Today's mortgage and refinance rates, May 18th, 2023 | Rates rise
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Average mortgage rates moved higher for all types of loans compared to a week ago, according to data compiled by Bankrate. Rates for 30-year fixed, 15-year fixed, 5/1 ARMs and jumbo loans edged higher.
The Federal Reserve has lifted rates 10 times in a row, most recently at its May 3 meeting. Rates now are at a 15-year high, but the consensus is that inflation is finally cooling and the central bank might halt raising rates.
”Mortgage rates have settled into a new normal of around 6.5 percent on a 30-year fixed-rate loan," says Lisa Sturtevant, chief economist at Bright MLS, a large multiple listing service in the Middle Atlantic region. ”With growing recession risks, we could see mortgage rates dip lower, but we will not be returning to the 3 percent level seen during the height of the pandemic."
|Loan type||Interest rate||A week ago||Change|
|30-year fixed rate||6.96%||6.89%||+0.07|
|15-year fixed rate||6.30%||6.23%||+0.07|
|5/1 ARM rate||5.83%||5.79%||+0.04|
|30-year fixed jumbo rate||7.01%||6.93%||+0.08|
Rates last updated on May 18, 2023.
These rates are averages based on the assumptions here. Actual rates displayed across the site may vary. This story has been reviewed by Suzanne De Vita. All rate data accurate as of Thursday, May 18th, 2023 at 7:30 a.m.
>>Check out historical mortgage interest rate trends
You can save thousands of dollars over the life of your mortgage by getting multiple offers. Comparing mortgage offers from multiple lenders is always a smart move, but shopping around grew especially critical during the interest rate run-up of 2022, according to research by mortgage giant Freddie Mac. It found the payoff for bargain-huntng borrowers doubled last year.
"All too often, some homeowners take the path of least resistance when seeking a mortgage, in part because the process of buying a home can be stressful, complicated and time-consuming," says Mark Hamrick, senior economic analyst for Bankrate. "But when we’re talking about the potential of saving a lot of money, seeking the best deal on a mortgage has an excellent return on investment. Why leave that money on the table when all it takes is a bit more effort to shop around for the best rate, or lowest cost, on a mortgage?"
Mortgage rates for home purchase
Today's 30-year mortgage rate climbs, +0.07%
The average rate for the benchmark 30-year fixed mortgage is 6.96 percent, up 7 basis points over the last seven days. A month ago, the average rate on a 30-year fixed mortgage was lower, at 6.88 percent.
At the current average rate, you'll pay principal and interest of $662.62 for every $100k you borrow. Compared to last week, that's $4.69 higher.
15-year mortgage rate rises,+0.07%
The average rate for the benchmark 15-year fixed mortgage is 6.30 percent, up 7 basis points since the same time last week.
Monthly payments on a 15-year fixed mortgage at that rate will cost $860 per $100,000 borrowed. That may squeeze your monthly budget than a 30-year mortgage would, but it comes with some big advantages: You'll save thousands of dollars over the life of the loan in total interest paid and build equity much faster.
5/1 ARM rises, +0.04%
The average rate on a 5/1 ARM is 5.83 percent, ticking up 4 basis points over the last 7 days.
Adjustable-rate mortgages, or ARMs, are mortgage terms that come with a floating interest rate. In other words, the interest rate can change intermittently throughout the life of the loan, unlike fixed-rate loans. These types of loans are best for people who expect to sell or refinance before the first or second adjustment. Rates could be much higher when the loan first adjusts, and thereafter.
While borrowers shunned ARMs during the pandemic days of super-low rates, this type of loan has made a comeback as mortgage rates have risen.
Monthly payments on a 5/1 ARM at 5.83 percent would cost about $589 for each $100,000 borrowed over the initial five years, but could ratchet higher by hundreds of dollars afterward, depending on the loan's terms.
Jumbo mortgage rate trends upward, +0.08%
The average rate you'll pay for a jumbo mortgage is 7.01 percent, an increase of 8 basis points over the last seven days. A month ago, the average rate on a jumbo mortgage was below that, at 6.93 percent.
At today's average jumbo rate, you'll pay $665.97 per month in principal and interest for every $100,000 you borrow. That's an additional $5.36 per $100,000 compared to last week.
Recap: How mortgage rates have shifted over the past week
- 30-year fixed mortgage rate: 6.96%, up from 6.89% last week, +0.07
- 15-year fixed mortgage rate: 6.30%, up from 6.23% last week, +0.07
- 5/1 ARM mortgage rate: 5.83%, up from 5.79% last week, +0.04
- Jumbo mortgage rate: 7.01%, up from 6.93% last week, +0.08
30-year mortgage refinance rises, +0.03%
The average 30-year fixed-refinance rate is 7.05 percent, up 3 basis points since the same time last week. A month ago, the average rate on a 30-year fixed refinance was lower, at 7.04 percent.
At the current average rate, you'll pay $668.66 per month in principal and interest for every $100,000 you borrow. That's an increase of $2.01 over what you would have paid last week.
Where are mortgage rates headed?
The days of sub-3 percent mortgage interest on the 30-year fixed are behind us, and rates have so far risen beyond 7 percent in 2022.
"Low interest rates were the medicine for economic recovery following the financial crisis, but it was a slow recovery so rates never went up very far," says McBride. "The rebound in the economy, and especially inflation, in the late pandemic stages has been very pronounced, and we now have a backdrop of mortgage rates rising at the fastest pace in decades."
Comparing mortgage options
The 30-year fixed-rate mortgage is the most popular option for homeowners, and this type of loan has a number of advantages, including:
- Lower monthly payment: Compared to a shorter term, such as 15 years, the 30-year mortgage offers lower payments spread over time.
- Stability: With a 30-year mortgage, you lock in a consistent principal and interest payment. Because of the predictability, you can plan your housing expenses for the long term. Remember: Your monthly housing payment can change if your homeowners insurance and property taxes go up or, less likely, down.
- Buying power: With lower payments, you can qualify for a larger loan amount and a more expensive home.
- Flexibility: Lower monthly payments can free up some of your monthly budget for other goals, like saving for emergencies, retirement, college tuition or home repairs and maintenance.
- Strategic use of debt: Some argue that Americans focus too much on paying down their mortgages rather than adding to their retirement accounts. A 30-year fixed mortgage with a smaller monthly payment can allow you to save more for retirement.
That said, shorter-term loans have gained popularity as rates have been historically low. Although they have higher monthly payments compared to 30-year mortgages, there are some big benefits if you can afford the upfront costs. Shorter-term loans can help you achieve:
- Greatly reduced interest costs: Because you pay off the loan faster, you’ll be able to pay less interest overall.
- Lower interest rate: On top of less time for that interest to compound, most lenders price shorter-term mortgages with lower rates.
- Build equity faster: The faster you pay off your mortgage, the faster you’ll own value in your home outright. That’s especially handy if you want to borrow against your property to fund other spending.
- Debt-free sooner: A shorter-term mortgage means you’ll own your house free and clear sooner than you would with a longer-term loan.
When to lock your mortgage rate
A rate lock guarantees your interest rate for a specified period of time. Lenders often offer 30-day rate locks for a nominal fee or roll the price of the lock into your loan. Some lenders will lock rates for longer periods, sometimes for more than 60 days, but those locks can be costly. In today’s volatile market, some lenders will lock an interest rate for only two weeks because they don’t want to take on unnecessary risk.
With a rate lock, if interest rates rise, you’re locked into the guaranteed rate. You may be able to find a lender that offers a floating rate lock. A floating rate lock lets you get a lower rate if interest rates decline before closing your loan. It could be worth the cost in a declining rate environment. Because mortgage rates are not predictable, there’s no guarantee that rates will stay where they are from week to week or even day to day. So, if you can lock in a low rate, then you should do so rather than gamble on interest rates falling even lower.
Keep in mind that during the pandemic, all aspects of real estate and mortgage closings are taking much longer than usual. Expect the closing on a new mortgage to take at least 60 days, with refinancing taking at least a month.
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