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Wondering about where mortgage rates are headed? Check out our latest Two-Month Mortgage Rate Forecast.

Wondering about where mortgage rates are headed? Check out our latest Two-Month Mortgage Rate Forecast.

Today's Mortgage Rates - 01/28/2023

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With investors awaiting direction from the Fed, mortgage rates were mostly stable this week.

Freddie Mac reported today that the average offered interest rate for a conforming 30-year fixed-rate mortgage declined by just two basis points (0.02%), edging down to 6.13%. The passage of the holiday season and lower mortgage rates has seen a bit of a pickup in both home purchases and mortgage refinancing activity.

For the third week in a row, the average offered rate for a conforming fifteen-year FRM declined by a greater amount than its longer-term counterpart, falling by eleven basis points (0.11%), putting the most popular shorter-term mortgage at 5.17%.

Freddie Mac's legacy rate survey showed the average initial fixed rate for a hybrid 5/1 ARM at 5.47%, a six-basis-point (0.06%) increase from last week. A 5/1 ARM might offer a reasonable alternative to some homebuyers looking for a less-costly mortgage option right now, although the interest rate break has shrunk a little over the past few weeks.

Amid signs that inflation is heading in the right direction, the Fed will meet next week to make changes to monetary policy. Markets currently expect a 0.25% increase in the federal funds rate. While that may the outcome, it's still true that labor markets remains considerably tighter than the central bank would like to see. As well, the economy continues to grow at a clip that makes it more difficult for inflation to diminish quickly, as Gross Domestic Product (GDP) came in at a 2.9% annualized rate for the fourth quarter of 2022.

The open question is how patient the Fed will be once it lifts rates again, and the meeting-closing statement and Chair Powell's press conference may provide clues as to what comes next.

Like other long-term interest rates, mortgage rates are in a gentle ebb and flow at the moment, and don't appear likely to move much in the coming 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 5-year-ARM*
01/26 6.130% 5.170%
01/19 6.150% 5.280%
01/12 6.330% 5.520%
01/05 6.480% 5.730%
12/29 6.420% 5.680%
12/22 6.270% 5.690%
12/15 6.310% 5.540%
12/08 6.330% 5.670%
12/01 6.490% 5.760%
11/23 6.580% 5.900%
11/17 6.610% 5.980%
11/10 7.080% 6.380% 6.060%

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

Mortgage rates and more

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