advances, +0.13%
The average rate on a 5/1 adjustable rate mortgage is 6.51 percent, rising 13 basis points from a week ago.
Adjustable-rate mortgages, or ARMs, are home loans that come with a floating interest rate. In other words, the interest rate will change at regular intervals, unlike fixed-rate mortgages. These loan types are best for those who expect to refinance or sell before the first or second adjustment. Rates could be substantially higher when the loan first adjusts, and thereafter.
While borrowers shunned ARMs during the pandemic days of super-low rates, this type of loan has made a comeback as mortgage rates have risen.
Monthly payments on a 5/1 ARM at 6.51 percent would cost about $633 for each $100,000 borrowed over the initial five years, but could ratchet higher by hundreds of dollars afterward, depending on the loan’s terms.
The average rate for the benchmark jumbo mortgage is 7.09 percent, up 11 basis points since the same time last week. A month ago, the average rate for jumbo mortgages was higher at 7.13 percent.
At the current average rate, you’ll pay principal and interest of $671.36 for every $100,000 you borrow. That’s an extra $7.40 compared with last week.
Mortgage refinance rates
Current 30 year mortgage refinance rate goes up, +0.12%
The average 30-year fixed-refinance rate is 6.99 percent, up 12 basis points since the same time last week. A month ago, the average rate on a 30-year fixed refinance was higher at 7.16 percent.
At the current average rate, you’ll pay $664.63 per month in principal and interest for every $100,000 you borrow. That’s $8.04 higher compared with last week.
Where are mortgage rates going?
“The Federal Reserve will not cut interest rates in the first half of this year, in my view,” says Lawrence Yun, chief economist of the National Association of Realtors, “but rate cuts of three, four or even five rounds will be possible in the second half of the year as rent measures will be much more well-behaved.”
The rates on 30-year mortgages mostly follow the 10-year Treasury, which shifts continuously as economic conditions dictate, while the cost of variable-rate home loans mirror the Fed’s moves.
These broader factors influence overall rate movement. As a borrower, you could be quoted a higher or lower rate compared to the trend.
What these rates mean for you and your mortgage
While mortgage rates change daily, it’s unlikely we’ll see rates back at 3 percent anytime soon. If you’re shopping for a mortgage now, it might be wise to lock your rate when you find an affordable loan. If your house-hunt is taking longer than anticipated, revisit your budget so you’ll know exactly how much house you can afford at prevailing market rates.
Keep in mind: You could save thousands over the life of your mortgage by getting at least three loan offers, according to Freddie Mac research. You don’t have to stick with your bank or credit union, either. There are many types of mortgage lenders, including online-only and local, smaller shops.
“All too often, some [homebuyers] take the path of least resistance when seeking a mortgage, in part because the process of buying a home can be stressful, complicated and time-consuming,” says Mark Hamrick, senior economic analyst for Bankrate. “But when we’re talking about the potential of saving a lot of money, seeking the best deal on a mortgage has an excellent return on investment. Why leave that money on the table when all it takes is a bit more effort to shop around for the best rate, or lowest cost, on a mortgage?”
More on current mortgage rates
Methodology
Bankrate displays two sets of rate averages that are produced from two surveys we conduct: one daily (“overnight averages”) and the other weekly (“Bankrate Monitor averages”).
The rates on this page represent our overnight averages. For these averages, APRs and rates are based on no existing relationship or automatic payments.
Learn more about Bankrate’s rate averages, editorial guidelines and how we make money.
The National Association of Realtors (NAR) and the Mortgage Bankers Association (MBA) are asking federal housing officials to confirm their treatment of interested party contributions (IPCs) to home purchase transactions.
In a letter addressed to Federal Housing Finance Agency (FHFA) director Sandra Thompson, Fannie Mae CEO Priscilla Almodovar, Freddie Mac CEO Michael DeVito, and Federal Housing Administration (FHA) commissioner Julia Gordon on Wednesday, the NAR and MBA wrote that it was important for the agencies and government-sponsored enterprises (GSEs) to review NAR’s commission lawsuit settlement agreement.
They asked the federal officials to “provide guidance to market participants that will ensure these new arrangements will continue to be supported by” FHA and GSE underwriting standards.
At the moment, IPCs “include concessions from the seller to the buyer for items that are traditionally paid by the buyer such as loan closing costs or rate buy-downs,” but as buyer agents are customarily paid by the listing agent, their fees are excluded from caps on the IPCs.
Under existing FHA policy, for example, if sellers continue to pay buyer-side real estate agent commissions and fees as a matter of state or local laws or customs — and if the commissions and fees are reasonable in amount — these payments would not be treated as interested party contributions provided all other requirements are met.
Under the terms of NAR’s settlement agreement, the practice of cooperative compensation is still allowed, but it cannot be offered through a Multiple Listing Service (MLS). Sellers or buyers can pay the buyer’s agent’s fees.
“Consequently, once the settlement is in effect, we believe that FHA and GSE policy should continue to exclude seller or listing agent payment of buyer agents’ commission from IPCs,” the NAR and MBA wrote. “Confirming your policies and maintaining this practice will sustain the current flow of mortgage capital to home buyers without change or delay.”
The two trade organizations urge federal officials to provides this certainty now, as they feel it is needed “to prevent disruptions that may cost homebuyers and sellers money and potentially their home purchases.”
NAR also sent a letter to the U.S. Department of Veteran Affairs (VA) on Wednesday, urging it to revise policies that prohibit veterans from paying buyer broker commissions.
The current VA rule states that a borrower using a VA loan cannot pay fees or commissions to a real estate agent unless determined “by the Under Secretary for Benefits as appropriate for inclusion … as proper local variances.”
NAR told John Bell, the executive director of VA’s Loan Guaranty Service, that the current policy would put VA buyers at a disadvantage, as they would potentially be forced to forego professional representation.
Housing demand reached a new level of enthusiasm during the pandemic, with homebuyers benefitting from extremely low mortgage rates. From the summer of 2020 until much of 2021, average 30-year mortgage rates stayed under 3%. However, as more and more buyers jumped into the real estate market, months of inventory began to plummet and home prices surged. According to the U.S. Census Bureau and U.S. Department of Housing and Urban Development, the national average sales price in the US grew from $383,000 in Q1 2020 to a peak of $552,600 in Q4 2022 – a 44.3% increase in less than two years.
So if you purchased a home during the pandemic, how much is it worth now? To find out, Zoocasa analyzed median home prices in 30 major US cities from January 2020, 2021, and 2022, and compared them with the 2024 median price to see how much they’ve changed over the last 4, 3, and 2 years.
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Median single-family home prices were sourced from each city’s respective real estate board and are from January of each year. Average 30-year fixed rates were sourced from Freddie Mac and are from the first week of each month. The national average sales price in the US for each quarter was sourced from the U.S. Census Bureau and U.S. Department of Housing and Urban Development, Average Sales Price of Houses Sold for the United States [ASPUS], retrieved from the Federal Reserve Bank of St. Louis.
In 14 of the 30 real estate markets we analyzed, the median home price increased by more than $100,000 from 2020 to 2024. In those four years, Californian homes increased the most in value. San Diego and San Francisco homes bought in 2020 appreciated by $265,000 and $247,000 respectively. Los Angeles homebuyers also built a significant amount of equity, with the median home price rising by $211,500 to $750,000 in 2024.
Outside of California, 2020 home purchases in Boston and Miami experienced significant price growth, both increasing by more than $200,000 in four years. For homebuyers in Miami in 2021, the value of their homes experienced the second-highest increase over three years, at $170,000, just below San Diego’s increase of $195,000. But Miami isn’t the only city in Florida where home prices have grown substantially from 2020. In Tampa and Jacksonville, home values have increased by $151,500 and $129,900 since 2020, and since 2021 they have risen by $115,000 and $95,919 respectively.
Other cities where home values increased by more than $100,000 in four years include Denver, Nashville, Dallas, and Salt Lake City. Buyers who bought a home in one of these cities in 2021 also benefited from sizable price appreciation – with home values rising by $100,000 or more in three years.
Though 2020 and 2021 pandemic buyers experienced a significant increase in their home values, some homebuyers who purchased a home in 2022 – when interest rates started climbing – have yet to see equity build. From January 2022 to January 2024, home values dropped in San Francisco by $71,000 and in Brooklyn, they dropped by $51,000. 2022 homebuyers are currently down in six other cities: Washington DC, San Antonio, Memphis, New Orleans, St. Louis, and Salt Lake City. But this doesn’t mean homebuyers in those cities won’t build equity. According to the National Association of Realtors®, in 2023 the median time buyers expected to stay in their home was 15 years. This gives the average homeowner plenty of time for their home to appreciate, and with interest rates coming down, competition will rise and push home prices up once again.
The vast majority of pandemic buyers are in the green, even if they bought their home in 2022. With some of the highest median home prices in the country, it comes as no surprise that Boston, Miami, San Diego and Los Angeles lead the way for 2-year price increases – all up by $50,000 or more. Not every city experienced home price increases of those heights, however. 2022 homebuyers in Philadelphia and Tucson built home equity, but values increased by just $1,250 and $2,500 respectively in two years.
If you’re looking to find an affordable home this spring, give us a call! We can answer any questions you have about your local market and help you navigate the home-buying process.
Mortgage rates surged closer to 7% this week, a blow to hopeful homebuyers this spring.
The rate on the 30-year fixed mortgage increased to 6.87% from 6.74% the week prior, according to Freddie Mac. Rates tilted higher as inflation remained hotter than expected, leading to the Fed putting off any potential rate cuts until summer.
The uptick in rates caused some rate-sensitive homebuyers to retreat from the market, as affordability remains a top concern for the entry-level pool. Those looking to refinance also backed away from their plans as the chances of grabbing a lower rate slipped away.
Still, housing experts remain hopeful about the direction of affordability as more inventory trickles into the market.
“The housing market continues to face elevated mortgage rates, high prices, and low for-sale inventory,” said Hannah Jones, senior economic research analyst at Realtor.com. “As the spring season approaches, many buyers and sellers are getting warmed up to enter the housing market.”
Demand falters as rates jump higher
As mortgage rates rebounded, both refinance and purchase activity faltered — a recurring theme this season.
The volume of applications to refinance a home fell 3% for the week ending March 15 and was 3% lower than the same week a year ago, according to the Mortgage Bankers Association (MBA).
Demand for refinance had gained surprising momentum in the weeks leading up to March 8, with applications up 12%. The sudden jump in activity was due to a larger 24% increase in the government refinance index, the MBA noted, as homeowners who purchased at top rates last year were closely attuned to any opportunity to snatch a lower rate.
But as rates rebounded this week, that window of opportunity closed.
Read more: Mortgage rates hover around 7% — is this a good time to buy a house?
Purchase applicants also retreated from the market, with the volume of applications to buy a home down 1% for the week and 14% lower than the same week a year ago.
“Most homebuyers are sensitive to interest rates, which is why we see mortgage applications increase when rates fall and decline with rates increase,” said Bright MLS chief economist Dr. Lisa Sturtevant.
“However, not all homebuyers are equally sensitive to interest rates,” she added. “The number of cash buyers has increased. In many markets, these cash buyers are not investors but regular home buyers who have accrued significant equity in an existing home that they can roll over into the purchase of a new home.”
Just getting into a home has become more expensive. Mortgage News Daily, which tracks rates daily, revealed that rates surpassed 7% last week and have remained above that threshold as of March 20.
People looking at houses for sale in a real estate agent’s window. (Credit: Mike Kemp/In Pictures via Getty Images) (Mike Kemp via Getty Images)
For first-time homebuyers, in particular, the fluctuation of rates has been a tough blow — especially as inventory of entry-level homes remains scarce and competition for homes within their price point is picking up.
According to the National Association of Realtors, the average price of a previously owned home increased to $384,500 in February, marking the eighth consecutive month of year-over-year price gains. The median price was also 5.7% higher than a year earlier.
“Additional housing supply is helping to satisfy market demand,” said NAR chief economist Lawrence Yun. “Housing demand has been on a steady rise due to population and job growth, though the actual timing of purchases will be determined by prevailing mortgage rates and wider inventory choices.”
Buyers and sellers need to adjust to ‘new normal’ in rates
Mortgage rates were elevated after data last week showed inflation and payroll numbers came in stronger than expected, which fueled concerns about the timing of the Fed’s plans to issue rate cuts this year.
Federal Reserve officials expect three interest rate cuts this year, which should help ease pressure on overall borrowing costs when they come to pass. However, when those rate cuts will happen remains to be seen.
“There is some uncertainty in the housing market as we head into spring,” said Sturtevant. “The Federal Reserve likely will put off rate cuts until the summer, which suggests that mortgage rates will not come down much in the first half of the year. Buyers and sellers seem to be adjusting to the ‘new normal’ of mortgage rates above 6.5%.”
A sign is posted in front of a home for sale on Feb. 5 in San Anselmo, Calif. (Credit: Justin Sullivan, Getty Images) (Justin Sullivan via Getty Images)
Still, there’s some hope that buyers will see mortgage rates start to ease sooner rather than later.
“As we enter the spring homebuying season, we still anticipate rates will decrease in the coming months,” said MBA president and CEO Bob Broeksmit.
Gabriella Cruz-Martinez is a personal finance and housing reporter at Yahoo Finance. Follow her on X @__gabriellacruz.
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On the heels of the $418 million settlement recently announced by the National Association of Realtors(NAR), mortgage trade group Community Home Lenders of America (CHLA) has called on the U.S. Department of Veteran Affairs (VA) to expedite regulatory change that would allow veterans and active-duty service members to fund buyer’s broker commissions when purchasing a home with a VA mortgage.
In a letter submitted Monday to John Bell, executive director of VA’s Loan Guaranty Service, the CHLA took issue with how the existing regulatory requirements regarding VA mortgages could put veterans and active-duty personnel at an “unfair disadvantage” when buying a home.
NAR’s settlement, which could go into effect as early as July, will eliminate the long-standing “Participation Rule” that requires listing agents to make an offer of cooperative compensation to buyers’ agents. Under the current system, the buyer agent’s commission is baked into the price paid for a home. If the settlement is finalized in its current form, buyers may have to pay upfront flat fees to agents.
The current VA rule states that a borrower using a VA loan cannot pay fees or commissions to a real estate agent unless determined “by the Under Secretary for Benefits as appropriate for inclusion . . . as proper local variances, under current VA regulations.“
“We ask that VA adopt an appropriate administrative remedy to ensure that those who have courageously served this country are not financially discriminated against in their homeownership journey,” the letter reads.
The VA has been monitoring various cases involving real estate broker commissions, including the NAR case, an official told HousingWire.
“VA is working closely with the Department of Justice to determine any potential implications for Veteran borrowers and is committed to ensuring that Veterans are neither disadvantaged in the homebuying process nor overcharged,” the official said in an e-mailed response.
The official added that the VA recognizes that potential changes may be forthcoming in the industry as a result of the proposed NAR settlement.
“VA is actively engaged with the Department of Justice to review the potential implications and evaluate how VA can best ensure that VA’s home loan program remains an attractive option for Veterans in the homebuying process.”
In December, the CHLA sent a letter to regulators and administrators at the Federal Housing Finance Agency (FHFA), the Department of Housing and Urban Development (HUD), the Department of Agriculture (USDA) and the VA warning that homebuyers who must pay broker commissions out of pocket could face further affordability challenges.
“First-time homebuyers, families with lower incomes, veterans, and minority homebuyers could be adversely affected in their ability to purchase a home because of obstacles and complications related to the need to fund the buyer’s broker commission,” the CHLA said.
National mortgage rates increased for all loan terms compared to a week ago, according to data compiled by Bankrate. Rates for 30-year fixed, 15-year fixed, 5/1 ARMs and jumbo loans moved higher.
While it’s expected that rates will gradually come down this year, the path might be bumpy.
At its Jan. 31 meeting, the Federal Reserve announced it would hold off changing rates, but could cut rates in the future. At their March 20th meeting, the Fed will update their outlook on rates. Rate fluctuations affect many areas of the economy, including the 10-year Treasury, a key benchmark for fixed-rate mortgages.
“Where the 10-Year Treasury yield goes, mortgage rates will follow,” says Ken Johnson of Florida Atlantic University. “In roughly the last two months, the 10-year Treasury yield is up 50 basis points. Depending on the source, the 30-year mortgage rate is up 48 basis points. Treasurys’ path remains a coin toss at this point.”
Rates last updated March 25, 2024.
The rates listed above are marketplace averages based on the assumptions here. Actual rates listed on-site may vary. This story has been reviewed by Suzanne De Vita. All rate data accurate as of Monday, March 25th, 2024 at 7:30 a.m.
30-year mortgage increases, +0.10%
Today’s average rate for the benchmark 30-year fixed mortgage is 6.98 percent, an increase of 10 basis points over the last week. A month ago, the average rate on a 30-year fixed mortgage was higher, at 7.19 percent.
At the current average rate, you’ll pay a combined $663.96 per month in principal and interest for every $100,000 you borrow. Compared to last week, that’s $6.70 higher.
Use Bankrate’s mortgage rate calculator to calculate your monthly payments and see how much you’ll save by adding extra payments. The tool will also help you calculate how much interest you’ll pay over the life of the loan.
15-year mortgage rate increases, +0.06%
The average rate for the benchmark 15-year fixed mortgage is 6.47 percent, up 6 basis points since the same time last week.
Monthly payments on a 15-year fixed mortgage at that rate will cost around $869 per $100,000 borrowed. The bigger payment may be a little more difficult to find room for in your monthly budget than a 30-year mortgage payment, but it comes with some big advantages: You’ll come out several thousand dollars ahead over the life of the loan in total interest paid and build equity much more quickly.
5/1 adjustable rate mortgage goes up, +0.13%
The average rate on a 5/1 ARM is 6.51 percent, climbing 13 basis points over the last week.
Adjustable-rate mortgages, or ARMs, are mortgage loans that come with a floating interest rate. To put it another way, the interest rate will change at regular intervals, unlike fixed-rate mortgages. These types of loans are best for people who expect to sell or refinance before the first or second adjustment. Rates could be considerably higher when the loan first adjusts, and thereafter.
While borrowers shunned ARMs during the pandemic days of super-low rates, this type of loan has made a comeback as mortgage rates have risen.
Monthly payments on a 5/1 ARM at 6.51 percent would cost about $633 for each $100,000 borrowed over the initial five years, but could ratchet higher by hundreds of dollars afterward, depending on the loan’s terms.
Jumbo mortgage rate goes up, +0.11%
The average rate for a jumbo mortgage is 7.09 percent, up 11 basis points over the last seven days. A month ago, the average rate for jumbo mortgages was higher at 7.24 percent.
At today’s average rate, you’ll pay $671.36 per month in principal and interest for every $100,000 you borrow. Compared to last week, that’s $7.40 higher.
Refinance rates
30-year mortgage refinance climbs, +0.12%
The average 30-year fixed-refinance rate is 6.99 percent, up 12 basis points over the last seven days. A month ago, the average rate on a 30-year fixed refinance was higher at 7.16 percent.
At the current average rate, you’ll pay $664.63 per month in principal and interest for every $100,000 you borrow. That’s up $8.04 from what it would have been last week.
Where are mortgage rates heading?
With inflation still above the Fed’s 2 percent goal and the job market holding strong, the Fed isn’t likely to cut rates at its March meeting.
“The Federal Reserve will not cut interest rates in the first half of this year, in my view,” says Lawrence Yun, chief economist of the National Association of Realtors, “but rate cuts of three, four or even five rounds will be possible in the second half of the year as rent measures will be much more well-behaved.”
The rates on 30-year mortgages mostly follow the 10-year Treasury, which shifts continuously as economic conditions dictate, while the cost of variable-rate home loans mirror the Fed’s moves.
These broader factors influence overall rate movement. As a borrower, you could be quoted a higher or lower rate compared to the trend.
What these rates mean for your mortgage
While mortgage rates change daily, it’s unlikely we’ll see rates back at 3 percent anytime soon. If you’re shopping for a mortgage now, it might be wise to lock your rate when you find an affordable loan. If your house-hunt is taking longer than anticipated, revisit your budget so you’ll know exactly how much house you can afford at prevailing market rates.
Keep in mind: You could save thousands over the life of your mortgage by getting at least three loan offers, according to Freddie Mac research. You don’t have to stick with your bank or credit union, either. There are many types of mortgage lenders, including online-only and local, smaller shops.
“All too often, some [homebuyers] take the path of least resistance when seeking a mortgage, in part because the process of buying a home can be stressful, complicated and time-consuming,” says Mark Hamrick, senior economic analyst for Bankrate. “But when we’re talking about the potential of saving a lot of money, seeking the best deal on a mortgage has an excellent return on investment. Why leave that money on the table when all it takes is a bit more effort to shop around for the best rate, or lowest cost, on a mortgage?”
More on current mortgage rates
Methodology
Bankrate displays two sets of rate averages that are produced from two surveys we conduct: one daily (“overnight averages”) and the other weekly (“Bankrate Monitor averages”).
The rates on this page represent our overnight averages. For these averages, APRs and rates are based on no existing relationship or automatic payments.
Learn more about Bankrate’s rate averages, editorial guidelines and how we make money.
Rather than easing back from the January level as expected, existing home sales shot significantly higher in February, The National Association of Realtors® (NAR) said pre-owned single-family houses, townhouses, condominiums, and cooperative apartments sold at a seasonally adjusted annual rate of 4.38 million units. This is an increase of 9.5 percent from the 4.0 million unit pace the previous month and the largest monthly increase since last February. Sales still trailed that month’s 4.53-million-unit rate by 3.3 percent.
Analysts polled by Econoday had a consensus estimate for sales of 3.92 million units while Trading Economics had projected the rate at 3.94 million.
Single-family home sales grew to a seasonally adjusted annual rate of 3.97 million in February, a 10.3 percent gain, but were down 2.7 percent year-over-year. The annual sales rate for condos and coops (410,000 units) was 2.5 percent higher than in January, but 8.9 percent below the February 2023 pace.
Despite the increase in sales, the number of homes available for sale also climbed, rising 5.9 percent from January and 10.3 percent from the previous February to 1,07 million units. This is estimated at a 2.9-month supply at the current rate of sales. Still, inventory remains well below the five-to-six-month supply considered a balanced market.
The median existing home price for all housing types in February was $384,500, an increase of 5.7 percent from $363,600 a year earlier. It was the eighth consecutive month of year-over-year price gains and was the highest price ever recorded for the month of February. The median price for a single-family home was $388,700, a 5.6 percent annual increase while condos appreciated by 6.7 percent to a median of $344,000.
First-time buyers were responsible for 26 percent of the month’s sales and individual investors or second-home buyers accounted for 21 percent. Thirty-three percent of sales were all-cash. Properties typically remained on the market for 38 days in February, up from 36 days in January and 34 days in February 2023.
Sales rose in three of the four major regions compared to January but remained below the pace a year earlier in all four. For the fourth consecutive month, the Northeast posted a sales rate of 480,000 units. This was 7.7 percent below the previous February’s number. The median price in the Northeast was $420,600, an increase of 11.5 percent from one year ago.
“Due to inventory constraints, the Northeast was the regional underperformer in February home sales but the best performer in home prices,” NAR chief economist Lawrence Yun said. “More supply is clearly needed to help stabilize home prices and get more Americans moving to their next residences.”
In the Midwest, existing home sales rose 8.4 percent to an annual rate of 1.03 million, a 3.7 percent deficit year-over-year. The median price moved higher by 6.8 percent to $277,600.
Existing home sales in the South jumped 9.8 percent from January to an annual rate of 2.02 million, down 2.9 percent from one year earlier. The median price in the South was $354,200, up 4.1 percent from last year.
The greatest increase was in the West with a surge of 16.4 percent compared to January. The annual rate of 850,000 units was 1.2 percent below sales the prior year. Prices also surged, rising 9.1 percent to $593,000.
National Association of Home Builders (NAHB) analyst Fan-Yu Kuo, writing in the Eye on Housing blog compared results of NAR’s Pending Home Sales Index (PHSI), a measure of signed purchase contracts thought to be a leading indicator of existing home sales, to recent completed transactions. Kuo said the PHSI fell from 78.1 to 74.3 in January. On a year-over-year basis, pending sales were 8.8 percent lower than a year ago per the NAR data.