Current Mortgage Rates
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Current Mortgage Rates
The table shows rates for NY State. This table shows Conventional Mortgage rates for New Purchase.
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Last updated November 28, 2023. Rates are for informational purposes only.
What Is a Mortgage?
A mortgage is a loan product used for financing a home purchase or a refinance where a home is used as collateral. In a mortgage loan contract, a borrower and a lender agree that the lender can take the borrower’s property if the borrower fails to repay the loan. A borrower must repay the principal part of the loan and interest determined by the mortgage rate.
Mortgage rates can be different for different people depending on their financial situation. Lenders usually adjust the best interest rate they can offer to reflect the riskiness of a borrower. The rate adjustment is called Loan Level Price Adjustment, and it helps lenders offer more loans to different borrowers. Lenders usually offer two types of mortgage rates that are described below.
Fixed vs Adjustable Rate Mortgage Chart
|Fixed Rate Mortgage||Adjustable Rate Mortgage (ARM)|
|Stays unchanged for a specific period of time||Fluctuates based on the Prime rate.|
|Fixed rates are usually higher than adjustable rates.||Adjustable rates are usually lower than fixed mortgage rates initiall|
|Offers fixed monthly mortgage payments.||Monthly mortgage payments may change.|
|Suggested for people buying a home for more than 10 years||Suggested to people who are planning to sell their house within 10 years.|
Types of Mortgage Loans
There are two broad categories of mortgages: conventional and non-conventional. Conventional mortgages are not backed by government agencies, while non-conventional mortgages are backed or offered by government agencies. Since the government does not secure conventional mortgages, these mortgages normally have stricter financial requirements than non-conventional ones. On the other hand, non-conventional home loans usually have other requirements that are not related to the borrower’s financial situation.
Mortgage Loan Types Comparison
|Who Can Apply?||Anyone||First Time Homebuyers||Military servicemen, veterans, and their spouses||Low-income households living in rural areas|
|Min. Credit Score||620||500||No minimum||No minimum|
|Min. Down Payment||3% (With PMI) |
20% (No PMI)
|Mortgage Insurance||0.4% - 2.25% |
LTV ≥ 20%
|1.75% upfront |
0.45% - 1.05% annually
|1.4% - 3.6% |
|1% upfront |
|Max. DTI ratio||50%||57%||No Set Limit||41%|
|Loan Term||10, 15, 20, or 30 years||15 or 30 years||15 or 30 years||15 or 30 years|
Non-conventional loans may be a good option for eligible homebuyers who do not have a sufficient credit history or who do not have enough money saved up for a large enough down payment. On the other hand, conventional loans may be more flexible for people with good credit scores, relatively good income, and enough money to cover the down payment.
Conventional mortgages are offered by banks and private lenders. Conventional loans can be split into two subsets: Conforming Loans and Non-Conforming Loans. Conforming loans conform to the limits set by FHFAwhile non-conforming loans do not satisfy all the limits.
Conforming vs Non-Conforming Loans Chart
|Conforming Loans||Non-Conforming Loans|
|Meet the requirements set by Fannie Mae and Freddie Mac.||Do not meet the requirements set by Fannie Mae and Freddie Mac.|
|Have a borrowing limit that depends on the county.||No borrowing limit.|
|Minimum credit score requirement of 620.||Minimum credit score requirement of 700.|
|Usually has a relatively low mortgage rate.||Usually has a relatively high mortgage rate.|
Non-conventional loans are backed by different U.S. government agencies. These loans have easier financial requirements, but they usually have other requirements that a borrower must meet to be eligible for the loan.
- FHA Loans: The Federal Housing Administration offers mortgage loans to low-income earners, individuals who have not yet built their credit score or have been bankrupt in the past.
- VA Loans: The Department of Veteran Affairs offers mortgage loans for U.S. military service members or veterans and their spouses.
- USDA Loans: The US Department of Agriculture offers loans for low-income earning individuals living in rural areas.
What Affects Mortgage Rates?
Mortgage interest rates are generally determined by:
- Market economic factors such as prime rates, confidence in the economy, and housing market health.
- The borrower’s personal financial information, such as income and credit report.
Economic factors are out of the borrower’s control, but the borrower can increase their creditworthiness to get a lower mortgage rate. The lender offers lower rates to borrowers who prove to be less likely to default on their loan and this likelihood is determined by factors such as credit score, down payment, loan term, and more.
Factors That Affect Your Mortgage Rate
Credit Score: Lenders use your credit score to see how reliable you are as a borrower. Lenders tend to offer better mortgage rates and loan terms to borrowers with a higher credit score.
Down Payment: Lenders generally require borrowers to put at least 20% of the home price as a down payment. If a borrower chooses to put down less than 20% of the home price, the lenders will require them to pay a private mortgage insurance premium on top of mortgage interest. On the other hand, lenders may offer a lower mortgage rate for larger down payments.
Loan Term: The mortgage term is the period during which the borrower has to repay the loan. Generally, longer terms have higher mortgage rates because they are considered riskier.
Fixed vs Adjustable Rate: Fixed-rate mortgage payments do not change over the life of the loan. They usually have a higher interest rate than adjustable-rate mortgages because of relative certainty. Adjustable rate mortgages (ARMs) have a fixed interest rate over a certain time period, after which it starts fluctuating based on theprime rate.
Loan Type: Your mortgage rate can vary depending on which type of loan you are applying for. Typically, conventional loans are cheaper than government-backed loans, but they have strict financial requirements. On the other hand, government-backed loans may be slightly more expensive, but they have easier financial requirements for eligible borrowers.
How Much Mortgage Can I Afford?
To determine how much you can afford to borrow, you will first need to start by creating a forecasted budget. By estimating your monthly sources of income and your expenses, you can determine how much money you can pay monthly to cover mortgage payments and other costs associated with being a homeowner. Depending on the term of the loan, the down payment, and the expected interest rate, you can determine how much you should borrow through a mortgage.
Factors that affect your borrowing limit:
- Credit History: Lenders will check your credit history to determine how reliable you are in paying back debts. Good credit history will have a positive impact on your borrowing capacity.
- Debt-to-Income Ratio (DTI): A lower DTI ratio leaves more room for borrowing. Your DTI ratio is determined by your income and the monthly payments you have to make to cover other debts, such as student loans and car loans.
- Down Payment: The amount you put down affects your Loan-to-Value ratio. The bigger the down payment, the lower your LTV ratio. A low LTV ratio indicates that you are a less risky borrower which has a positive effect on how much lenders are willing to lend you.
- Loan Type: Conforming loans have a borrowing limit that depends on the county you are located in. To borrow an amount above the limit, you would have to apply for a jumbo loan.
Frequently Asked Questions
When Will Mortgage Rates Go Down?
The market currently watches closely what policy the Federal Reserve implements to gauge when the mortgage rates will go down. Expansionary monetary policy from the Federal Reserve may drive the mortgage rates down. The Fed may pivot from its contractionary monetary policy stance when the US inflation will decrease to its target or the US economy will show signs of weakness. As of April 2023, the Federal Reserve is committed to combatting inflation by tightening monetary policy.
The recent increase in the mortgage rates was caused by the Federal Reserve Overnight Rate and other monetary policies. When the Fed’s overnight rate increases, the prime rates increase. The prime rates increase causes adjustable mortgage rates to increase.
Fixed interest rates are generally not affected by the movements in the Fed’s rate. Instead, they typically follow the 10-year Treasury yield. The current policy implemented by the Fed also targeted the price of long-term bonds, which led to a large spike in fixed mortgage rates.
How Long Can You Lock in a Mortgage Rate For?
A mortgage rate lock guarantees that the lender keeps the predetermined interest rate unchanged until a certain date. The rate lock-in period is usually 30 to 60 days, and some lenders offer it for free. This guarantee is usually provided with the mortgage pre-approval letter, but it can also be requested without the pre-approval.
Locking in a mortgage rate protects you from rate fluctuations. Interest rates can rise and fall dramatically over a short time. If the interest rate rises, you can benefit by taking the lower rate you have locked in. If the interest rate falls, you may not be able to benefit from locking in the interest rate as the lender may require you to follow the agreement.
If you believe that the closing process will take more time, you might have to request an extended option of the mortgage rate lock, for which you will have to pay a fee. For those lenders that charge for a mortgage rate lock altogether, it usually costs 0.25% - 0.5% of the loan amount to lock in your rate for 60 days or less and 0.06% - 0.375% to extend it.
What Are Discount Points on a Mortgage?
A discount point is a form of prepaid interest available to the borrowers for a certain fee. A borrower can purchase discount points to reduce the interest rate on their mortgage. One discount point usually costs 1% of the loan amount. Typically, one discount point will reduce your mortgage rate by approximately 0.125% to 0.25% depending on the lender, the type of loan, and current interest rates.
Let's look at a $300,000 mortgage with a term length of 30 years. The current interest rate is 3%. Your mortgage lender offers 1 discount point for $3,000 for a reduction in your mortgage rate to 2.75%.
Over the 30 year life of your mortgage, the 1 discount point can saveyou $14,432 in interest saved. The break-even period is 6 years. This means that if you sell your home before 6 years are up, you would have paid more for the discount point than what you have saved in interest. Having the mortgage for more than 6 years means that the discount point would save you more in interest compared to the cost of the discount point.
Discount points can be a very effective tool to lower the cost of your mortgage by decreasing your interest payments. There are a few things to remember before considering purchasing discount points.
- There is generally a limit on how many discount points you can buy. This means that lenders won’t let you prepay your entire interest upfront leading to a zero interest rate.
- In a refinance, you can rollover the cost of your discount points into the new loan balance.
- Discount points are tax-deductible in the year in which you pay for them.
When to Refinance Mortgage?
Most people choose to refinance their mortgages in order to take advantage of lower mortgage rates. However, there are several other reasons why someone would choose to refinance their mortgages, such as to convert from an ARM to a Fixed-Rate Mortgage, change the loan term, remove their mortgage insurance or tap into their home’s equity through a cash-out refinance.
- Lower Mortgage Rates: When current interest rates are low, you might consider refinancing your loan to lower the interest rate.
- Changing the Rate Type: Refinance can help you change your mortgage rate type from fixed to variable and from variable to fixed. If you have a reason to switch your rate type, you can do it with refinancing.
- Changing the Loan Term: You can change your loan term from 15 years to 30 years with refinance to lower your monthly mortgage payments. You can also change your loan term to a shorter term to save on interest paid over time.
- Removing Mortgage Insurance: The only way that you can remove the mortgage insurance for an FHA loan is through a mortgage refinance. Therefore, when you reach 20% equity in your home with an FHA loan, it would be a good idea to refinance.
- Cash-out Refinance: A cash-out refinance allows you to borrow from your home-equity using a new larger mortgage. To estimate your cash-out refinance, you need to know how much home equity you own at the time.