we spent last year watching mortgage rates double. And what did home sales do they plummeted? And the constant interest rate hikes. Not helping. So buying *** new house and selling your old one was put on the back burner. But now it's *** new year and we want to know what's in store, what should you be doing right now? To answer your questions, we have the National Association of Realtors Chief economist Lawrence john Lawrence always good to see you. Thanks for joining us. Hello. Thanks for inviting. Let's start with your prediction for 2023. Where do you think home prices will be in three months, six months and *** year from now. Are they are they still going down? The home prices have been declining those due to the seasonal factor in the winter months. But we generally see some strength in the spring months as the buyers began to reach the market. So overall for the annual total. I think essentially home prices will be neutral. Half of the country may see some modest price decline. Other half of the country modest price gains when in the year is the best time to sell and buy *** new house then because it sounds like maybe the best time to buy is in the winter for the buyers who have the flexibility that winter times is *** better time to negotiate. The home sellers are seeing *** lengthening days on the market. But in terms of the choices available, there's much more inventory in the spring and summer months. So there are more choices. But also there are more buyers After the constant hikes. We saw the last few months from the Fed. What do you think is going to be the best for this coming year? Right? You know, we're so used to thinking in terms of *** 30 year fixed rate mortgage or should we be thinking more of an arm and adjustable rate mortgage? Because those rates are usually *** little lower. And since rates are really high right now you sort of get one of those right now and then refinance in *** couple of years. What's best is *** risk reward tradeoff, adjustable little lower rates save on monthly payment, but it will readjust three years from now or five years to film now. So those are the risk factor that people need to consider. I guess you'd have to, if you get *** three or *** five or *** seven or *** 10 year arm, you have to sort of be betting on the fact that interest rates will be down in *** couple of years and you can refinance right. If the inflation is lower *** few years from now then definitely interest rate will be heading downwards. What do you think? Do you think? Do you think that we've do you think in *** few, I I know you don't have *** crystal ball, but from everything, you know is the chief economist, do you think that the rates will be lower in *** few years if we just hold on The mortgage rate? In fact, I think has already topped out back in December. Now, we are seeing modestly lower rates, independent of the Fed, is already incorporated. What the federal reserve will be doing and mortgage rate this year will be in the 6% range, which is *** little lower than the 7% that we saw in December. Only have *** few seconds left. But I got to ask you about renters because renters have been really, really hit. Do you see any relief coming up in rents? There's active apartment building, so more supply will be steadily reaching the market renters. Some good news down the line. As the more supply reaches the market Lawrence Young, you're always the best. Thanks for being here. I appreciate it. Thank you.
Mortgage rates are volatile. Should you lock your rate today?
If mortgage rates go up even more, you’re protected. But what happens if mortgage rates go back down?
![KCRA logo]()
Updated: 1:29 PM CST Feb 13, 2023
Jean Folger is writer specializing in real estate and personal finance. She has written for Investopedia, The Motley Fool, Business Insider, and more. She is also the co-founder of PowerZone Trading, a company that has provided software, consulting, and strategy development services to active traders and investors since 2004. Her goal is to help people make better financial decisions, so they have more money and time to spend on the things that matter most.Hearst Television participates in various affiliate marketing programs, which means we may get paid commissions on editorially chosen products purchased through our links to retailer sites. This may influence which products we write about and where those products appear on the site, but it does not affect our recommendations or advice, which are grounded in research.Mobile app users, click here for the best viewing experience.Homebuyers, buckle up: Mortgage rates are spiking again after dropping for five consecutive weeks. The average rate for a 30-year fixed mortgage jumped to 6.94% for the week ending April 14, up from 6.81% the week before, according to Bankrate.After reaching a 20-year high in the fall, mortgage rates have largely trended downward since November. They continued to fall after the Federal Reserve increased interest rates on February 1 by just a quarter percent, a signal that its unprecedented streak of rate hikes might finally be cooling off. But just two days later, mortgage rates began creeping up after a surprisingly strong jobs report indicated that inflation might not be easing quite as quickly as hoped.So with all this unpredictability, what’s a homebuyer to do?When you receive a mortgage offer, your lender might ask if you want to lock in the rate. A mortgage rate lock means your interest rate won’t change between the loan offer and closing, provided you close on time and don’t change your application. Interest rates fluctuate continuously — so if your rate isn’t locked, you could end up with a different rate (for better or worse) when you close. It’s impossible to know where interest rates are going from one day to the next, but if you’re worried that they’ll continue climbing, a mortgage rate lock might be for you.Current mortgage rates Even with all the ups and downs, mortgage rates have still dropped slightly since they peaked above 7% in October and November. 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PHNwYW4+PC9zcGFuPjxzY3JpcHQgYXN5bmM9InRydWUiIHNyYz0iaHR0cHM6Ly9zdGF0aWMubXlmaW5hbmNlLmNvbS93aWRnZXQvbXlGaW5hbmNlLmpzIj48L3NjcmlwdD48ZGl2IGNsYXNzPSJteUZpbmFuY2Utd2lkZ2V0IiBkYXRhLWFkLWlkPSIyNDgxNTAwZi0zZDMxLTQ0MzYtYjZlYy1lYmFlZDk3Y2NkN2IiIGRhdGEtY2FtcGFpZ249ImhlYXJzdHR2LW10Z3B1cmNoLW11bHRpIiBkYXRhLXN1Yi1pZD0iaHR0cHM6Ly93d3cua2NyYS5jb20vYXJ0aWNsZS9tb3J0Z2FnZS1yYXRlLWxvY2svNDI2Mzc3MDAiPjwvZGl2Pg==How mortgage rates workAs anyone shopping for a mortgage knows, interest rates fluctuate constantly. Various personal factors and economic variables influence where mortgage rates fall on any given day. Personal factorsCredit score: Lenders use credit scores to determine your creditworthiness and evaluate risk. The higher your score, the lower your rate because you’ll be considered a lower risk.Down payment: A larger down payment can mean a lower interest rate because you’ll have more skin in the game, making you a less risky borrower.Debt-to-income (DTI) ratio: This metric compares what you owe to what you earn. A low DTI can help you lock in a lower rate because there’s less risk you’ll default on the loan.Loan term: The loan term is the number of years your lender gives you to pay off the loan. Shorter-term loans typically have lower rates and lower overall costs — but your monthly payments will be higher.Loan type: There are many different types of mortgage loans. FHA, VA, and USDA loans are backed by the government and generally offer lower rates than conventional mortgages. However, higher fees and mortgage insurance premiums could increase the overall cost of the loan.Interest rate type: Mortgage interest can be fixed or adjustable. Adjustable-rate mortgages (ARMs) often have lower rates initially, but the rate can rise later on.Economic variablesThe Federal Reserve: The Fed doesn’t set mortgage rates, but its monetary policy decisions greatly influence them.Inflation: Inflation doesn’t directly affect mortgage rates, but the Fed’s interest rate decisions a guided by what’s happening with prices.The economy: Mortgage rates tend to rise during periods of economic growth and fall when the economy slows.How a mortgage rate lock worksA mortgage rate lock guarantees an interest rate for a specified period, such as 30, 45, or 60 days. If the lender hasn’t processed the loan before the rate lock expires, you can negotiate for an extension or accept the current mortgage rate. Your lender may charge a fee for the rate lock or bake the cost into your loan (many lenders let you lock the rate for 30 days for free). Fees vary based on the loan size, loan term, and the length of the lock-in period. For example, you might pay 0.25% to 0.50% for a 60-day rate lock — or between $750 and $1,500 for a $300,000 mortgage. Once your rate is locked, it won’t change unless there are changes in your application, such as:You want to switch to a different type of loan.You request a different down payment amount.The loan amount changes.The home appraisal comes in higher or lower than expected.Your credit score drops (for example, because you missed a payment or took out an unrelated loan).Your lender can't verify your income.What happens if interest rates fall after your rate lock? If mortgage rates go up, you’re protected. But what happens if mortgage rates go down?If rates fall below your locked-in rate, you can switch to a lower rate — but only if you have a “float-down” option. This might be a prudent move in the current climate, where mortgage rates are fluctuating so unpredictably. Your lender may charge a fee for the option (typically a percentage of your loan amount) and will stipulate when and how you can float the rate down. Rate float-down options aren’t automatic, and not all lenders offer them — so be sure to ask if you’re interested. Otherwise, you can withdraw your current mortgage application and start a new one. However, doing so could increase your costs. For example, you’ll lose any money you already spent on a home appraisal and credit check — and you’ll pay for those things again with the new loan application. This approach can also delay your closing, which could disrupt your plans or be a deal-breaker for the seller. Still, it might be worth the hassle (and the added costs) to start a new application if the new rate saves you thousands over the life of the loan. Remember, even a small change in interest rate significantly impacts your monthly payment and the overall cost of the loan. (You can use a loan comparison calculator to try different scenarios.)Should you lock in a mortgage rate?It’s impossible to predict where mortgage rates will be tomorrow, next week, or next month. That can make it tricky to decide if you should lock in your rate. If you lock in your rate and rates go down, you could miss out on lower monthly payments and lower overall loan costs. Or, the rate lock could expire before you close, in which case you’d miss out on the rate altogether — or incur extra fees to get an extension. Still, a mortgage rate lock might make sense if:You feel your lender has offered the best rate possible compared to other lenders.You’re concerned rates may continue to go up.The rate lock period will give you enough time to close.You want the certainty that a locked rate offers.You want to avoid scrambling at closing to buy points or make a larger down payment because interest rates have increased. PHNwYW4+PC9zcGFuPjxzY3JpcHQgYXN5bmM9InRydWUiIHNyYz0iaHR0cHM6Ly9zdGF0aWMubXlmaW5hbmNlLmNvbS93aWRnZXQvbXlGaW5hbmNlLmpzIj48L3NjcmlwdD48ZGl2IGNsYXNzPSJteUZpbmFuY2Utd2lkZ2V0IiBkYXRhLWFkLWlkPSIyNDgxNTAwZi0zZDMxLTQ0MzYtYjZlYy1lYmFlZDk3Y2NkN2IiIGRhdGEtY2FtcGFpZ249ImhlYXJzdHR2LW10Z3B1cmNoLW11bHRpIiBkYXRhLXN1Yi1pZD0iaHR0cHM6Ly93d3cua2NyYS5jb20vYXJ0aWNsZS9tb3J0Z2FnZS1yYXRlLWxvY2svNDI2Mzc3MDAiPjwvZGl2Pg==Editorial Disclosure: All articles are prepared by editorial staff and contributors. Opinions expressed therein are solely those of the editorial team and have not been reviewed or approved by any advertiser. The information, including rates and fees, presented in this article is accurate as of the date of the publish. Check the lender’s website for the most current information.This article was first published on SFGate.com and reviewed by Jill Slattery, who serves as VP of Content for the Hearst E-Commerce team. Email her at jill.slattery@hearst.com.
Jean Folger is writer specializing in real estate and personal finance. She has written for Investopedia, The Motley Fool, Business Insider, and more. She is also the co-founder of PowerZone Trading, a company that has provided software, consulting, and strategy development services to active traders and investors since 2004. Her goal is to help people make better financial decisions, so they have more money and time to spend on the things that matter most.
Hearst Television participates in various affiliate marketing programs, which means we may get paid commissions on editorially chosen products purchased through our links to retailer sites. This may influence which products we write about and where those products appear on the site, but it does not affect our recommendations or advice, which are grounded in research.
Mobile app users, click here for the best viewing experience.
Homebuyers, buckle up: Mortgage rates are spiking again after dropping for five consecutive weeks. The average rate for a 30-year fixed mortgage jumped to 6.94% for the week ending April 14, up from 6.81% the week before, according to Bankrate.
After reaching a 20-year high in the fall, mortgage rates have largely trended downward since November. They continued to fall after the Federal Reserve increased interest rates on February 1 by just a quarter percent, a signal that its unprecedented streak of rate hikes might finally be cooling off. But just two days later, mortgage rates began creeping up after a surprisingly strong jobs report indicated that inflation might not be easing quite as quickly as hoped.
So with all this unpredictability, what’s a homebuyer to do?
When you receive a mortgage offer, your lender might ask if you want to lock in the rate. A mortgage rate lock means your interest rate won’t change between the loan offer and closing, provided you close on time and don’t change your application. Interest rates fluctuate continuously — so if your rate isn’t locked, you could end up with a different rate (for better or worse) when you close. It’s impossible to know where interest rates are going from one day to the next, but if you’re worried that they’ll continue climbing, a mortgage rate lock might be for you.
Current mortgage rates
Even with all the ups and downs, mortgage rates have still dropped slightly since they peaked above 7% in October and November.
How mortgage rates work
As anyone shopping for a mortgage knows, interest rates fluctuate constantly. Various personal factors and economic variables influence where mortgage rates fall on any given day.
Personal factors
- Credit score: Lenders use credit scores to determine your creditworthiness and evaluate risk. The higher your score, the lower your rate because you’ll be considered a lower risk.
- Down payment: A larger down payment can mean a lower interest rate because you’ll have more skin in the game, making you a less risky borrower.
- Debt-to-income (DTI) ratio: This metric compares what you owe to what you earn. A low DTI can help you lock in a lower rate because there’s less risk you’ll default on the loan.
- Loan term: The loan term is the number of years your lender gives you to pay off the loan. Shorter-term loans typically have lower rates and lower overall costs — but your monthly payments will be higher.
- Loan type: There are many different types of mortgage loans. FHA, VA, and USDA loans are backed by the government and generally offer lower rates than conventional mortgages. However, higher fees and mortgage insurance premiums could increase the overall cost of the loan.
- Interest rate type: Mortgage interest can be fixed or adjustable. Adjustable-rate mortgages (ARMs) often have lower rates initially, but the rate can rise later on.
Economic variables
- The Federal Reserve: The Fed doesn’t set mortgage rates, but its monetary policy decisions greatly influence them.
- Inflation: Inflation doesn’t directly affect mortgage rates, but the Fed’s interest rate decisions a guided by what’s happening with prices.
- The economy: Mortgage rates tend to rise during periods of economic growth and fall when the economy slows.
How a mortgage rate lock works
A mortgage rate lock guarantees an interest rate for a specified period, such as 30, 45, or 60 days. If the lender hasn’t processed the loan before the rate lock expires, you can negotiate for an extension or accept the current mortgage rate.
Your lender may charge a fee for the rate lock or bake the cost into your loan (many lenders let you lock the rate for 30 days for free). Fees vary based on the loan size, loan term, and the length of the lock-in period. For example, you might pay 0.25% to 0.50% for a 60-day rate lock — or between $750 and $1,500 for a $300,000 mortgage.
Once your rate is locked, it won’t change unless there are changes in your application, such as:
- You want to switch to a different type of loan.
- You request a different down payment amount.
- The loan amount changes.
- The home appraisal comes in higher or lower than expected.
- Your credit score drops (for example, because you missed a payment or took out an unrelated loan).
- Your lender can't verify your income.
What happens if interest rates fall after your rate lock?
If mortgage rates go up, you’re protected. But what happens if mortgage rates go down?
If rates fall below your locked-in rate, you can switch to a lower rate — but only if you have a “float-down” option. This might be a prudent move in the current climate, where mortgage rates are fluctuating so unpredictably. Your lender may charge a fee for the option (typically a percentage of your loan amount) and will stipulate when and how you can float the rate down. Rate float-down options aren’t automatic, and not all lenders offer them — so be sure to ask if you’re interested.
Otherwise, you can withdraw your current mortgage application and start a new one. However, doing so could increase your costs. For example, you’ll lose any money you already spent on a home appraisal and credit check — and you’ll pay for those things again with the new loan application. This approach can also delay your closing, which could disrupt your plans or be a deal-breaker for the seller.
Still, it might be worth the hassle (and the added costs) to start a new application if the new rate saves you thousands over the life of the loan. Remember, even a small change in interest rate significantly impacts your monthly payment and the overall cost of the loan. (You can use a loan comparison calculator to try different scenarios.)
Should you lock in a mortgage rate?
It’s impossible to predict where mortgage rates will be tomorrow, next week, or next month. That can make it tricky to decide if you should lock in your rate.
If you lock in your rate and rates go down, you could miss out on lower monthly payments and lower overall loan costs. Or, the rate lock could expire before you close, in which case you’d miss out on the rate altogether — or incur extra fees to get an extension.
Still, a mortgage rate lock might make sense if:
- You feel your lender has offered the best rate possible compared to other lenders.
- You’re concerned rates may continue to go up.
- The rate lock period will give you enough time to close.
- You want the certainty that a locked rate offers.
- You want to avoid scrambling at closing to buy points or make a larger down payment because interest rates have increased.
Editorial Disclosure: All articles are prepared by editorial staff and contributors. Opinions expressed therein are solely those of the editorial team and have not been reviewed or approved by any advertiser. The information, including rates and fees, presented in this article is accurate as of the date of the publish. Check the lender’s website for the most current information.
This article was first published on SFGate.com and reviewed by Jill Slattery, who serves as VP of Content for the Hearst E-Commerce team. Email her at jill.slattery@hearst.com.
