Up for the quarter, down for the year? See what's happening with home affordability in our latest "Income you need to buy a home in the top 50 metro areas".

Up for the quarter, down for the year? See what's happening with home affordability in our latest "Income you need to buy a home in the top 50 metro areas".

Today's Mortgage Rates - 06/06/2023

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Mortgage rates continued their late-spring rise this week, powered higher by solid economic data and more.

As reported by Freddie Mac, the average offered interest rate for a conforming 30-year fixed-rate mortgage increased by another twenty-two basis points (0.22%), lifting the average rate on the most popular mortgage to 6.79%, the highest such rate since last November, although just over an early March level.

Conforming fifteen-year FRMs also strode higher. with the average offered rate for the most common short-term mortgage rising by twenty-one basis points to 6.18%.

Amid growing concerns by investors that strong economic data might see the Fed reconsider pausing interest rate hikes this month, Freddie Mac's legacy rate survey showed the average initial fixed rate for a hybrid 5-year ARM jumping upward by another thirteen one-hundredths of a percentage point, (0.13%) to land at 6.41% for the week. This is the highest weekly rate ever for the most common alternative to a 30-year FRM since Freddie began tracking them in January 2005.

The deal to raise the debt ceiling is coming down to the wire, but is likely to be signed into law, since neither political party wants to be blamed for a first-ever U.S. default on its obligations. Still, markets remain a bit on edge since time is running tight.

Information Pressuring rates higher this week so far included a range new data pointing to a resilient economy, stubborn inflation and a labor market that just keeps powering ahead despite months of monetary policy headwinds. In the latest observations, consumer spending picked up after a couple of lackluster months, and the Fed's favorite measure of inflation showed an uptick in price pressures. Unemployment claims remain very low, and job openings have expanded again, pointing to a still-strong labor market. Among other signals, the overall tenor of the recent economic data suggests that any decision to pause by the Fed at its next meeting will likely be a close call.

Upward pressure remains on interest rates at the moment, but there will likely be a bit of a "relief rally" once a debt deal is in place. Given the economic fundamentals, it will probably be a mild one at best, and we'll probably need to see what the Fed does -- and says about its future intentions -- when the next meeting comes to a close. As such, mortgage rates are likely to be slow to ease, but may settle back a little 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.

Week 30-year-Fixed 15-year-Fixed
06/01 6.790% 6.180%
05/25 6.570% 5.970%
05/18 6.390% 5.750%
05/11 6.350% 5.750%
05/04 6.390% 5.760%
04/27 6.430% 5.710%
04/20 6.390% 5.760%
04/13 6.270% 5.540%
04/06 6.280% 5.640%
03/30 6.320% 5.560%
03/23 6.420% 5.680%
03/16 6.600% 5.900%

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

Mortgage rates and more

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