Interest Rate Update – May 8, 2023

The following article is directly from Bankrate, written by Ruben Caginalp. We have included it in our blog for ease of reference for our community. If you want to closely follow interest rates, we encourage you to subscribe directly to Bankrate. 

National mortgage rates were mostly lower compared to a week ago, according to data compiled by Bankrate. Rates for 30-year fixed, 15-year fixed and jumbo loans declined, while rates for adjustable rate mortgages remained flat.

The Federal Reserve has increased 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 typeInterest rateA week agoChange
30-year fixed rate6.79%6.90%-0.11
15-year fixed rate6.15%6.22%-0.07
5/1 ARM rate5.80%5.80%N/C
30-year fixed jumbo rate6.85%6.98%-0.13

Rates last updated on May 5, 2023.

The rates listed above are Bankrate's overnight average rates and are based on the assumptions here. Actual rates available within the site may vary. This story has been reviewed by Suzanne De Vita. All rate data accurate as of Friday, May 5th, 2023 at 7:30 a.m.

30-year fixed-rate mortgage moves down, -0.11%

The average 30-year fixed-mortgage rate is 6.79 percent, a decrease of 11 basis points over the last seven days. Last month on the 5th, the average rate on a 30-year fixed mortgage was higher, at 6.86 percent.

At the current average rate, you'll pay a combined $651.26 per month in principal and interest for every $100,000 you borrow. That's down $7.34 from what it would have been last week.

The 30-year mortgage is the most popular option for borrowers. It has a number of advantages. Among them:

  • Lower monthly payment. The 30-year mortgage offers lower, more affordable payments spread over time compared with shorter-term mortgages.
  • Stability. With the 30-year, you lock in a consistent principal and interest payment. That predictability lets you 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 building an emergency fund, contributing to retirement or college tuition, or saving for 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 mortgage with a lower monthly cost can allow you to save more for retirement.

15-year mortgage rate dips,-0.07%

The average 15-year fixed-mortgage rate is 6.15 percent, down 7 basis points over the last week.

Monthly payments on a 15-year fixed mortgage at that rate will cost approximately $852 per $100k borrowed. That's obviously much higher than the monthly payment would be on a 30-year mortgage at that rate, but it comes with some big advantages: You'll come out several thousand dollars ahead over the life of the loan in total interest paid and build equity much more rapidly.

5/1 ARM rate flat for the week

The average rate on a 5/1 adjustable rate mortgage is 5.80 percent, unchanged since the same time last week.

Adjustable-rate mortgages, or ARMs, are home loans that come with a floating interest rate. To put it another way, the interest rate can change intermittently throughout the life of the loan, unlike fixed-rate loans. These types of loans are best for those who expect to sell or refinance before the first or second adjustment. Rates could be considerably 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 5.80 percent would cost about $587 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.

Current jumbo mortgage rate dips, -0.13%

The average rate for a 30-year jumbo mortgage is 6.85 percent, a decrease of 13 basis points from a week ago. This time a month ago, the average rate on a jumbo mortgage was higher, at 6.93 percent.

At the current average rate, you'll pay a combined $655.26 per month in principal and interest for every $100,000 you borrow. That represents a decline of $8.70 over what it would have been last week.

In summary: How interest rates have moved over the past week

  • 30-year fixed mortgage rate: 6.79%, down from 6.90% last week, -0.11
  • 15-year fixed mortgage rate: 6.15%, down from 6.22% last week, -0.07
  • 5/1 ARM mortgage rate: 5.80%, unchanged from last week
  • Jumbo mortgage rate: 6.85%, down from 6.98% last week, -0.13