Mortgage Rates Will Head Higher this Year and in 2015

Mortgage rates are higher this week over last as 10 year U.S. Treasury yields declined. 30 year conforming mortgage rates today are averaging 4.50 percent, a decline from last week's average 30 year mortgage rate of 4.54 percent. Mortgage rates moved higher throughout 2013 and will continue to move higher in 2014 and 2015.

The lowest point for average 30 year rates in 2013 was back in the first week of January when rates hit a low of 3.34 percent. The lowest point ever for 30 year rates was the week of November 21, 2012, when rates hit a low of 3.21 percent. Rates moved higher from the all-time lows set late in 2012 but are still low, historically speaking.

Current mortgage rates will continue to move higher over the next two years but take a look back at where rates have been.

Loan Type

Purchase Refinance with Cash out Refinance

State

Alabama Alaska Arizona Arkansas California Colorado Connecticut Delaware District Of Columbia Florida Georgia Hawaii Idaho Illinois Indiana Iowa Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Virginia Washington West Virginia Wisconsin Wyoming

FICO Score

Superior (780-850) Exceptional (760-779) Excellent (740-759) Very Good (720-739) Good (700-719) Above Average (680-699) Average (660-679) Fair (640-659) Need Improvement (620-639) Poor (350-620)

Loan Amount

$

Points

Up to 0 points Up to 0.5 points Up to 1 points Up to 1.5 points Up to 2 points Up to 2.5 points Up to 3 points

LTV

%

Loan Term

 15-Year Fixed  20-Year Fixed  30-Year Fixed  5-Year ARM  7-Year ARM  10-Year ARM

Show Advertiser Disclosure

The lenders whose rates and other terms appear on this chart are MRC's advertising partners. They provide their rate information to our data partner RateUpdate.com. Unless adjusted by the consumer, advertisers are sorted by APR from lowest to highest. For any advertising partners that do not provide their rate they are listed in advertisement display units at the bottom of the chart. Advertising partners may not pay to improve the frequency priority or prominence of their display. The interest rates, annual percentage rates and other terms advertised here are estimates provided by those advertising partners based on the information you entered above and do not bind. Any lender Monthly payment amounts stated do not include amounts for taxes and insurance premiums. The actual payment obligation will be greater if taxes and insurance are included. Although our data partner RateUpdate.com collects the information from the financial institutions themselves, the accuracy of the data cannot be guaranteed. Rates may change without notice and can change intraday. Some of the information contained in the rate tables including but not limited to special marketing notes is provided directly by the lenders. Please verify the rates and offers before applying for a loan with the financial institution themselves. No rate is binding until locked by a lender.

Lender

APR / Rate

Fees / Points

Payment

NMLS #1835285

4.863%

15-Year Fixed

4.750%

$3,000

Includes 0.750 points for $3,000

Lender Fees: $0

$3,112 /mo

Next >

NMLS #2473786

4.887%

15-Year Fixed

4.750%

$3,635

Includes 0.635 points for $2,540

Lender Fees: $1,095

$3,112 /mo

Next >

NMLS #757416

4.997%

15-Year Fixed

4.875%

$3,240

Includes 0.810 points for $3,240

Lender Fees: $0

$3,138 /mo

Next >

NMLS #6606

5.150%

15-Year Fixed

5.000%

$3,972

Includes 0.993 points for $3,972

Lender Fees: $0

$3,164 /mo

Next >

NMLS #2473786

5.231%

5-Year ARM

5.125%

$4,807

Includes 0.928 points for $3,712

Lender Fees: $1,095

$2,178 /mo

Next >

NMLS #1025894

5.273%

15-Year Fixed

5.125%

$3,888

Includes 0.797 points for $3,188

Lender Fees: $700

$3,190 /mo

Next >

NMLS #1954591

License: 60DBO-113383

5.304%

15-Year Fixed

5.125%

$4,771

Includes 0.916 points for $3,664

Lender Fees: $1,107

$3,190 /mo

Next >

NMLS #1835285

5.342%

5-Year ARM

5.250%

$4,147

Includes 0.912 points for $3,648

Lender Fees: $499

$2,209 /mo

Next >

NMLS #1835285

5.598%

30-Year Fixed

5.500%

$4,327

Includes 0.957 points for $3,828

Lender Fees: $499

$2,272 /mo

Next >

NMLS #2473786

5.700%

30-Year Fixed

5.625%

$3,291

Includes 0.549 points for $2,196

Lender Fees: $1,095

$2,303 /mo

Next >

NMLS #757416

5.715%

30-Year Fixed

5.625%

$3,940

Includes 0.985 points for $3,940

Lender Fees: $0

$2,303 /mo

Next >

NMLS #2561451

5.737%

30-Year Fixed

5.625%

$5,078

Includes 0.824 points for $3,296

Lender Fees: $1,782

$2,303 /mo

Next >

NMLS #6606

5.966%

30-Year Fixed

5.875%

$3,924

Includes 0.981 points for $3,924

Lender Fees: $0

$2,367 /mo

Next >

NMLS #1025894

5.970%

30-Year Fixed

5.875%

$4,132

Includes 0.858 points for $3,432

Lender Fees: $700

$2,367 /mo

Next >

NMLS #399799

5.980%

30-Year Fixed

5.875%

$4,719

Includes 0.848 points for $3,392

Lender Fees: $1,327

$2,367 /mo

Next >

NMLS #1954591

License: 60DBO-113383

6.087%

30-Year Fixed

5.990%

$4,239

Includes 0.783 points for $3,132

Lender Fees: $1,107

$2,396 /mo

Next >

NMLS #1954591

License: 60DBO-113383

6.230%

5-Year ARM

6.125%

$4,523

Includes 0.854 points for $3,416

Lender Fees: $1,107

$2,431 /mo

Next >

Rate data provided by RateUpdate.com. Displayed by Mortgage Research Center, NMLS #1907, Equal Housing Opportunity. Payments do not include taxes and insurance premiums. Actual payments will be greater with taxes and insurance included. Rate and product details.

30 Year Conforming Mortgage Rates Historical Perspective

Current 30 year rates have moved 1.25 percent higher from the record lows but when you compare current rates to the record highs, these rates are still incredibly low. Back in the early 1980's when inflation was in the double digits, 30 year mortgage rates were also in the double digits.

Looking back for historical perspective, the highest point ever recorded for 30 year rates in Freddie Mac's Primary Mortgage Market Survey was at an unbelievable high of 18.45 percent in October 1981. The monthly payments for a home loan with an 18.45 percent rate is much higher than the same loan amount at the current rate of 4.50 percent.

Using a mortgage calculator you can see the difference in this example:

• A $500,000 loan for 30 years with a rate of 18.45 percent has a monthly payment of $7,719.27
• A $500,000 loan for 30 years with a rate of 4.50 percent has a monthly payment of $2,533.43

In this example the monthly payment difference an astonishing $5,185.84.

Homes Are Less Affordable When Home Prices and Mortgage Rates Increase

After the housing bust and when mortgage rates hit record lows, home affordability was at its highest point ever according to the National Association of Realtors. This meant you could buy more home than you ever could before. Home affordability has since declined from the highs in 2012 and will continue to decline in the coming years.

As home prices increase and mortgage rates increase, you'll be able to buy less with your money. Therefore you should consider buying sooner than later. Freddie Mac has a Homebuyer Affordability tool you can use to see how higher mortgage rates and home prices affect homebuyer affordability.

Using the tool to forecast mortgage rates and home prices between Q3 2013 and Q3 2014, you can see the Affordability Index declining, which means for the same money, you'll be getting less and less.

Direction of Mortgage Rates in 2014

Mortgage interest rates are moving higher but rates won't be moving that high. Hopefully we will never see double-digit inflation and double-digit mortgage rates ever again. There are different forecasts for where average mortgage rates will be this year and next but the consensus is that rates are moving higher.

The Mortgage Bankers Association has forecasted average 30 year conforming mortgage rates increasing to 4.70 percent in the first quarter of 2014. By the end of 2014, the MBA has forecasted average 30 year rates to move above 5.00 percent to 5.10 percent.

We believe average 30 year conforming rates will move somewhat higher than the MBA forecast. By the summer of 2014, average 30 year rates will be near 5.00 percent and by the end of 2014, average 30 year rates will be around 5.30 percent. We believe rates will be higher because economic growth will be stronger and the unemployment rate will be lower than expected.

Average Mortgage Rates in 2015

Rates are expected to continue to move higher in 2015 but the year over year increase is expected to be even lower than the 2013/2014 increase. The MBA has forecasted for average 30 year rates to increase to 5.20 percent in the second quarter of 2015 and move to 5.30 percent by the end of 2015.

If the MBA's forecast is correct, average 30 year rates are expected to only move up 0.80 percent over the next two years. This is not much of an increase at all and 30 year rates around 5.30 are still low, historically. We believe by the summer of 2015 average 30 year rates will be around 5.50 percent and by the end of 2015 rates will be around 6.00 percent. 30 year rates at 6.00 percent are still low.

Average Mortgage Rates January 08, 2014

15 year mortgage rates today are averaging 3.51 percent, a decline from last week's average 15 year mortgage rate of 3.57 percent. The average 15 year rate is at 3.51 percent but there are many lenders quoting 15 year rates below the average.

Right now in our database for the state of California we have lenders quoting 15 year refinance rates as low as 2.875 percent and 3.00 percent with mortgage points. The same lenders are also quoting 15 year refinance rates in other states as low.

30 year jumbo mortgage rates today are averaging 4.65 percent, higher than last week's average 30 year jumbo mortgage rate of 4.63 percent. Currently the lowest 30 year jumbo refinance rates in our database right now are quoted at 4.25 percent with no mortgage points for the state of Maryland.

15 year jumbo mortgage rates currently are averaging 3.88 percent, a slight decline from the previous week's average 15 year jumbo rate of 3.89 percent. Checking our database the lowest quoted 15 year jumbo refinancing rates today in the state of Oregon are at 3.375 percent with 2 points. The lowest 15 year refi rates without points are quoted at 3.75 percent.

Current 5/1 adjustable mortgage rates on conforming loans are at 3.67 percent, down from last week's average 5/1 adjustable mortgage rate of 3.69 percent. The best 5 year adjustable refinance rates quoted on our rate tables are much lower than the average. Checking on rates in South Carolina, we have lenders quoting 5 year rates at 2.25 percent with 2 points and at 2.75 percent with no points.

5 year jumbo adjustable mortgage rates are higher this week averaging 3.02 percent, up from last week's average 5 year conforming rate of 3.00 percent. The lowest 5 year adjustable jumbo refi rates in our database for the state of Florida are currently at 2.50 percent with 2 points and at 2.875 percent with no points.