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See what's happening with home values in more than 400 metropolitan areas with HSH's Home Value Tracker, just updated though the second quarter of 2022.

See what's happening with home values in more than 400 metropolitan areas with HSH's Home Value Tracker, just updated though the second quarter of 2022.

Today's Mortgage Rates - 09/30/2022

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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.

Week 30-year-Fixed 15-year-Fixed 5-year-ARM
09/29 6.700% 5.960% 5.300%
09/22 6.290% 5.440% 4.970%
09/15 6.020% 5.210% 4.930%
09/01 5.660% 4.980% 4.510%
08/25 5.550% 4.850% 4.360%
08/18 5.130% 4.550% 4.390%
08/11 5.220% 4.590% 4.430%
08/04 4.990% 4.260% 4.250%
07/28 5.300% 4.580% 4.290%
07/21 5.540% 4.750% 4.310%
07/14 5.510% 4.670% 4.350%
07/07 5.300% 4.450% 4.190%

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
Benefits
  • 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
Drawbacks/Risks
  • 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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