Today’s Mortgage, Refinance Rates: Nov. 20, 2022

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The average 30-year fixed mortgage rate fell nearly 50 basis points last week, and rates remain low today.

The next path of interest rates depends largely on inflation. In October, price growth showed signs of starting to ease back to more sustainable levels. But with only one month of encouraging inflation data, it’s hard to predict exactly where rates will go in the months and years ahead.

Based on current conditions, we can see some possible outcomes in terms of mortgage rates in 2023.

The first is that inflation continues to retreat, the Fed has been able to slow down the pace of rate hikes, and mortgage rates have slowly declined throughout the year.

The second likely scenario is that Fed tightening pushes the U.S. economy into recession. In this scenario, mortgage rates could fall faster, but at the expense of a healthy economy.

Many experts believe this is the most likely scenario. The Mortgage Bankers Association said in its August commentary that it sees a 50% chance of a mild recession in the next 12 months.Others think it’s not a problem if There will be a recession, but when.

A third possible outcome is that inflation starts rising again, and the Fed has to switch back to aggressive rate hikes to try to keep inflation in check. This could push mortgage rates above 7% and significantly increase the chances of a recession in 2023.

Mortgage Rates Today

Mortgage type Today’s average exchange rate
This information is provided by Zillow.View More Mortgage Rates on Zillow

Today’s Mortgage Refinancing Rates

mortgage calculator

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

mortgage calculator

$1,161
your estimated monthly payment

  • pay a 25% A higher down payment will save you $8,916.08 charge interest
  • lower interest rates 1% will save you $51,562.03
  • additional payment $500 Loan term will be reduced every month 146 months

By plugging in different term lengths and interest rates, you’ll see how your monthly payment changes.

Mortgage Rate Forecast 2023

Mortgage rates recovered from record lows in the second half of 2021 and have risen more than three percentage points so far in 2022. Mortgage rates are likely to remain around current levels through the remainder of 2022.

But many forecasts expect rates to start falling next year. In their latest forecast, Fannie Mae researchers predict that interest rates are now peaking, with the 30-year fixed rate falling to 6.2% by the end of 2023.

Whether mortgage rates will fall in 2023 depends on whether the Fed can keep inflation in check.

Over the past 12 months, the consumer price index has risen 7.7%. That’s a slowdown compared to last month’s data, which means the Fed may start to slow down its pace of raising the federal funds rate.

Mortgage rates may also start to fall as inflation slows. If the Fed acts too aggressively and triggers a recession, mortgage rates could fall more than currently forecast. But rates likely won’t fall to the historic lows borrowers have enjoyed over the past few years.

When will prices drop?

Home prices are starting to fall, but even with a recession, we probably won’t see a big drop.

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The S&P Case-Shiller Home Price Index showed year-over-year price increases, although monthly prices fell in July and August. Fannie Mae researchers expect prices to fall 1.5% in 2023, while MBAs expect prices to rise 2.8% in 2023 and 2.1% in 2024.

Exorbitant mortgage rates have pushed many hopeful buyers out of the market, slowing demand for homes and putting downward pressure on home prices. But interest rates could start to fall next year, which would take some of the pressure off. The current supply of homes is also historically low, which may prevent prices from falling too much.

Pros and Cons of Fixed Rate vs. Adjustable Rate Mortgages

A fixed-rate mortgage locks in your interest rate for the entire term of the loan. An adjustable-rate mortgage locks in your rate for the first few years, and then your rate rises or falls periodically.

ARMs typically start out at a lower rate than a fixed-rate mortgage, but once your initial introductory period is over, ARM rates rise. If you’re planning to move or refinance before rates adjust, an ARM could be a good deal. But keep in mind that changing circumstances may prevent you from doing these things, so it’s a good idea to consider whether your budget can afford a higher monthly payment.

A fixed-rate mortgage is a good option for borrowers who want stability because your monthly principal and interest payments don’t change over the life of the loan (although if your taxes or insurance go up, your Mortgage payments may increase).

But in exchange for this stability, you will incur a higher interest rate. This may seem like a bad deal now, but if rates rise further in a few years, you might be happy locking in your rate.If rates are trending down, you may be able to get a lower rate by refinancing

How do adjustable rate mortgages work?

ARM starts with an introductory period and your rate will remain fixed for a period of time. Once that period is over, it will begin to be adjusted periodically — usually annually or every six months.

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How much your interest rate changes depends on the index the ARM uses and the margin set by the lender. Lenders choose the index their ARM uses and the rate may trend up or down depending on current market conditions.

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

ARM also limits how much they can change and how high they can go. For example, an ARM may be limited to a 2% increase or decrease per adjustment, with a maximum increase of 8%.

Should I buy a HELOC?pros and cons

If you’re looking to capitalize on your home’s equity, a HELOC may be the best way to go right now. Unlike cash-out refinancing, you don’t have to get a brand new mortgage at a new rate, and you may get a better rate than a home equity loan.

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

HELOC Professionals

  • Only pay interest on what you borrow
  • Often lower interest rates than alternatives, including home equity loans, personal loans, and credit cards
  • If you have a lot of assets, you may be able to borrow more money than a personal loan

Disadvantages of HELOC

  • The interest rate is variable, which means your monthly payment may increase
  • Taking assets out of your home can be risky if property values ​​drop or you default on your loan
  • The minimum withdrawal amount may exceed the amount you want to borrow

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