Mortgage and refinancing rates today: November 14, 2022

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Last week was a good week for mortgage rates and today they are stable. Rates fell more than 50 basis points after Thursday’s Consumer Price Index report showed inflation is finally slowing down.

In December, the Federal Reserve will meet again to discuss another federal funds rate hike, and right now markets are largely expecting a smaller, 50 basis point hike, after four consecutive 75 point hikes. .

If inflation continues to fall and the Fed is able to slow its rate hike pace, it could still achieve a so-called “soft landing”, in which it slows the economy enough to tame inflation but not so much as to cause a recession.

But a month of low inflation readings is likely not to turn the Fed out of its aggressive stance. Fed Chairman Jerome Powell made it clear that the central bank was waiting for a prolonged slowdown before considering a change of course and noted in his press conference after the November meeting that it was “very premature” to consider suspending its policies. his efforts.

As long as the Fed continues to raise rates, mortgage rates are likely to remain high as well. But they may not increase further this year and will likely start decreasing in 2023.

Mortgage Rates Today

Mortgage type Average rate today
This information was provided by Zillow. See more mortgage rates on Zillow

Mortgage Refinancing Rates Today

Mortgage type Average rate today
This information was provided by Zillow. See more mortgage rates on Zillow

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Use our free mortgage calculator to see how today’s mortgage rates will affect your monthly and long-term payments.

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$1.161
Your estimated monthly payment

  • Pay a 25% a higher down payment would save you $ 8,916.08 on interest expense
  • Lower the interest rate by 1% would save you $ 51,562.03
  • By paying a supplement $ 500 each month would reduce the loan term by 146 months

By linking different maturities and interest rates, you will see how your monthly payment could change.

Mortgage rate projection for 2023

Mortgage rates have started to rise from historic lows in the second half of 2021 and have so far risen by more than three percentage points in 2022. They are likely to remain close to current levels for the remainder of 2022.

But many forecasts predict that rates will start falling next year. In their latest prediction, Fannie Mae researchers predicted that rates are currently peaking and that fixed 30-year rates will drop to 6.2% by the end of 2023.

The Mortgage Bankers Association also noted that a recession in the first half of 2023 could cause rates to drop even more rapidly. He currently estimates that there is a 50% chance that a mild recession will materialize in the next year.

Whether mortgage rates fall in 2023 depends on whether the Federal Reserve will be able to keep inflation in check.

Over the past 12 months, the consumer price index has grown by 7.7%. This is just a slight slowdown from the previous month’s numbers, meaning the Fed will likely have to continue aggressively hike federal funds rates to bring prices down significantly.

As inflation slows, mortgage rates are likely to start falling as well. If the Fed acts too aggressively and plans a recession, mortgage rates could drop further than current forecasts are expecting. But rates are likely not to drop to the all-time lows borrowers have enjoyed over the past two years.

When will house prices drop?

Home prices are starting to fall, but we probably won’t see huge falls, even if there is a recession.

The S&P Case-Shiller Home Price Index shows that prices are still rising year-over-year, although they fell on a monthly basis in July and August. Fannie Mae researchers predict a price drop of 1.5% in 2023, while the MBA predicts a 2.8% increase in 2023 and 2.1% in 2024.

Skyrocketing mortgage rates have pushed many hopeful buyers out of business, slowing home purchase demand and putting downward pressure on home prices. But rates could start falling next year, which would take away some of that pressure. The current supply of homes is also historically low, which will likely prevent prices from dropping too much.

Pros and cons of the fixed rate mortgage vs. variable rate mortgage

Fixed rate mortgages lock the rate for the entire term of the loan. Variable rate mortgages lock the rate for the first few years, so the rate increases or decreases periodically.

ARMs typically start at lower rates than fixed rate mortgages, but ARM rates can increase once the initial introductory period is over. If you plan to move or refinance before the rate adjusts, an ARM could be a good deal. But keep in mind that a change in circumstances may prevent you from doing these things, so it’s a good idea to think about whether your budget could handle a higher monthly payment.

Fixed-rate mortgages are a good choice for borrowers who want stability, as monthly principal and interest payments will not change over the life of the loan (although the mortgage payment may increase if taxes or insurance increase).

But in exchange for this stability, you will be hiring a higher rate. This might seem like a bad deal right now, but if rates increase further in a few years, you may be happy to have a locked rate. And if rates go down, you may be able to refinance to get a lower rate

How does an adjustable rate mortgage work?

ARMs start with an introductory period where your rate will remain fixed for a certain period of time. Once that period has elapsed, it will begin to adjust periodically, typically once a year or once every six months.

How much your rate will change depends on the index used by ARM and the margin set by the lender. Lenders choose the index used by their ARMs and this rate can increase or decrease depending on current market conditions.

Margin is the amount of interest a lender charges on top of the index. You should shop around with multiple lenders to see which one offers the lowest margin.

ARMs also have limits on how much they can change and how high they can go. For example, an ARM might be limited to a 2% increase or decrease each time it adjusts, with a maximum rate of 8%.

Should I take a HELOC? pros and cons

If you are looking to take advantage of your home equity, a HELOC might be the best way to do it right now. Unlike a cash-out refinance, you won’t have to get a completely new mortgage with a new interest rate, and you’ll likely get a better rate than you would with a home loan.

But HELOCs don’t always make sense. It is important to consider the pros and cons.

HELOC pro

  • You only pay interest on what you borrow
  • They typically have lower rates than alternatives, including home equity loans, personal loans, and credit cards
  • If you have a lot of equity, you could potentially borrow more than you could get with a personal loan

HELOC cons

  • Rates are variable, which means monthly payments may go up
  • Taking equity out of your home can be risky if property values ​​decline or if you default on your loan
  • The minimum withdrawal amount may be higher than what you want to borrow

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