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

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

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Average 30-year fixed mortgage rates dropped nearly 50 basis points last week, and rates remain low today.

Where rates will go next largely hinges on inflation. In October, price growth showed signs that it’s starting to come down to a more sustainable level. But with just one month of promising inflation data, it’s hard to predict exactly where rates will go in the coming months and years.

Based on current conditions, there are a few possible outcomes we could see in regards to mortgage rates in 2023.

The first is that inflation continues to come down, the Federal Reserve is able to slow its pace of hikes to the federal funds rate, and mortgage rates slowly inch down throughout the year.

The second possible scenario is that the tightening from the Federal Reserve pushes the US economy into a recession. In this case, mortgage rates would likely come down faster, but it would be at the expense of a healthy economy.

Many experts think this is the likeliest scenario. In its August commentary, the Mortgage Bankers Association said it believes that there’s a 50% likelihood of the economy experiencing a mild recession in the next 12 months. Others believe it’s not a question of if there will be a recession, but when.

The third possible outcome is that inflation starts to increase again, and the Fed has to shift back to aggressive rate hikes to try to tame it. This would likely push mortgage rates up past 7% and significantly increase the chances of a recession in 2023.

Mortgage rates today

Typical Mortgage Average rate today
This information has been provided by Zillow. See more mortgage rates on Zillow

Mortgage refinance rates today

Typical Mortgage Average rate today
This information has been provided by Zillow. See more mortgage rates on Zillow

mortgage calculator

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

Mortgage Calculator

$1,161
Your estimated monthly payment

  • Paying a 25% higher down payment would save you $8,916.08 on interest charges
  • Lowering the interest rate by 1% would save you $51,562.03
  • Paying an additional $500 each month would reduce the loan length by 146 months

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

Mortgage rate projection for 2023

Mortgage rates started ticking up from historic lows in the second half of 2021 and have increased over three percentage points so far in 2022. They’ll likely remain near their current levels for the remainder of 2022.

But many forecasts expect rates to begin to fall next year. In their latest forecast, Fannie Mae researchers predicted that rates are currently peaking, and that 30-year fixed rates will trend down to 6.2% by the end of 2023.

Whether mortgage rates will drop in 2023 depends on if the Federal Reserve can get inflation under control.

In the last 12 months, the Consumer Price Index rose by 7.7%. This is a slowdown compared to the previous month’s numbers, which means the Fed may be able to start slowing its pace of hikes to the federal funds rate.

As inflation slows, mortgage rates will likely start to fall as well. If the Fed acts too aggressively and engineers a recession, mortgage rates could fall further than what current forecasts expect. But rates probably won’t drop to the historic lows borrowers enjoyed throughout the past couple of years.

When will house prices come down?

Home prices are starting to decline, but we likely won’t see huge drops, even if there’s a recession.

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

Sky high mortgage rates have pushed many hopeful buyers out of the market, slowing homebuying demand and putting downward pressure on home prices. But rates may start to drop next year, which would remove some of that pressure. The current supply of homes is also historically low, which will likely keep prices from dropping too far.

Fixed rate vs. adjustable-rate mortgage pros and cons

Fixed-rate mortgages lock in your rate for the entire life of your loan. Adjustable-rate mortgages lock in your rate for the first few years, then your rate goes up or down periodically.

ARMs typically start with lower rates than fixed-rate mortgages, but ARM rates can go up once your initial introductory period is over. If you plan on moving or refinancing before the rate adjusts, an ARM could be a good deal. But keep in mind that a change in circumstances could prevent you from doing these things, so it’s a good idea to think about whether your budget could handle a higher monthly payment.

Fixed-rate mortgage are a good choice for borrowers who want stability, since your monthly principal and interest payments won’t change throughout the life of the loan (though your mortgage payment could increase if your taxes or insurance go up).

But in exchange for this stability, you’ll take on a higher rate. This might seem like a bad deal right now, but if rates increase further in a few years, you might be glad to have a rate locked in. And if rates trend down, you may be able to refinance to snag a lower rate

How does an adjustable-rate mortgage work?

ARMs start with an introductory period where your rate will remain fixed for a certain period of time. Once that period is up, it will begin to adjust periodically — typically once per year or once every six months.

How much your rate will change depends on the index that the ARM uses and the margin set by the lender. Lenders choose the index that their ARMs use, and this rate can trend up or down depending on current market conditions.

The margin is the amount of interest a lender charges on top of the index. You should shop around with multiple lenders to see which one offers the lowest margin.

ARMs also come with limits on how much they can change and how high they can go. For example, an ARM might be limited to a 2% increase or decrease every time it adjusts, with a maximum rate of 8%.

Should I get a HELOC? Pros and Cons

If you’re looking to tap into your home’s equity, a HELOC might be the best way to do so right now. Unlike a cash-out refinance, you won’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’s important to consider the pros and cons.

HELOC pros

  • Only pay interest on what you borrow
  • Typically have lower rates than alternatives, including home equity loans, personal loans, and credit cards
  • If you have a lot of equity, you could potentially borrow more than you could get with a personal loan

HELOC cons

  • Rates are variable, meaning your monthly payments could go up
  • Taking equity out of your home can be risky if property values ​​decline or you default on the loan
  • Minimum withdrawal amount may be more than you want to borrow

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