What are mortgage rates likely to do as we close out 2023 and start 2024? Check out our latest Two-Month Mortgage Rate Forecast.

What are mortgage rates likely to do as we close out 2023 and start 2024? Check out our latest Two-Month Mortgage Rate Forecast.

Today's Mortgage Rates - 12/05/2023

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Rate Downtrend Continues

Fixed mortgage rates posted another decline this week, a trend that began at the turn of November.

As reported by Freddie Mac today, the average offered interest rate for a conforming 30-year fixed-rate mortgage decreased by seven more basis points (0.07%), landing at 7.22%. While still quite pricey, 30-year mortgage rates are now at their lowest point in 10 weeks.

Shorter-term fixed mortgage rates also declined again, making it a four-for-four trend. The eleven basis point (0.11%) drop a conforming 15-year fixed-rate mortgage with an average offered rate of 6.56%, a cumulative decline of nearly half a percentage point since an early November peak. Home loans with shorter terms are most popular with homeowners looking to refinance, but rates will need to be significantly lower than now to entice many homeowners to change mortgages.

Fixed mortgage rates have retreated meaningfully in recent weeks, lessening the appeal of choosing an ARM as an alternative. Freddie Mac's legacy survey data pegs the interest for a hybrid 5/1 ARM at 6.75%, down seven basis points (0.07%%) from last week.

As they are often kept in a lender's portfolio rather than sold to investors, rates on ARMs vary more widely from lender to lender than do fixed-rate mortgages. In contrast to Freddie's survey data, a different observation of offered rates for 5/1 ARMs -- one from the Mortgage Bankers Association's weekly applications survey -- declined quite bit more, with this observation decreasing by seventeen basis points (0.17%) to 6.59% in the MBA's latest report.

Slower economic growth and a cooler trend for inflation appears to have more investors betting that the Fed will no longer need to raise interest rates. In fact, there are growing bets that rate cuts may be coming as early as March, but that does seem to be a little too aggressive a time line, given that core PCE inflation is still well above the 2% goal for which the Fed is aiming. However, the trend for prices is favorable, and the latest annual core PCE rate is down to 3.5%, the lowest it has been since April 2021.

The next Fed meeting is now just two weeks away; futures markets show about a 96% probability that the Fed will not change monetary policy for a third straight meeting. By March, these same speculators place more than a 43% chance of a quarter-point cut in rates. For our part, we'll wait until the release of the next Summary of Economic Projections (due December 13) to hazard any guess as to when the Fed will likely begin the slow process of trimming policy rates.

But all that is off in the future. In the very near term, there remains at least some downforce on mortgage rates, but probably only a little. We expect to see slightly lower mortgage rates in the market over the next few 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.

Week 30-year-Fixed 15-year-Fixed
11/30 7.220% 6.560%
11/22 7.290% 6.670%
11/16 7.440% 6.760%
11/09 7.500% 6.810%
11/02 7.760% 7.030%
10/26 7.790% 7.030%
10/19 7.630% 6.920%
10/12 7.570% 6.890%
10/05 7.490% 6.780%
09/28 7.310% 6.720%
09/21 7.190% 6.540%
09/14 7.180% 6.510%

Mortgage Choices at a Glance

Loan type/terms Fixed 30 years Fixed 15 years/
20 Years
Hybrid ARM Traditional ARM Balloon Mortgage
Rate changes
  • Never; Fully fixed for entire term
  • Never; Fully fixed for entire term
  • Usually after fixed period of 3, 5, 7 or 10 years
  • After that, annual change typical
  • Fully variable
  • Typically changing at one-year intervals
  • Some have shorter change intervals
  • Never; Fully fixed for entire term
  • Low, stable payment
  • Usually easiest qualification
  • Stable payments
  • Builds equity faster
  • Lower total interest costs than 30-year term
  • Lower rates than fully fixed-rate mortgage
  • Can sometimes borrow larger loan amount for same income
  • Can have lowest interest rates
  • Qualification may not depend upon today's interest rate
  • Often has lower interest rate/monthly payment over balloon period than fixed rate
  • Similar to hybrid ARM
  • Can have highest total interest cost over time
  • User may "buy" more rate stability than actually needed, increasing cost
  • Requires higher income to qualify
  • Less affordable monthly payment
  • Funds commited to payment cannot be used elsewhere
  • Stable payment for a number of years, then unpredictable
  • Rates can jump by as much as 6 percentage points at first adjustment
  • Payments fluctuate at each rate change
  • Unpredictable, rates can change as much as 2 percentage points at each adjustment
  • Loan fully due and payable when balloon period ends
  • Must be paid off or refinanced in unknown market conditions
Alternative strategy
  • Consider Hybrid ARM with appropriate fixed period
  • Consider 30-year term and prepaying loan to preserve cash-flow flexibility
  • Consider Fixed rate mortgage or longest possible fixed period, if loan hold period not known
  • Consider Hybrid ARM to ameliorate rate and payment risks for a given period
  • Consider Hybrid ARM to ensure continued loan availability
These may be useful for...
  • Purchasing a home
  • First-time homebuyers
  • Refinancing to improve cash flow/lower payment
  • Refinancing to lower total interest cost
  • Retiring mortgage more quickly
  • Building or rebuilding equity more quickly
  • Purchasing or refinancing when time horizon is seven years or shorter, and where borrower can handle increase in monthly payments
  • Purchasing or refinancing when interest rates are near top of cycle, and are likely to fall, or sale or refinance is anticipated within three years
  • Purchasing or refinancing when time horizon is three years or longer and home will be sold prior to end of balloon period
Consider if
  • Buying or refinancing a home and planning on owning for longer than 10 years
  • Buying second home
  • Refinancing to build equity
  • Paying off mortgage before life event (retirement, etc)
  • Buying a home and expect to move before fixed period ends, or know income will rise to offset payment risk, even in worst-case scenario
  • Buying or refinancing when income can handle frequent payment changes and worst-case scenario for rates over a four-year period
  • Buying a home and expect to move before balloon period ends, or have resources to pay off mortgage if refinance not available
When shopping, ask about
  • "Full cost" vs. "No cost" refinances, prepaying loan to shorten term if desired
  • If 20-year term makes payment too high, whether 25-year term is available
  • Interest rate caps, for first and subsequent adjustments, worst-case scenario
  • A history of the Index the loan is keyed off, margin and caps
  • Whether or not there is any built-in refinancing option when the balloon period ends
Useful tools & resources

Latest Mortgage Rate Analysis

HSH's longer-range outlook for mortgage rates, where we review our last forecast,discuss current market influences and provide our expectations for mortgage rates over the next nine weeks.

Mortgage Calculators

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