Today’s Mortgage, Refinance Rates: Nov. 14, 2022

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Last week was a good week for mortgage rates, and they are holding steady today. Rates fell by more than 50 basis points after Thursday’s Consumer Price Index report showed that inflation was finally slowing.

In December, the Federal Reserve will meet again to discuss another increase to the federal funds rate, and currently markets are largely expecting a smaller 50 basis point increase after four consecutive 75 point hikes.

If inflation continues to fall and the Fed is able to slow its pace of rate hikes, it could still reach a so-called “soft landing,” where it slows the economy enough to tame inflation but not so much as to cause a recession not. .

But one month of low inflation readings is unlikely to sway the Fed from its aggressive stance. Fed Chairman Jerome Powell made it clear that the central bank is on the lookout for a sustained slowdown before considering changing course, noting in his press conference after November’s meeting that it was “very premature.” is to consider interrupting his efforts.

As long as the Fed continues to raise rates, mortgage rates are likely to remain elevated as well. But they may not increase much further this year, and they will likely start to decline in 2023.

Mortgage rates today

Bond type Average rate today
This information was provided by Zillow. See more mortgage rates on Zillow

Mortgage refinance rates today

Bond type Average rate today
This information was provided by Zillow. See more mortgage rates on Zillow

Mortgage calculator

Use our free mortgage calculator to see how today’s mortgage rates will affect your monthly and long-term payments.

By factoring in different term lengths and interest rates, you’ll see how your monthly payment can change.

Mortgage rate projection for 2023

Mortgage rates began rising from historic lows in the second half of 2021 and have increased by more than three percentage points so far in 2022. They are likely to remain close to their current levels for the rest of 2022.

But many forecasts expect rates to start falling next year. In their latest forecast, Fannie Mae researchers predicted that rates are currently peaking, and that 30-year fixed rates will trend toward 6.2% by the end of 2023.

The Mortgage Bankers Association also noted that a recession in the first half of 2023 could cause rates to fall even faster. It currently estimates that there is a 50% probability that a mild recession will materialize in the next year.

Whether mortgage rates will fall in 2023 depends on whether the Federal Reserve can get inflation under control.

In the last 12 months, the Consumer Price Index rose by 7.7%. This is only a slight slowdown compared to the previous month’s numbers, which means that the Fed will likely need to continue to aggressively raise the federal funds rate to bring prices down significantly.

As inflation slows, mortgage rates are likely to start falling as well. If the Fed acts too aggressively and triggers a recession, mortgage rates could fall further than current forecasts expect. But rates are unlikely to fall to the historic lows that borrowers have enjoyed in recent years.

When will house prices fall?

Home prices are starting to fall, but we probably won’t see big drops even if there is a recession.

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The S&P Case-Shiller Home Price Index shows that prices are still higher year-over-year, although they fell on a monthly basis in July and August. Fannie Mae researchers expect prices to fall 1.5% in 2023, while the MBA expects a 2.8% increase in 2023 and a 2.1% increase in 2024.

Sky-high mortgage rates have pushed many hopeful buyers out of the market, slowing home buying demand and putting downward pressure on home prices. But rates could start to fall next year, taking some of that pressure off. The current supply of homes is also historically low, which is likely to keep prices from falling too far.

Fixed-rate vs. adjustable-rate mortgage pros and cons

Fixed rate mortgages lock in your rate for the life of your loan. Adjustable rate mortgages lock in your rate for the first few years, then your rate goes up or down periodically.

ARMs usually start out with lower rates than fixed-rate mortgages, but ARM rates can go up once your initial introductory period is over. If you plan to move or refinance before the rate adjusts, an ARM can be a good deal. But keep in mind that a change in circumstances may prevent you from doing these things, so it’s a good idea to think about whether your budget can handle a higher monthly payment.

Fixed-rate mortgages are a good choice for borrowers who want stability, since your monthly principal and interest payments won’t change over the course of the loan (although your mortgage payment may increase if your taxes or insurance go up).

But in exchange for this stability, you will assume a higher rate. It may seem like a bad deal at the moment, but if rates rise further in a few years, you may be happy to lock in a rate. And if rates drop, you may be able to refinance to get a lower rate

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How does an adjustable rate mortgage work?

ARMs start with an introductory period where your rate will remain fixed for a certain period of time. Once that period is over, it will begin to adjust periodically – usually once a year or once every six months.

How much your rate will change depends on the index the ARM uses and the margin set by the lender. Lenders choose the index their ARMs use, and this rate can trend up or down depending on current market conditions.

The margin is the amount of interest a lender charges on top of the index. You should shop around with several lenders to see which one offers the lowest margin.

ARMs also come with limits on how much they can change and how high they can go. For example, an ARM may be limited to an increase or decrease of 2% each time it adjusts, with a maximum rate of 8%.

Should I Get a HELOC? Advantages and disadvantages

If you’re looking to increase your home equity, a HELOC may be the best way to do it right now. Unlike a cash-out refinance, you don’t have to get a whole new mortgage with a new interest rate, and you’ll likely get a better rate than you would with a home equity loan.

But HELOCs don’t always make sense. It is important to consider the pros and cons.

HELOC benefits

  • Only pay interest on what you borrow
  • Usually have lower rates than alternatives, including home loans, personal loans and credit cards
  • If you have a lot of stocks, you may be able to borrow more than you can with a personal loan

HELOC disadvantages

  • Rates are variable, which means your monthly payments may increase
  • Taking equity out of your home can be risky if property values ​​drop or if you default on the loan
  • Minimum withdrawal amount may be more than you want to borrow

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