Today's Mortgage Rates - 09/29/2023

Mortgage rates rose again this week, and 30-year fixed-rate mortgages are as high as they were back in Y2K.

Freddie Mac reported today that the average offered interest rate for a conforming 30-year fixed-rate mortgage took rose a dozen basis points (0.12%) increasing to 7.31% in the latest survey. It is the highest such average since the week of December 15, 2000.

At the same time, the average offered rate for a conforming 15-year FRM managed an even larger jump, rising 18 basis points (0.18%) to 6.72% for the week. With payments on shorter-term mortgages even higher than those on longer-term loans, it's a fair bet that few if any homebuyers have an interest in one at the moment.

Some potential homembuyers may look for interest-rate relief by selecting an adjustable-rate mortgage. However, there's very little help to be found there; the most popular product, a hybrid 5/1 ARM, currently sports a 6.96% fixed interest rate for the first five years, but at least this was a decline of six basis points (0.06%) compared to last week, per Freddie Mac's legacy PMMS.

A different observations for rates on 5/1 ARMs -- one from the Mortgage Bankers Association's weekly applications survey - pegs the starting rate for the product at 6.47%. Differences in methodologies and survey sample sizes likely explain the variance between the two. In either case, the relatively small interest rate break compared to a 30-year FRM hardly makes them a compelling choice, but at least some savings can be had.

In contrast to today's homebuying audience, potential homebuyers back at the end of Y2K, were actually cheered by the then-current level of rates, as they were actually declining from even loftier levels. Of course, the median price of existing single-family homes in the fourth quarter of 2000 was $139,400 as reported by the National Association of Realtors; at least through August, that same figure was $407,100, so the paid of those higher rates is a little more acute now than then, even accounting for increase in income over time. There were also more homes available for sale at that time, too -- about 3.9 months of supply at the time at the then-present pace of sales, well above today's 3.3 months available.

There's very little to like about the current climate for interest rates in general and mortgage rates specifically. The conditions which have pushed interest rate to present levels show few signs of relenting, and until they do, mortgage rates will struggle to move down. To do so, they first of course need to stop rising, but at least some upward pressure remains in place, so expect slightly higher rates in the market in the coming days.

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.