Today’s Mortgage Rates, January 2, 2023 | Rates Trending Upward

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High mortgage rates brought the housing market to a standstill in 2022. But there could be a light at the end of the tunnel.

Inflation, the main reason behind the doubling of interest rates this year, is starting to look like it’s peaked. Experts say mortgage rates might have seen their peak as well. That could set up a somewhat better housing market in 2023.

Here are today’s mortgage rates and what they mean for buyers.

Looking at today’s mortgage rates a number of rates inched up. The averages for both 30-year fixed and 15-year fixed mortgages both made gains. At the same time, average rates for 5/1 adjustable-rate mortgages (ARM) also were raised.

Mortgage rates currently are:

Mortgage Rate Trends: Why Are Mortgage Rates Changing So Fast?

Mortgage rates might be on their way down. They’re driven largely by inflation, and it appears price increases are slowing. The Consumer Price Index was 7.1% in November, better than expected for the second month in a row. Mortgage rates dropped below 7% in November, after October’s inflation report showed promising news.

Rates for mortgages are less connected to those of the Federal Reserve, which are continuing to rise, although not at the same rate they have all year.

“From a mortgage perspective, rates have actually gone down even though the Fed has raised rates. We would expect the worst is over. We think you’re going to see lower rates into the next year despite further rate hikes,” says JR Gondeck, partner and managing director with the Lerner Group, a financial advisory firm.

Are Current Mortgage Rates Good For Buying a Home Right Now?

Whether it’s a good time to buy a home depends more on your personal financial situation than anything else, but it’s important to understand the changes in a fast-moving housing market. The big surge in interest rates has taken a lot of buyers out of the market because it’s harder to afford a mortgage – meaning less competition and lower home prices.

The drops in home prices, which remain near all-time highs, might help some buyers get back into the market. You need to factor in all the aspects that go into your monthly payment, and high mortgage rates could more than offset the savings from lower home prices.

“Especially in a volatile market, make sure you’re okay with the payment. Whatever loan you’re in, make sure you can afford it on your own,” says Sheila Smith, an Idaho-based realtor at RE/MAX Capital City. “Pick a home you’re happy in that’s affordable to you.”

Closing Costs & Loan Fees

When you take out a mortgage, you’ll want to be aware of the closing costs. There are typically 3 to 6% of the loan amount in closing costs, including origination charges, prepaid interest, and property taxes.. Accepting a higher interest rate, in exchange for lender credits can assist you in reducing your out-of-pocket costs. This strategy can save you money in the short-term, so it’s worth looking into if there is a chance you’ll be selling the home or refinancing in five to eight years.

Looking at Today’s Mortgage Refinance Rates

Refinancing became a bit more expensive today as 30-year fixed and 15-year fixed refinance mortgages saw their average rates trend upward. If you’ve been considering a 10-year refinance loan, just know average rates also saw an increase.

Today’s refinance rates are:

Check out mortgage rates that meet your distinct needs.

30-Year Fixed-Rate Mortgage Rates

The median interest rate for a standard, 30-year, fixed mortgage is 6.66%, which is an increase of 10 basis points from the previous week.

15-Year Mortgage Rates

The median rate for a 15-year fixed mortgage is 5.98%, which is an increase of 11 basis points from the same time last week.

A 15-year, fixed-rate mortgage’s monthly payment is larger than what you would pay with a 30-year mortgage. But, 15-year loans have some considerable benefits: You’ll save thousands of dollars in interest and pay off your loan much sooner.

5/1 ARM Rates

A 5/1 ARM has an average rate of 5.50%, which is a rise of 8 basis points from seven days ago.

An adjustable-rate mortgage is ideal for individuals who will refinance or sell before the rate changes. If that’s not the case, their interest rates could end up being significantly higher after a rate adjusts.

For the first five years, a 5/1 ARM will typically have a lower interest rate compared to a 30-year fixed mortgage. Keep in mind that your rate could climb higher and your payment might grow by hundreds of dollars a month.

How We Calculate Our Mortgage Interest Rates

NextAdvisor’s mortgage interest rate averages are pulled from Bankrate’s daily rate data.. These overnight rates are based on a specific personal financial profile, which only includes loans for single-family homes with a loan-to-value ratio of 80% or better. Bankrate is part of the same parent company as NextAdvisor.

The table below compares today’s average rates to what they were a week ago, and is based on information provided to Bankrate by lenders from across the nation:

Rates accurate as of January 2, 2023.

Pro Tip

Use NextAdvisor’s mortgage calculator to see how your monthly mortgage payment changes based on factors like your mortgage interest rate, property taxes, or down payment.

Mortgage Rate Frequently Asked Questions (FAQ):

How Do I Get the Lowest Mortgage Rate?

Your credit score, and loan-to-value ratio (LTV), and are the most important factors lenders use to calculate your mortgage rate.

To get the best mortgage rate, it’s best to have a credit score somewhere between 700-800. Having a credit score above 800 is nice, but will likely have no major impact on your rate.

Banks offer the largest mortgage rate discounts to home buyers that are seen as less risky. One surefire way to show you’re more likely to make your monthly payments is to make a larger down payment. A down payment of 20% or more will save you money in two ways: with a more favorable mortgage rate, and you’ll be able to avoid paying for private mortgage insurance (PMI).

Is It a Good Idea to Lock in My Mortgage Rate Right Now?

Mortgage rates move up and down on a daily basis, and it’s impossible to time the market. So locking in your interest rate right now is a good idea because overall, rates are historically favorable.

When you lock in your rate, ask your lender how long the lock will last. A rate lock can be good for anywhere from 30 to 60 days, which typically will give you enough time to close before the lock expires. If you want to extend the rate lock, ask about fees as many lenders charge a fee for extending a rate lock.

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