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Today's Mortgage Rates - 03/27/2023

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Mortgage rates have moved lower again, but markets remain highly volatile and there's little indication that they will perch at present levels for very long.

Freddie Mac reported today that the average offered interest rate for a conforming 30-year fixed-rate mortgage declined by another 18 basis points (0.18%) to 6.42%, but the yields that underpin mortgage rates are bouncing up and down in wide swings of late.

Conforming fifteen-year FRMs saw a larger decrease, with the average offered rate for the most common shorter-term mortgage easing by 22 basis points (0.022) and slipping back to 5.68%. Both 30- and 15-year fixed-rate mortgage rates are about where they were toward the end of February.

Freddie Mac's legacy rate survey -- now slated to run though the end of 2023 -- showed that the average initial fixed rate for a hybrid 5/1 ARM slumped hard, posting a decline of 60 basis points (0.60%) and falling all the wan back down to 5.55%. This re-widened the rate spread between the most popular ARM and the most popular fixed-rate mortgage to 87 basis points, enough to entice at least some homebuyers looking for a lower cost alternative as they shop the housing market this spring.

With financial markets roiling, the Federal Reserve met this week to decide what, if anything should be done in terms of monetary policy. Recent banking failures raise new risks to the economy, but inflation still a serious concern, and the Fed had a choice between forceful action on rates or making no move at all. In the end, they opted for a quarter-point increase in the federal funds rate, and signaled that more increases may or may not come, depending on incoming data and the fallout of banking stresses on the economy.

The FOMC's Summary of Economic Projections -- the Fed's own forward outlook -- suggests that another quarter-point move in rates may yet come, but investors in futures markets are placing bets such a move isn't a certainty and that the Fed will be cutting rates starting later this year. Of course, these are only speculators putting money behind their hunches and not a guarantee of what may come. Based upon the comments Fed Chair Powell made at the post-meeting press conference, it's not likely that the Fed is very sure what may come in the months ahead.

As we noted here last week, it's very important to remember that mortgages aren't Treasurys; that is, during times of market stress, money may rush into the safe haven of Treasury bonds, but it's not as though investors are rushing to buy mortgages or mortgage bonds. While wide swings up or down in Treasury yields have some influence on the direction of mortgage rates, it's by no means a lockstep, one-for-one relationship.

Unsettled markets remain the order of the day, and the influential yield on the 10-year Treasury is currently about in the middle of the range it has held this week. Mortgage rates seem tentatively stable at present levels -- the lowest in a month -- but will struggle to hold still for very long in this kind of climate.

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
03/23 6.420% 5.680%
03/16 6.600% 5.900%
03/09 6.730% 5.950%
03/02 6.650% 5.890%
02/23 6.500% 5.760%
02/16 6.320% 5.510%
02/09 6.120% 5.250%
02/02 6.090% 5.140%
01/26 6.130% 5.170%
01/19 6.150% 5.280%
01/12 6.330% 5.520%
01/05 6.480% 5.730%

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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