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 - 02/08/2023

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A somewhat less-hawkish tone from the Fed this week has helped mortgage rate to decline a bit, with the prospect for a somewhat larger decline on tap.

As reported by Freddie Mac today, the average offered interest rate for a conforming 30-year fixed-rate mortgage declined by another four basis points (0.04%), slipping to 6.09% and holding at about a four month low.

The average offered rate for a conforming fifteen-year FRM declined by a little less than its longer-term counterpart, easing by just three basis points (0.03%) to settle at 5.14% for the week.

Freddie Mac's legacy rate survey showed the average initial fixed rate for a hybrid 5/1 ARM at 5.42%, a five-basis-point (0.05%) decrease from last week. Even with fixed-rate mortgages easing over the past couple of months, a 5/1 ARM might offer a reasonable alternative to some homebuyers looking for a less-costly mortgage option right now.

The Federal Reserve met this week and decided to lift the federal funds rate by another quarter of a percentage point. The new range for the key monetary policy rate is 4.5% to 4.75%, the highest it has been since October 2007.

Despite the increase, financial markets were encouraged that the Fed is getting closer to completing its cycle of increasing rates to combat 40-year high inflation. In his post-meeting press conference, Fed Chair Powell noted that it is reasonable to think that "the disinflationary process has begun" but also that the job of returning core PCE back to a 2% level is "not yet fully done."

The Fed continues to signal that at least one and possibly two hikes will come before the policy rate is at a sufficiently restrictive level. Financial markets appear to be convinced that inflation is set to start to cool more rapidly, or that a recession may come at some point later this year; the Fed does not think so in either case, pointing to a lack of meaningful decline in service-price inflation and plenty of signs of a still-expanding economy, such as a tight labor market.

It's never clear which side will turn out to be right, at least until time passes and the actual economic data and inflation figures are posted and evaluated. Until then, all we can do is watch and consider the changes as they come along.

Near term, the initial reaction to the Fed's statements and move on Wednesday was a rally in bonds, driving yields down a little bit more, setting the stage for lower mortgage rates in the coming few days at least.

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
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%
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%

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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