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Today's Mortgage Rates

As we expected, mortgage rates rose a little this week, as slightly firmer inflation and somewhat better economic data lessened the chances of an aggressive rate cut by the Fed at the end of the month/

As reported by Freddie Mac, the average offered rate for a conforming 30-year fixed-rate mortgage rose by six basis points (0.06%), climbing to an 3.81%, while conforming 15-year FRMs edged just one basis point higher (0.01%) to 3.23 percent. The initial rate for a 5/1 Hybrid ARM also moved upward, rising two one-hundredths of a percentage point to close the survey week at 3.48%.

While the Fed has paved the way for a cut in the federal funds rate at the end of the month, it will likely be just a quarter percentage point trim. Some investors had placed bets on a half-point cut, but dialed back those expectations after a solid June employment report and a touch of firmness in core inflation readings.

For the moment, it looks like markets are settling in to a bit of summer doldrums, and may remain in this torpor until we approach (and likely pass) the July 30-31 Fed meeting.

For more about the Fed, the economy and mortgage rates, see our weekly MarketTrends newsletter.

Week30-year-Fixed15-year-Fixed5-year-ARM
07/11 3.750% 3.220% 3.460%
06/27 3.730% 3.160% 3.390%
06/20 3.840% 3.250% 3.480%
06/13 3.820% 3.260% 3.510%
06/06 3.820% 3.280% 3.520%
05/30 3.990% 3.460% 3.600%
05/23 4.060% 3.510% 3.680%
05/16 4.070% 3.530% 3.660%
05/09 4.100% 3.570% 3.630%
05/02 4.140% 3.600% 3.680%
04/25 4.200% 3.640% 3.770%
04/18 4.170% 3.620% 3.780%
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Displaying Today's Mortgage Rates for a $150000 Refinance loan in VA.
Refinance
Your loan amount is greater than the value of the property, a condition known as being "underwater".
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Mortgage Choices at a Glance

Loan type/termsFixed 30 yearsFixed 15 years/
20 Years
Hybrid ARMTraditional ARMBalloon 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.