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Mortgage Rates by Loan Product
Mortgage Rate ReportWednesday, April 25, 2018
Mortgage rates moved mostly higher on the week although there were also some positive signs as the market continued to respond to the Fed's increasingly hawkish stance on rates. In its March meeting, the Fed pointed to strong job growth, record low unemployment, an improving economic outlook and an expected boost in near-term inflation to justify its decision to raise the Federal Funds rate 0.250% to 1.500% to 1.750%.
The minutes from the March meeting also shed more light on the Fed's more aggressive outlook on rates. Fed members were unanimous in their forecast for higher inflation, accelerating GDP growth and additional interest rate increases in the future. The Fed meeting minutes highlighted the 2017 tax cuts and recently passed budget as potential economic catalysts, which is code for sources of inflation, while also recognizing the the negative effects of a possible trade war. In sum, the meeting minutes reinforced the Federal Reserve's aggressive forecast for interest rates with the market anticipating two more rate hikes in 2018 and four rate increases in 2019.
Mortgage rates were mixed in response to the meeting minutes as relatively little new information was released. Most lenders had already factored the Fed's March rate hike into their mortgage rate pricing and the expected number of future rate hikes remained unchanged despite the Fed's bullish tone. Over the past week, however, mortgage rates increased moderately as fears of a trade war receded and more positive economic news hit the market, although the news was not all negative for borrowers.
The interest rate for a 30 year fixed rate mortgage increased 0.125% to 4.375% while the interest rate for a 15 year mortgage climbed 0.125% to 3.875%. The interest rate on a 5/1 adjustable rate mortgage (ARM) also moved 0.250% higher to 3.875% as short term mortgage products became more expensive. In more positive news, FHA mortgage rates and VA mortgage rates were flat at 3.875%, with both programs appealing to borrowers focused on low or no down payment options, especially first-time home buyers. Jumbo mortgage rates were also steady at 4.375% while non-owner occupied mortgage rates remained at 4.625%.
The Federal Reserve's decision to increase interest rates in March was widely anticipated and its meeting minutes only made its long-term outlook more clear. Although there was a bit of a a delay, we are now seeing mortgage rates gradually move higher in response to the Fed. With the Fed reinforcing its forecast for multiple rate hikes in 2018 and 2019 (up to six!), prospective borrowers looking to buy a home or refinance their mortgage may be able to lock in a lower mortgage rate by acting now. While interest rates are challenging to forecast, the Fed's latest statement and meeting minutes underscore how higher inflation could yield more aggressive action on interest rates.
Because mortgage rates fluctuate daily, we continue to actively monitor the mortgage market for updates. Borrowers should check the FREEandCLEAR mortgage rate tables regularly to review customized, 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.
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.
Why Borrowers Compare Mortgage Rates on FREEandCLEAR
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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