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Mortgage Rates by Loan Product
Mortgage Rate ReportSaturday, June 23, 2018
Mortgage rates dipped slightly this week after rising in response to the Federal Reserve's decision to raise interest rates at its June meeting last week. In its statement, the Fed pointed to a robust labor market, improving household spending, sustained business investment and accelerating inflation to support a 0.250% increase in the target Fed Funds rate to 1.750% to 2.000%. The Fed's removal of measured language from its statement as well as highly positive comments on the economy by Fed Chair Jerome Powell also improved the probability of two more increases rate moves this year and in 2019 as well.
Although June's quarter point rate surprised few, there were mixed opinions prior to the meeting over the number of increases to expect for the remainder of 2018, with moderate wage growth, lower than targeted inflation and potential international trade wars providing rationale for the Fed to pause or slow future rate hikes. Following meeting, however, there is greater certainty regarding the Fed's apporach for the second half of 2018.
While the increase in interest rates and the Fed's more hawkish outlook drove mortgage rates higher across the board last week, in good news for borrowers, we saw rates pullback for several programs this week. It appears that by effectively telegraphing its intentions, the Fed brought increased stability to the mortgage market, which positively impacted rates for certain programs.
The mortgage rate for a 30 year fixed rate loan slid 0.125% higher to 4.375% while the rate for a 15 year fixed rate mortgage remained at 3.875%. The interest rate on a 5/1 adjustable rate mortgage (ARM) was also steady at 3.875%. FHA mortgage rates stayed put at 3.875%, matching VA mortgage rates which held at 3.875%, with both programs remaining attractive to borrowers focused on low or no down payment programs, especially first time home buyers. Jumbo mortgage rates were stable 4.500% while non-owner occupied mortgage rates moved 0.125% lower to 4.625%.
Although the Fed's move to raise rates was widely expected, the mortgage market reaction to the news was better than expected. Rates increased less than expected initially and dropped slightly this week. We have seen rates gradually move higher this year in response to the Fed's forecast and expectations for future rate hikes were reinforced this week. While interest rates are impossible to predict, prospective borrowers looking to buy a home or refinance their mortgage may be able to lock in a lower rate by acting sooner rather than later. As lenders react differently to shifting market conditions, we have also seen the variation in mortgage rate pricing grow recently, which means borrowers benefit more by shopping multiple lenders.
Because rates fluctuate constantly, we continue to actively monitor the market for new developments. Borrowers should check the FREEandCLEAR mortgage rate tables regularly to review personalized, updated mortgage rates for lenders in their area. Our rate tables are free to use and require no personal information.
Reasons to Refinance Your Mortgage
Lower Your Interest Rate.
As a rule of thumb, if you are refinancing, your new interest rate should be at least .75% lower than your existing interest rate to justify the refinance closing costs (if any). Additionally, your lower monthly mortgage payment should enable you to recover your mortgage closing costs, or breakeven, within two and a half years. Refinance mortgage rates tend to be slightly lower than home purchase loan rates which can help borrowers save money on their mortgage.
Reduce Your Mortgage Term.
Shortening your mortgage term when you refinance allows you to lower your mortgage rate. For example, the interest rate on a 15 year mortgage is typically .5% - 1.0% less than the interest rate on a 30 year mortgage. A mortgage with a shorter term and lower interest rate results in significantly less total interest expense over the course of the mortgage. For example, a $250,000 15 year mortgage with a 2.750% interest rate saves a borrower approximately $100,000 in total interest expense as compared to a 30 year mortgage with a 3.500% interest rate.
Change Your Mortgage Program.
Refinancing your mortgage also enables you to change your mortgage program. For example, borrowers with an adjustable rate mortgage or interest only mortgage may refinance into a fixed rate mortgage if they are concerned interest rates will increase in the future. Alternatively, borrowers could decide to refinance a fixed rate mortgage into an adjustable rate mortgage to lower their current interest rate or if they believe interest rates will decline in the future.
Take Cash Out of Your Home.
Borrowers can use a cash-out refinance to access the equity in their homes. With a cash-out refinance your new mortgage amount is greater than your current mortgage balance and you keep the difference, less any closing costs, when the refinance closes. Borrowers can use the proceeds from a cash-out refinance for a multitude of purposes including to pay for a remodeling project or college tuition. Please note that refinance mortgage rates for cash-out loans are usually higher than for standard refinancings.
Why Borrowers Compare Refinance Mortgage Rates on FREEandCLEAR
Comparing refinance mortgage rates can save you thousands. Use our rate tables to find the lender offering the lowest rates and fees
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More FREEandCLEAR Mortgage Resources
Our Mortgage Refinance, Cash-Out, Debt Consolidation or Bi-Weekly refinance calculators enable you to evaluate different refinance scenarios and determine how much money you can save by refinancing
Our comprehensive mortgage refinance guide takes you through the refinance process from start to finish
Refinancing your mortgage is only one option for taking cash out of your home. We review all your cash-out alternatives and provide pros and cons so that you can select the option that is right for you
Make sure all your questions are answered before you start the refinance process. Submit your refinance queries to the FREEandCLEAR Mortgage Expert and receive a thorough answer within 24 hours