Today’s Mortgage, Refinance Rates: Nov. 6, 2022

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Homebuyers have struggled to find affordability as mortgage rates have risen to 20-year highs. But as markets settle on expectations of further hikes from the Federal Reserve, it’s possible that mortgage rates won’t rise much further this year.

Mortgage rates fell this summer when investors interpreted comments from the Fed as a sign that the central bank may be preparing for a pivot away from aggressive increases to the federal funds rate. But as inflation continued to heat up, Fed President Jerome Powell made it clear that the central bank will not stop raising rates until price growth slows to a more acceptable level. This helped the rates trend back.

In his press conference last week, Powell twice used the phrase “very premature” when talking about a potential pause in rate hikes.

Until inflation begins to decline, mortgage rates are likely to remain high. But because the market has priced in the expectations of future increases from the Fed, they may have finally reached the highest level.

Today’s mortgage rates

Type of mortgage Average rate today
This information was provided by Zillow. See more mortgage rates on Zillow

Today’s refinance rates

Mortgage calculator

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

Mortgage Calculator

Your estimated monthly payment

  • Payment a 25% higher down payment saves $8,916.08 on interest payments
  • Reducing the interest rate by 1% if he would save you $51,562.03
  • Additional charge $500 each month reduces the length of the loan by 146 months

By fitting different durations and interest rates, you’ll see how your monthly payment can change.

Mortgage rate projection for 2023

Mortgage rates started to rise from historic lows in the second half of 2021 and have risen more than three percentage points so far in 2022. They will likely remain close to their current levels for the rest of 2022.

But many forecasters expect rates to start falling next year. In their latest forecast, Fannie Mae researchers predicted that rates are currently at an all-time high, and that 30-year fixed rates will decline to 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 is currently estimating that there is a 50% probability that a mild recession will materialize in the next year.

Whether mortgage rates decline in 2023 depends on whether the Federal Reserve can control inflation.

In the last 12 months, the Consumer Price Index increased by 8.2%. This is only a small drop compared to the previous month’s numbers, which means the Fed will likely need to continue to aggressively raise federal funds rates to bring prices down significantly. .

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As inflation slows, mortgage rates are likely to begin to decline as well. If the Fed acts too aggressively and designs a recession, mortgage rates could fall further than current forecasts expect. But rates probably won’t drop to the historic lows that borrowers have enjoyed over the past few years.

Should I get a HELOC? Pros and cons

If you’re looking to tap into your home equity, a HELOC may be the best way to do it 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 advantages

  • Pay only the interest on what you borrow
  • They typically have lower rates than alternatives, including home equity loans, personal loans, and credit cards
  • If you have a lot of equity, you can potentially borrow more than you can get with a personal loan

HELOC cons

  • Rates are variable, meaning your monthly payments may increase
  • Taking equity out of your home can be risky if property values ​​fall or if the loan defaults
  • The minimum withdrawal amount may be more than you want to borrow

When will house prices go down?

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

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

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Sky-high mortgage rates have driven many hopeful buyers out of the market, reducing home-buying demand and putting downward pressure on house prices. But rates could start to come down next year, which would take some of that pressure off. Current housing supply is also historically low, which is likely to keep prices from falling too far.

What happens to house prices in a recession?

House prices usually fall during a recession, but not always. When it does, it’s usually because fewer people can afford to buy homes, and low demand forces sellers to lower their prices.

How much mortgage can I pay?

A mortgage calculator can help you determine how much you can afford to borrow. Play around with different home prices and down payment amounts to see how much your monthly payment might be, and think about how that fits into your overall budget.

Typically, experts recommend that you spend no more than 28% of your gross monthly income on housing costs. This means your total monthly mortgage payment, including taxes and insurance, should not exceed 28% of your monthly income before tax.

The lower your rate, the more you can borrow, so shop around and get pre-approved with multiple mortgage lenders to see who can offer you the best rate. But remember not to borrow more than what your budget can comfortably handle.


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