Today's Mortgage Rates - 09/30/2022

Mortgage rates powered sharply higher again next week, reaching their highest levels in more than 15 years.

Freddie Mac reported today that the average offered interest rate for a conforming 30-year fixed-rate mortgage increased another 41 basis points (0.41%), rising to 6.70%, it's highest level since July 2007.

Conforming fifteen-year FRMs also leapt higher, rising by fifty-two basis points (0.52%) higher to 5.96%. While all mortgage rates are rising, the cost of a fixed-rate mortgages may see some potential homebuyers look to ARMs instead. The initial fixed interest rate for a hybrid 5/1 ARM rose by "only" thirty-three one-hundredths of a percentage point (0.33%), landing at 5.30% for the week.

A borrower with a $300,000 loan who selects this kind of ARM over a 30-year FRM will see a reduction in payment of about $270 per month, would save about $21,000 in interest cost in the first five years of the loan and retire about $5,000 more of the loan balance over that time.

Markets remain in a state of upheaval after the Fed recalibrated expectations for monetary policy at its meeting last week. As recently as three months ago, the Fed expected to lift short term rates to about 3.5% or so by the end of the year, but now expects to push them a full percent higher than that before the calendar turns. Investors were not expecting such a "hawkish" turn for policy and have been scrambling to adjust their holdings and hedges since then.

Such large increases in mortgage rates aren't unheard of, but they are unusual, most often occurring at times of severe market stress. This week's increase was the third largest this year, surpassed by the week of Chair Powell's Jackson Hole speech and the week of the June FOMC meeting where a three-quarter-point hike first occurred.

That said, the volatility in mortgage rates has been considerable this year, both and down. Of the 2232 weeks since January 1980, seven of the weekly increases in the 30-year FRM so far this year can be placed into a group of 50 largest increases (and three in the top 13), but this year has also placed three weeks in the group of 50 largest weekly rate declines, too.

Markets remain highly unstable as investors try to find some solid ground on which to stand. Presently, it appears that the hard run up in mortgage rates has at least plateaued but holding even these levels remains highly uncertain at the moment.

Each week in HSH's MarketTrends newsletter, we track and discuss economic conditions that affect mortgage rates and their impact on housing markets and consumers. Read the most recent edition of MarketTrends or subscribe for email delivery.