Posts from November 2023

Mortgage interest rates were mostly lower compared to a week ago, according to data compiled by Bankrate. Average rates for 30-year fixed, 15-year fixed and jumbo loans decreased, while rates for adjustable rate mortgages rose.

The average rate on the popular 30-year fixed-rate loan at times exceeded 8 percent in recent weeks, following a jump in 10-year Treasury yields. After a period of record lows, mortgage rates climbed in 2022 as inflation spiked and the Federal Reserve took action. The Fed last hiked its key interest rate in July, which brought up borrowing costs on a variety of financial products, including mortgages.

The central bank held firm on another rate hike this month, indicating it expects rates to stay on the higher side for the foreseeable future.

"To have the full effect of keeping interest rates higher for longer, the Fed will maintain a posture that rates could go higher and that any rate cuts are quite a ways off," says Greg McBride, CFA, Bankrate chief financial analyst.

The rise in mortgage rates comes alongside appreciating home prices, both of which have kept homebuyers on the sidelines. More than half of home purchase mortgages originated in July had a monthly payment greater than $2,000, according to Black Knight. Twenty-three percent of originations in July had a payment over $3,000. The affordability squeeze is stretching budgets, and keeping many first-time homebuyers out of the market altogether.

Rates accurate as of November 16, 2023.

The rates listed here are marketplace averages based on the assumptions shown here. Actual rates available within the site may vary. This story has been reviewed by Suzanne De Vita. All rate data accurate as of Thursday, November 16th, 2023 at 7:30 a.m.

30-year fixed-rate mortgage drops, -0.08%

The average rate you'll pay for a 30-year fixed mortgage today is 7.75 percent, down 8 basis points over the last seven days. This time a month ago, the average rate on a 30-year fixed mortgage was higher, at 8.03 percent.

At the current average rate, you'll pay principal and interest of $716.41 for every $100,000 you borrow. That's lower by $5.54 than it would have been last week.

Use our mortgage calculator to estimate your monthly payments and see how much you'll save by adding extra payments. The tool will also help you calculate how much interest you'll fork up over the life of your loan.

15-year fixed mortgage rate trends down, -0.03%

The average rate for the benchmark 15-year fixed mortgage is 7.09 percent, down 3 basis points from a week ago.

Monthly payments on a 15-year fixed mortgage at that rate will cost $904 per $100,000 borrowed. The bigger payment may be a little harder to find room for in your monthly budget than a 30-year mortgage payment, but it comes with some big advantages: You'll come out several thousand dollars ahead over the life of the loan in total interest paid and build equity much more quickly.

5/1 ARM moves up, +0.01%

The average rate on a 5/1 adjustable rate mortgage is 6.98 percent, up 1 basis point over the last week.

Adjustable-rate mortgages, or ARMs, are mortgage loans that come with a floating interest rate. In other words, the interest rate will change at regular intervals, unlike fixed-rate mortgages. These loan types are best for those who expect to refinance or sell before the first or second adjustment. Rates could be much higher when the loan first adjusts, and thereafter.

While borrowers shunned ARMs during the pandemic days of super-low rates, this type of loan has made a comeback as mortgage rates have risen.

Monthly payments on a 5/1 ARM at 6.98 percent would cost about $664 for each $100,000 borrowed over the initial five years, but could climb hundreds of dollars higher afterward, depending on the loan's terms.

Current jumbo mortgage rate retreats, -0.06%

The average jumbo mortgage rate is 7.77 percent, down 6 basis points over the last week. Last month on the 16th, the average rate on a jumbo mortgage was greater than 7.77, at 8.05 percent.

At today's average jumbo rate, you'll pay a combined $717.79 per month in principal and interest for every $100,000 you borrow. That's down $4.16 from what it would have been last week.

Refinance rates

30-year mortgage refinance eases, -0.01%

The average 30-year fixed-refinance rate is 7.95 percent, down 1 basis point compared with a week ago. A month ago, the average rate on a 30-year fixed refinance was higher, at 8.14 percent.

At the current average rate, you'll pay $730.28 per month in principal and interest for every $100,000 you borrow. That's lower by $0.70 than it would have been last week.

Where are mortgage rates heading?

Most rate watchers polled by Bankrate believe mortgage rates will rise this upcoming week. Looking to the remainder of the year, some forecasters still expect to see rates decrease, but the state of the U.S. economy and rising 10-year Treasury yields will be key factor.

The rates on 30-year home loans mostly follow the 10-year Treasury yield, which shifts continuously as economic conditions dictate, while the cost of variable-rate home loans mirror the Fed's moves.

"Economic data that is not too hot and not too cold would be helpful to mortgage rates and could get rates back down below 7 percent," says Greg McBride, chief financial analyst for Bankrate, adding, "but that has to be true for inflation, job growth, wages and consumer spending."

What current rates mean for your mortgage

While mortgage rates fluctuate considerably,, there is some consensus that we won't see rates return to 3 percent for some time. If you're shopping for a mortgage now, it might be wise to lock your rate when you find an affordable loan. If your house-hunt is taking longer than anticipated, revisit your budget so you'll know exactly how much house you can afford at prevailing market rates.

You could save serious money on interest by getting at least three loan offers, according to Freddie Mac research. You don't have to stick with your bank or credit union, either. There are many types of mortgage lenders, including online-only and local, smaller shops.

"All too often, some [homebuyers] take the path of least resistance when seeking a mortgage, in part because the process of buying a home can be stressful, complicated and time-consuming," says Mark Hamrick, senior economic analyst for Bankrate. "But when we're talking about the potential of saving a lot of money, seeking the best deal on a mortgage has an excellent return on investment. Why leave that money on the table when all it takes is a bit more effort to shop around for the best rate, or lowest cost, on a mortgage?"

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November 10, 2023

 California housing affordability dials back to hit 16-year nadir
 as interest rates surge to two-decade high in Q3 2023, C.A.R. reports

• Fifteen percent of California households could afford to purchase the $843,600 median-priced home in the third quarter of 2023, down from 16 percent in second-quarter 2023 and down from 18 percent in third-quarter 2022.
  
  
• A minimum annual income of $221,200 was needed to make monthly payments of $5,530, including principal, interest and taxes on a 30-year fixed-rate mortgage at a 7.14 percent interest rate.
  
  
• Twenty-three percent of home buyers were able to purchase the $650,000 median-priced condo or townhome. A minimum annual income of $170,400 was required to make a monthly payment of $4,260.
  
  
• Infographic: https://www.car.org/Global/Infographics/HAI-2023-Q3

LOS ANGELES (Nov. 10) – With borrowing costs reaching all-time highs and home prices continuing to climb, California housing affordability dialed back for the second straight quarter and dropped to the lowest level since 2007, the CALIFORNIA ASSOCIATION OF REALTORS^® (C.A.R.) said today.

Fewer than one in five (15 percent) home buyers could afford to purchase a median-priced, existing single-family home in California in third-quarter 2023, down from 16 percent in the second quarter of 2023 and down from 18 percent in the third quarter of 2022, according to C.A.R.'s Traditional Housing Affordability Index (HAI). The third-quarter 2023 figure is less than a third of the affordability index peak high of 56 percent in the first quarter of 2012.

C.A.R.'s HAI measures the percentage of all households that can afford to purchase a median-priced, single-family home in California. C.A.R. also reports affordability indices for regions and select counties within the state. The index is considered the most fundamental measure of housing well-being for home buyers in the state.

A minimum annual income of $221,200 was needed to qualify for the purchase of a $843,600 statewide median-priced, existing single-family home in the third quarter of 2023. The monthly payment, including taxes and insurance (PITI) on a 30-year, fixed-rate loan, would be $5,530, assuming a 20 percent down payment and an effective composite interest rate of 7.14 percent.

This marked the first time the effective interest rate jumped above 7 percent in more than two decades. The effective composite interest rate was 6.61 percent in second-quarter 2023 and 5.72 percent in third-quarter 2022. Interest rates appear to have peaked, and further economic slowdown could result in further rate drops before the end of the year. The rate decline should alleviate pressure on both the supply and demand sides of the housing market, which could help improve housing affordability in the coming quarters.

The median price of condominiums and townhomes in California declined from a year ago but was up from the previous quarter. As a result, the share of households that could afford a typical condo/townhome in third-quarter 2023 dipped from the 25 percent recorded in the previous quarter and was down from the 28 percent recorded in the third quarter of 2022. An annual income of $170,400 was required to make the monthly payment of $4,260 on the $650,000 median-priced condo/townhome in the third quarter of 2023.

Compared with California, more than a third of the nation's households could afford to purchase a $406,900 median-priced home, which required a minimum annual income of $106,800 to make monthly payments of $2,670. Nationwide affordability was down from 39 percent a year ago.

Key points from the third-quarter 2023 Housing Affordability report include:

• When compared to the previous quarter, housing affordability declined in 36 counties and remained unchanged in 10. Only five counties showed a quarter-to-quarter improvement in affordability, thanks to steeper price declines than in other counties during the same time period. Compared to a year ago, six counties saw an improvement in affordability. A greater majority of counties (42) throughout the state recorded a decline in affordability on a year-over-year basis, and only three remained unchanged.

   

• Lassen (58 percent) remained the most affordable county in California and the only county to record an affordability of more than 50 percent in the third quarter of 2023. Tehama (39 percent) and Shasta (35 percent) trailed behind as distant second and third placers and together were the only three counties to record an affordability index of at least 35 percent – all located in the Far North region of the State. Of all counties in California, Lassen required the lowest minimum qualifying income ($55,600) to purchase a median-priced home in third-quarter 2023.
  
  
• Mono (5 percent), Monterey (9 percent), San Luis Obispo (10 percent), and Santa Barbara (10 percent), were the least affordable counties in California, with each of requiring at least a minimum income of $226,800 to purchase a median-priced home in the county. San Mateo continued to require the highest minimum qualifying income ($516,000) to buy a median-priced home in the third quarter of 2023 and was the only county in California that required a minimum qualifying income over $500,000. Santa Clara County came in second of all counties needing a minimum required income of $484,800, followed by Marin ($416,400).
  
  
• Housing affordability declined the most on a year-over-year basis in Kings, falling 13 points from third-quarter 2022 to third-quarter 2023. Amador registered the second biggest drop in affordability moving eight points below last year, followed by Kern, Sacramento, and Stanislaus, each dropping six points from a year ago. Despite higher household incomes, higher home prices and elevated mortgage rates continued to be the primary factors that kept the cost of borrowing near its all-time high and affordability near the all-time low across most counties.

See C.A.R.'s historical housing affordability data.
See first-time buyer housing affordability data.

Leading the way…® in California real estate for more than 117 years, the CALIFORNIA ASSOCIATION OF REALTORS® (www.car.org) is one of the largest state trade organizations in the United States with more than 200,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Los Angeles.

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CALIFORNIA ASSOCIATION OF REALTORS®
Traditional Housing Affordability Index
Third quarter 2023

 r = revised

Traditional Housing Affordability Indices (HAI) were calculated based on the following effective composite interest rates: 7.14% (3Qtr. 2023), 6.61% (2Qtr. 2023) and 5.72% (3Qtr. 2022).