The Fed made no move at its September meeting, but you'll want to read what the Fed said about future policy and implications for mortgage rates.

The Fed made no move at its September meeting, but you'll want to read what the Fed said about future policy and implications for mortgage rates.

Today's Mortgage Rates - 09/28/2023

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Mortgage rates rose again this week, and 30-year fixed-rate mortgages are as high as they were back in Y2K.

Freddie Mac reported today that the average offered interest rate for a conforming 30-year fixed-rate mortgage took rose a dozen basis points (0.12%) increasing to 7.31% in the latest survey. It is the highest such average since the week of December 15, 2000.

At the same time, the average offered rate for a conforming 15-year FRM managed an even larger jump, rising 18 basis points (0.18%) to 6.72% for the week. With payments on shorter-term mortgages even higher than those on longer-term loans, it's a fair bet that few if any homebuyers have an interest in one at the moment.

Some potential homembuyers may look for interest-rate relief by selecting an adjustable-rate mortgage. However, there's very little help to be found there; the most popular product, a hybrid 5/1 ARM, currently sports a 6.96% fixed interest rate for the first five years, but at least this was a decline of six basis points (0.06%) compared to last week, per Freddie Mac's legacy PMMS.

A different observations for rates on 5/1 ARMs -- one from the Mortgage Bankers Association's weekly applications survey - pegs the starting rate for the product at 6.47%. Differences in methodologies and survey sample sizes likely explain the variance between the two. In either case, the relatively small interest rate break compared to a 30-year FRM hardly makes them a compelling choice, but at least some savings can be had.

In contrast to today's homebuying audience, potential homebuyers back at the end of Y2K, were actually cheered by the then-current level of rates, as they were actually declining from even loftier levels. Of course, the median price of existing single-family homes in the fourth quarter of 2000 was $139,400 as reported by the National Association of Realtors; at least through August, that same figure was $407,100, so the paid of those higher rates is a little more acute now than then, even accounting for increase in income over time. There were also more homes available for sale at that time, too -- about 3.9 months of supply at the time at the then-present pace of sales, well above today's 3.3 months available.

There's very little to like about the current climate for interest rates in general and mortgage rates specifically. The conditions which have pushed interest rate to present levels show few signs of relenting, and until they do, mortgage rates will struggle to move down. To do so, they first of course need to stop rising, but at least some upward pressure remains in place, so expect slightly higher rates in the market 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
09/28 7.310% 6.720%
09/21 7.190% 6.540%
09/14 7.180% 6.510%
09/07 7.120% 6.520%
08/31 7.180% 6.550%
08/24 7.230% 6.550%
08/17 7.090% 6.460%
08/10 6.960% 6.340%
08/03 6.900% 6.250%
07/27 6.810% 6.110%
07/20 6.780% 6.060%
07/13 6.960% 6.300%

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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