As of June 5, 2023, the average interest rates on various mortgage types have experienced a mix of changes. With the Federal Reserve’s monetary policy affecting long-term mortgage rates and the state of the economy and housing market influencing rates as well, it is essential for prospective homebuyers and homeowners to stay updated on the latest mortgage rate trends.
Also read: Mortgage Calculators: Maximize Your Mortgage Savings.
In this article, we will discuss the current mortgage interest rates for 30-year fixed, 15-year fixed, 30-year jumbo, 5/1 ARM, and VA mortgages. Additionally, we will provide insights into what affects mortgage rates and how to compare them when shopping around for your home financing needs.
Also read: FintechZoom Mortgage Calculator: Your Ultimate Tool for Accurate Mortgage Estimates.
30-Year Fixed Mortgage Rates
The average interest rate on a 30-year fixed mortgage has experienced a decrease in recent days. The current average mortgage rate for a 30-year fixed mortgage is 7.09%, down 0.18% from the previous week. The annual percentage rate (APR) for a 30-year fixed-rate mortgage, which includes interest and lender fees, stands at 7.11%.
On a $100,000 loan with a 30-year fixed mortgage rate of 7.09%, borrowers can expect to pay approximately $671 per month in principal and interest (not including taxes and fees). Over the life of the loan, the total interest paid would be around $141,689.
15-Year Fixed Mortgage Rates
The 15-year fixed mortgage rate has remained relatively stable, with an average rate of 6.54%. This rate is slightly higher than the 52-week low of 4.62%. The APR on a 15-year fixed mortgage is 6.57%.
With a 15-year fixed-rate mortgage of $100,000 at an interest rate of 6.54%, borrowers will pay $873 per month in principal and interest. Over the life of the loan, the total interest paid would amount to $57,195.
30-Year Jumbo Mortgage Rates
The interest rate for a 30-year fixed-rate jumbo mortgage currently stands at 7.13%. This rate has seen a decrease from 7.31% the previous week. For borrowers with a 30-year fixed-rate jumbo mortgage at an interest rate of 7.13%, the monthly payment for principal and interest per $100,000 would be $674. On a $750,000 loan, the monthly payment would be around $5,060, with a total interest payment of approximately $1,069,951 over the life of the loan.
5/1 ARM Mortgage Rates
The average interest rate for a 5/1 ARM mortgage has increased slightly, currently standing at 6.00%. This rate is up 0.03% from the previous week. In the past 52 weeks, the lowest 5/1 ARM rate was 3.90%, and the high was 6.03%.
For borrowers with a 5/1 ARM mortgage at an interest rate of 6.00%, the monthly payment on a $100,000 loan would be $600 in principal and interest.
VA Mortgage Rates
The current VA mortgage rate is 6.53%, compared to 6.71% from the previous week. In the past 52 weeks, the highest VA mortgage rate was 6.74%, while the lowest was 5.91%.
What Affects Mortgage Rates?
Several factors influence mortgage rates, including the Federal Reserve’s monetary policy, the state of the economy, and the housing market condition. Additionally, lenders determine the interest rate they offer borrowers based on their debt-to-income (DTI) ratio and credit score, which indicate their risk as a borrower.
How to Compare Mortgage Rates
When shopping for a mortgage, it’s essential to research multiple lenders and compare their mortgage loan offerings and services. Don’t settle for the first lender quote you receive; instead, compare the best mortgage rate quotes to find the most suitable deal for your needs.
Consider the fees each lender charges, the fees they are willing to waive, and any closing assistance they may provide. Be cautious of special offers or discounts that may result in a higher mortgage rate. Ensure that you apply with each lender within a 45-day window to avoid multiple credit inquiries affecting your credit score.
Is This a Good Time to Buy a House?
With elevated mortgage rates and limited housing supply, prospective homebuyers may face challenges in finding affordable housing options. The low inventory is preventing house prices from dropping, while the combination of high mortgage rates and increased home values continues to present obstacles for many homebuyers.
Mortgage Rate Forecast & Trends for 2023
The Federal Reserve’s interest rate hikes, aimed at restraining inflation, are pushing long-term mortgage rates higher. The state of the economy and housing market also affects mortgage rates. As a borrower, your interest rate offer from a lender will depend on your debt-to-income (DTI) ratio and credit score, which indicate your risk level.
For more information on mortgage rate forecasts and trends, visit Mortgage Rate Forecast & Trends for 2023.
How Federal Reserve Policy Affects Mortgage Rates
The Federal Reserve’s interest rate hikes indirectly influence mortgage rates by affecting the overall cost of borrowing for banks and other financial institutions. When the Federal Reserve raises its benchmark interest rate, it becomes more expensive for banks to borrow money, leading them to pass on the increased cost to consumers in the form of higher mortgage rates.
Fixed vs. Adjustable Mortgage Rates
Fixed mortgage rates remain constant throughout the life of the loan, ensuring that monthly payments stay the same. In contrast, adjustable mortgage rates fluctuate according to market conditions, which may cause monthly payments to increase or decrease over time.
An adjustable-rate mortgage (ARM), such as a 5/1 ARM, begins with a fixed interest rate for a set period (in this case, five years) before switching to a variable rate that can change annually. Borrowers should carefully consider the potential for rate increases when choosing between fixed and adjustable mortgage rates.
Mortgage Rate Buydowns
A mortgage rate buydown involves paying upfront fees to lower your interest rate, either permanently (by purchasing mortgage discount points) or temporarily (through a temporary rate buydown). This strategy can be beneficial for borrowers who plan to stay in their homes for an extended period and can afford the upfront cost, but it may not be worthwhile for those who plan to move or refinance before recouping the cost through lower monthly payments.
Conclusion
Staying informed about current mortgage interest rates and understanding the factors that influence them is crucial for prospective homebuyers and homeowners looking to refinance their existing mortgages. By comparing various lenders and their offerings, borrowers can make informed decisions that best suit their financial goals and needs. Keep an eye on market trends and economic factors to make the most of your mortgage shopping experience.
