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What You Need to Know About Current Mortgage Rate Trends

Today's Mortgage Rates

Who Determines Interest Rates?

Interest rates are typically determined by a central bank in most countries. In the United States, a forum is held once per month for eight months out of the year to determine interest rates. At this time, the economic status of the country is assessed, and interest rates are adjusted according to the needs of the country. The panel that determines interest rates consists of representatives of the Federal Reserve Board and the Federal Reserve Bank. Together, the representatives from both form the Federal Open Market Committee.

What is the Federal Reserve?

The Federal Reserve monitors and sets standards for monetary policy in the United States. There are 12 Federal Reserve Banks located in major cities around the country. Although the Federal Reserve undergoes reviews by Congress, the organization is an independent entity. Therefore, they do not need the President’s approval or any other branch of government before making decisions about the economy.

There are seven members of the board. Each member is appointed by the President to the Board of Governors and serves 14 years. They can be reelected. The board is headed by a President and Vice President. Each can hold office for 4 years and can be reappointed by the Senate. Janet Yellen currently serves this role and is the successor to Ben Bernake. Alan Greenspan held the position prior to him.

The Federal Reserve monitors and generates income from several entities. They earn dividends on foreign currency, loan interest collected, services, and interest from government securities. If the Federal Reserve posts a profit above and beyond its operating costs, then those funds are redirected to the U.S. Treasury.

How Are Interest Rates Determined?

The goal of each monthly meeting is to determine the liquidity of funds within the country and establish prices that will keep the economy stable. If the circulation of money within the country is abundant, the prices will increase. If the circulation of money within the country is minimal, the prices will decrease. The goal is to find a balance that will keep the economy stable and full employment. It is generally easier for central banks of core economies to fight inflation rather than deflation, so they typically target a moderate postive rate of consumer price inflation around 2%.

The central bank lends money to retail banks at a discount interest rate. The consumer in turn borrows from the retail banks. The interest rates or Prime Interest Rates are determined by the rates assigned by the central bank to the retail bank. The central bank will raise interest rates when they want to discourage consumer borrowing and encourage more deposits. The deposits contribute to the overall worth of the bank. When the consumer deposits money, the bank can lend this money to another party to generate income from interest collected. The central bank will lower interest rates when they want to encourage consumer borrowing and increase spending.

Typically the Federal Reserve sets short term interest rates and longer dated Treasury bonds trade at a premium to those rates to reflect the duration and inflation risks. The 30-year mortgage typically trades at a slight premium above the 10-year treasury. The reason the longer duration mortgage rates are based on the shorter duration trasury rate is most homeowners tend to move or refinance roughly every 5 to 7 years.

Where is the Market Headed?

Bull vs Bear Economist Predictions.

Expert economists predicted the economy would rebound in 2010. However, the economy was sluggish with slow growth rates for many years beyond that. The economy contracted in the first quarter of 2014, but in the second half of 2014 economic growth picked up. The Federal Reserve tapered their quantitative easing asset purchase program & the price of oil fell sharply. Consumer perception of inflation and inflation expectations are set largely by the price they pay at the pump when they refill their gas. With growth picking up the consensus view is interest rates will continue to head higher for the next couple years into 2020, or until a recession happens. The following table highlights 2018 rate predictions from influential organizations in the real estate & mortgage markets.

2018 30-year Fixed Mortgage Rate Predictions

Organization Q1 Q2 Q3 Q4 Average
Mortgage Banker's Association 4.3 %4.6 %4.7 %4.8 %4.6%
Fannie Mae 4.0 %4.1 %4.1 %4.2 %4.1%
Freddie Mac 4.1 %4.3 %4.4 %4.6 %4.35%
National Association of Realtors 4.2 %4.5 %    4.5%
National Association of Home Builders       4.2 % 
Zillow survey       4.5 % 
CoreLogic       4.6 % 

Table sources: MBA, Fannie Mae, Freddie Mac, NAR, NAHB, CoreLogic

2019 30-year Fixed Mortgage Rate Predictions

Organization Q1 Q2 Q3 Q4 Average
Mortgage Banker's Association 4.9 %4.9 %5.0 %5.1 %4.95%
Fannie Mae 4.2 %4.2 %4.3 %4.3 %4.25%
National Association of Home Builders       4.67 % 

Purchase vs Refinance

Most consumers obtaining mortgages to purchase a home opt for the 30-year fixed-rate mortgage. It completely dominates the purchase market.

Purchase Loans Only.

If one looks exclusively at purchases FRMs are about 90% of the market. 30-year loans are also a popular choice for refinancing homeowners, though the 15-year option is also popular with people refinancing their loans. The following chart shows the blended overall market condition, but if you can compare it against the above chart you can visualize how 15-year loans are much more popular for refinancing than for initial home purchases.

All Mortgage Originations.

Source: Urban Institute

Estimated Share of Mortgage Originations

  Year     Purchase     Refinance  
2016 52 %48%
2017 67 %33%
2018 75 %25%

In 2017 there were about $600 billion in mortgage refinance loans & $1.09 trillion in purchase mortgages, so purchases were nearly 2/3 of the market while refis were slightly more than 1/3 of the market. As rates are expected to keep rising, refinance is expected to make up a smaller share of the overall market.

The amount of new loans to refinance a home was expected to drop to $430 billion, down 28.3 percent from 2017, while the amount of new mortgages to buy a home will likely increase by 7.3 percent to $1.2 trillion, MBA said.

United States Census Data

As of July 1, 2016 the United States has a population of 323,127,513. The US gains a person every 18 seconds and is estimated to have a population of 326,965,105 on December 31, 2017.

The following table highlights the July 1, 2016 populations of states & territories based on United States Census Bureau estimates.

All table columns are sortable. Click on the column headers to sort by that column. Click again to sort low to high. States with higher levels of population growth typically see the increased real estate demand drive faster real estate price appreciation.

Rank State 2016 Pop 2010 Pop Change % △
United States 323,127,513 308,745,538 14,381,975 4.45%
23 Alabama 4,863,300 4,779,736 83,564 1.72%
47 Alaska 741,894 710,231 31,663 4.27%
16 Arizona 6,931,071 6,392,017 539,054 7.78%
32 Arkansas 2,988,248 2,915,918 72,330 2.42%
1 California 39,250,017 37,253,956 1,996,061 5.09%
22 Colorado 5,540,545 5,029,196 511,349 9.23%
29 Connecticut 3,576,452 3,574,097 2,355 0.07%
45 Delaware 952,065 897,934 54,131 5.69%
50 District of Columbia 681,170 601,723 79,447 11.66%
4 Florida 20,612,439 18,801,310 1,811,129 8.79%
9 Georgia 10,310,371 9,687,653 622,718 6.04%
40 Hawaii 1,428,557 1,360,301 68,256 4.78%
39 Idaho 1,683,140 1,567,582 115,558 6.87%
5 Illinois 12,801,539 12,830,632 -29,093 -0.23%
15 Indiana 6,633,053 6,483,802 149,251 2.25%
30 Iowa 3,134,693 3,046,355 88,338 2.82%
33 Kansas 2,907,289 2,853,118 54,171 1.86%
26 Kentucky 4,436,974 4,339,367 97,607 2.20%
25 Louisiana 4,681,666 4,533,372 148,294 3.17%
41 Maine 1,331,479 1,328,361 3,118 0.23%
19 Maryland 6,016,447 5,773,552 242,895 4.04%
14 Massachusetts 6,811,779 6,547,629 264,150 3.88%
8 Michigan 9,928,300 9,883,640 44,660 0.45%
21 Minnesota 5,519,952 5,303,925 216,027 3.91%
31 Mississippi 2,988,726 2,967,297 21,429 0.72%
18 Missouri 6,093,000 5,988,927 104,073 1.71%
44 Montana 1,042,520 989,415 53,105 5.09%
38 Nebraska 1,907,116 1,826,341 80,775 4.24%
35 Nevada 2,940,058 2,700,551 239,507 8.15%
42 New Hampshire 1,334,795 1,316,470 18,325 1.37%
11 New Jersey 8,944,469 8,791,894 152,575 1.71%
36 New Mexico 2,081,015 2,059,179 21,836 1.05%
3 New York 19,745,289 19,378,102 367,187 1.86%
10 North Carolina 10,146,788 9,535,483 611,305 6.02%
48 North Dakota 757,952 672,591 85,361 11.26%
7 Ohio 11,614,373 11,536,504 77,869 0.67%
28 Oklahoma 3,923,561 3,751,351 172,210 4.39%
27 Oregon 4,093,465 3,831,074 262,391 6.41%
6 Pennsylvania 12,784,227 12,702,379 81,848 0.64%
43 Rhode Island 1,056,426 1,052,567 3,859 0.37%
24 South Carolina 4,961,119 4,625,364 335,755 6.77%
46 South Dakota 865,454 814,180 51,274 5.92%
17 Tennessee 6,651,194 6,346,105 305,089 4.59%
2 Texas 27,862,596 25,145,561 2,717,035 9.75%
34 Utah 3,051,217 2,763,885 287,332 9.42%
49 Vermont 624,594 625,741 -1,147 -0.18%
12 Virginia 8,411,808 8,001,024 410,784 4.88%
13 Washington 7,288,000 6,724,540 563,460 7.73%
37 West Virginia 1,831,102 1,852,994 -21,892 -1.20%
20 Wisconsin 5,778,708 5,686,986 91,722 1.59%
51 Wyoming 585,501 563,626 21,875 3.74%
Puerto Rico 3,411,307 3,725,789 -314,482 -9.22%

Annual Estimates of the Resident Population: April 1, 2010 to July 1, 2016
Source: U.S. Census Bureau, Population Division
Release Date: May 2017.

Largest Cities Across the United States

There are over 300 cities across the United States which have at least 100,000 residents.

Population Cities
1,000,000+ 10
300,000–999,999 54
200,000–299,999 51
100,000–199,999 192
Total 307

Over 40% of these cities are located in just 3 states: California, Texas & Florida.

State Large Cities
CA 73
TX 38
FL 22
CO 12
AZ 10
NC 9
IL, WA 8
GA, MI, NJ, VA 7
OH, TN 6
CT, KS, MA, MO, NY, OR 5
AL, IN, LA, NV, OK, UT 4
IA, MN, PA, SC, WI 3
KY, NE, NM 2
AK, AR, DC, HI, ID, MD, MS, MT, ND, NH, RI, SD 1
DE, ME, VT, WV, WY 0

Typically during economic expansions real estate prices increase faster in large cities than they do in rural areas. Here is a table of cities & Census Designated Places across the United States with a population above 100,000.

Rank City State 2016 Pop 2010 Pop Change % △ Land Pop Density
1 New York New York 8,537,673 8,175,133 362,540 4.43% 301.5 mi² 28,317/mi²
2 Los Angeles California 3,976,322 3,792,621 183,701 4.84% 468.7 mi² 8,484/mi²
3 Chicago Illinois 2,704,958 2,695,598 9,360 0.35% 227.3 mi² 11,900/mi²
4 Houston Texas 2,303,482 2,100,263 203,219 9.68% 637.5 mi² 3,613/mi²
5 Phoenix Arizona 1,615,017 1,445,632 169,385 11.72% 517.6 mi² 3,120/mi²
6 Philadelphia Pennsylvania 1,567,872 1,526,006 41,866 2.74% 134.2 mi² 11,683/mi²
7 San Antonio Texas 1,492,510 1,327,407 165,103 12.44% 461.0 mi² 3,238/mi²
8 San Diego California 1,406,630 1,307,402 99,228 7.59% 325.2 mi² 4,325/mi²
9 Dallas Texas 1,317,929 1,197,816 120,113 10.03% 340.9 mi² 3,866/mi²
10 San Jose California 1,025,350 945,942 79,408 8.39% 177.5 mi² 5,777/mi²
11 Austin Texas 947,890 790,390 157,500 19.93% 312.7 mi² 3,031/mi²
12 Jacksonville Florida 880,619 821,784 58,835 7.16% 747.4 mi² 1,178/mi²
13 San Francisco California 870,887 805,235 65,652 8.15% 46.9 mi² 18,569/mi²
14 Columbus Ohio 860,090 787,033 73,057 9.28% 218.5 mi² 3,936/mi²
15 Indianapolis Indiana 855,164 820,445 34,719 4.23% 361.5 mi² 2,366/mi²
16 Fort Worth Texas 854,113 741,206 112,907 15.23% 342.9 mi² 2,491/mi²
17 Charlotte North Carolina 842,051 731,424 110,627 15.12% 305.4 mi² 2,757/mi²
18 Seattle Washington 704,352 608,660 95,692 15.72% 83.8 mi² 8,405/mi²
19 Denver Colorado 693,060 600,158 92,902 15.48% 153.3 mi² 4,521/mi²
20 El Paso Texas 683,080 649,121 33,959 5.23% 256.8 mi² 2,660/mi²
21 Washington District of Columbia 681,170 601,723 79,447 13.20% 61.1 mi² 11,148/mi²
22 Boston Massachusetts 673,184 617,594 55,590 9.00% 48.3 mi² 13,938/mi²
23 Detroit Michigan 672,795 713,777 -40,982 -5.74% 138.8 mi² 4,847/mi²
24 Nashville Tennessee 660,388 601,222 59,166 9.84% 475.9 mi² 1,388/mi²
25 Memphis Tennessee 652,717 646,889 5,828 0.90% 317.4 mi² 2,056/mi²
26 Portland Oregon 639,863 583,776 56,087 9.61% 133.5 mi² 4,793/mi²
27 Oklahoma City Oklahoma 638,367 579,999 58,368 10.06% 606.3 mi² 1,053/mi²
28 Las Vegas Nevada 632,912 583,756 49,156 8.42% 134.4 mi² 4,709/mi²
29 Louisville Kentucky 616,261 597,337 18,924 3.17% 263.5 mi² 2,339/mi²
30 Baltimore Maryland 614,664 620,961 -6,297 1.01% 80.9 mi² 7,598/mi²
31 Milwaukee Wisconsin 595,047 594,833 214 0.04% 96.2 mi² 6,186/mi²
32 Albuquerque New Mexico 559,277 545,852 13,425 2.46% 188.2 mi² 2,972/mi²
33 Tucson Arizona 530,706 520,116 10,590 2.04% 230.8 mi² 2,299/mi²
34 Fresno California 522,053 494,665 27,388 5.54% 114.4 mi² 4,563/mi²
35 Sacramento California 495,234 466,488 28,746 6.16% 97.9 mi² 5,059/mi²
36 Mesa Arizona 484,587 439,041 45,546 10.37% 137.9 mi² 3,514/mi²
37 Kansas City Missouri 481,420 459,787 21,633 4.71% 315.0 mi² 1,528/mi²
38 Atlanta Georgia 472,522 420,003 52,519 12.50% 133.5 mi² 3,539/mi²
39 Long Beach California 470,130 462,257 7,873 1.70% 50.3 mi² 9,347/mi²
40 Colorado Springs Colorado 465,101 416,427 48,674 11.69% 195.6 mi² 2,378/mi²
41 Raleigh North Carolina 458,880 403,892 54,988 13.61% 145.1 mi² 3,163/mi²
42 Miami Florida 453,579 399,457 54,122 13.55% 36.0 mi² 12,599/mi²
43 Virginia Beach Virginia 452,602 437,994 14,608 3.34% 244.7 mi² 1,850/mi²
44 Omaha Nebraska 446,970 408,958 38,012 9.29% 133.2 mi² 3,356/mi²
45 Oakland California 420,005 390,724 29,281 7.49% 55.9 mi² 7,514/mi²
46 Minneapolis Minnesota 413,651 382,578 31,073 8.12% 54.0 mi² 7,660/mi²
47 Tulsa Oklahoma 403,090 391,906 11,184 2.85% 196.8 mi² 2,048/mi²
48 Arlington Texas 392,772 365,438 27,334 7.48% 95.8 mi² 4,100/mi²
49 New Orleans Louisiana 391,495 343,829 47,666 13.86% 169.4 mi² 2,311/mi²
50 Wichita Kansas 389,902 382,368 7,534 1.97% 160.4 mi² 2,431/mi²
51 Cleveland Ohio 385,809 396,815 -11,006 -2.77% 77.7 mi² 4,965/mi²
52 Tampa Florida 377,165 335,709 41,456 12.35% 113.4 mi² 3,326/mi²
53 Bakersfield California 376,380 347,483 28,897 8.32% 148.8 mi² 2,529/mi²
54 Aurora Colorado 361,710 325,078 36,632 11.27% 153.5 mi² 2,356/mi²
55 Honolulu Hawaii 351,792 337,256 14,536 4.31% 60.5 mi² 5,815/mi²
56 Anaheim California 351,043 336,265 14,778 4.39% 50.0 mi² 7,021/mi²
57 Santa Ana California 334,217 324,528 9,689 2.99% 27.1 mi² 12,333/mi²
58 Corpus Christi Texas 325,733 305,215 20,518 6.72% 174.6 mi² 1,866/mi²
59 Riverside California 324,722 303,871 20,851 6.86% 81.2 mi² 3,999/mi²
60 Lexington Kentucky 318,449 295,803 22,646 7.66% 283.6 mi² 1,123/mi²
61 St. Louis Missouri 311,404 319,294 -7,890 -2.47% 62.0 mi² 5,023/mi²
62 Stockton California 307,072 291,707 15,365 5.27% 61.7 mi² 4,977/mi²
63 Pittsburgh Pennsylvania 303,625 305,704 -2,079 -0.68% 55.4 mi² 5,481/mi²
64 Saint Paul Minnesota 302,398 285,068 17,330 6.08% 52.0 mi² 5,815/mi²
65 Cincinnati Ohio 298,800 296,943 1,857 0.63% 77.4 mi² 3,860/mi²
66 Anchorage Alaska 298,192 291,826 6,366 2.18% 1,706.6 mi² 175/mi²
67 Henderson Nevada 292,969 257,729 35,240 13.67% 104.7 mi² 2,798/mi²
68 Greensboro North Carolina 287,027 269,666 17,361 6.44% 128.3 mi² 2,237/mi²
69 Plano Texas 286,057 259,841 26,216 10.09% 71.7 mi² 3,990/mi²
70 Newark New Jersey 281,764 277,140 4,624 1.67% 24.1 mi² 11,691/mi²
71 Lincoln Nebraska 280,364 258,379 21,985 8.51% 92.1 mi² 3,044/mi²
72 Toledo Ohio 278,508 287,208 -8,700 -3.03% 80.7 mi² 3,451/mi²
73 Orlando Florida 277,173 238,300 38,873 16.31% 105.2 mi² 2,635/mi²
74 Chula Vista California 267,172 243,916 23,256 9.53% 49.6 mi² 5,387/mi²
75 Irvine California 266,122 212,375 53,747 25.31% 65.6 mi² 4,057/mi²
76 Fort Wayne Indiana 264,488 253,691 10,797 4.26% 110.6 mi² 2,391/mi²
77 Jersey City New Jersey 264,152 247,597 16,555 6.69% 14.8 mi² 17,848/mi²
78 Durham North Carolina 263,016 228,330 34,686 15.19% 109.8 mi² 2,395/mi²
79 St. Petersburg Florida 260,999 244,769 16,230 6.63% 61.8 mi² 4,223/mi²
80 Laredo Texas 257,156 236,091 21,065 8.92% 101.1 mi² 2,544/mi²
81 Buffalo New York 256,902 261,310 -4,408 -1.69% 40.4 mi² 6,359/mi²
82 Madison Wisconsin 252,551 233,209 19,342 8.29% 77.0 mi² 3,280/mi²
83 Lubbock Texas 252,506 229,573 22,933 9.99% 124.6 mi² 2,027/mi²
84 Chandler Arizona 247,477 236,123 11,354 4.81% 64.9 mi² 3,813/mi²
85 Scottsdale Arizona 246,645 217,385 29,260 13.46% 183.9 mi² 1,341/mi²
86 Glendale Arizona 245,895 226,721 19,174 8.46% 59.1 mi² 4,161/mi²
87 Reno Nevada 245,255 225,221 20,034 8.90% 107.3 mi² 2,286/mi²
88 Norfolk Virginia 245,115 242,803 2,312 0.95% 53.3 mi² 4,599/mi²
89 Winston–Salem North Carolina 242,203 229,617 12,586 5.48% 132.5 mi² 1,828/mi²
90 North Las Vegas Nevada 238,702 216,961 21,741 10.02% 98.0 mi² 2,436/mi²
91 Irving Texas 238,289 216,290 21,999 10.17% 67.0 mi² 3,557/mi²
92 Chesapeake Virginia 237,940 222,209 15,731 7.08% 338.5 mi² 703/mi²
93 Gilbert Arizona 237,133 208,453 28,680 13.76% 68.0 mi² 3,487/mi²
94 Hialeah Florida 236,387 224,669 11,718 5.22% 21.5 mi² 10,995/mi²
95 Garland Texas 234,943 226,876 8,067 3.56% 57.0 mi² 4,122/mi²
96 Fremont California 233,136 214,089 19,047 8.90% 77.5 mi² 3,008/mi²
Paradise Nevada 229,666 223,167 6,499 2.91% 46.717 mi² 4,777/mi²
97 Baton Rouge Louisiana 227,715 229,493 -1,778 -0.77% 85.9 mi² 2,651/mi²
Arlington Virginia 226,092 207,627 18,465 8.89% 25.98 mi² 7,992/mi²
98 Richmond Virginia 223,170 204,214 18,956 9.28% 59.8 mi² 3,732/mi²
99 Boise Idaho 223,154 205,671 17,483 8.50% 82.1 mi² 2,718/mi²
100 San Bernardino California 216,239 209,924 6,315 3.01% 61.5 mi² 3,516/mi²
101 Spokane Washington 215,973 208,916 7,057 3.38% 68.7 mi² 3,144/mi²
102 Des Moines Iowa 215,472 203,433 12,039 5.92% 88.9 mi² 2,424/mi²
103 Modesto California 212,175 201,165 11,010 5.47% 43.0 mi² 4,934/mi²
104 Birmingham Alabama 212,157 212,237 -80 -0.04% 146.1 mi² 1,452/mi²
105 Tacoma Washington 211,277 198,397 12,880 6.49% 49.7 mi² 4,251/mi²
106 Fontana California 209,665 196,069 13,596 6.93% 43.0 mi² 4,876/mi²
107 Rochester New York 208,880 210,565 -1,685 -0.80% 35.8 mi² 5,835/mi²
108 Oxnard California 207,906 197,899 10,007 5.06% 26.9 mi² 7,729/mi²
109 Moreno Valley California 205,499 193,365 12,134 6.28% 51.3 mi² 4,006/mi²
110 Fayetteville North Carolina 204,759 200,564 4,195 2.09% 147.7 mi² 1,386/mi²
111 Aurora Illinois 201,110 197,899 3,211 1.62% 44.9 mi² 4,479/mi²
112 Glendale California 200,831 191,719 9,112 4.75% 30.4 mi² 6,606/mi²
113 Yonkers New York 200,807 195,976 4,831 2.47% 18.0 mi² 11,156/mi²
114 Huntington Beach California 200,652 189,992 10,660 5.61% 26.9 mi² 7,459/mi²
115 Montgomery Alabama 200,022 205,764 -5,742 -2.79% 159.8 mi² 1,252/mi²
116 Amarillo Texas 199,582 190,695 8,887 4.66% 101.4 mi² 1,968/mi²
117 Little Rock Arkansas 198,541 193,524 5,017 2.59% 118.7 mi² 1,673/mi²
118 Akron Ohio 197,633 199,110 -1,477 -0.74% 62.0 mi² 3,188/mi²
119 Columbus Georgia 197,485 189,885 7,600 4.00% 216.4 mi² 913/mi²
120 Augusta Georgia 197,081 195,844 1,237 0.63% 302.5 mi² 652/mi²
121 Grand Rapids Michigan 196,445 188,040 8,405 4.47% 44.4 mi² 4,424/mi²
122 Shreveport Louisiana 194,920 199,311 -4,391 -2.20% 107.1 mi² 1,820/mi²
123 Salt Lake City Utah 193,744 186,440 7,304 3.92% 111.2 mi² 1,742/mi²
124 Huntsville Alabama 193,079 180,105 12,974 7.20% 213.4 mi² 905/mi²
125 Mobile Alabama 192,904 195,111 -2,207 -1.13% 139.4 mi² 1,384/mi²
Sunrise Manor Nevada 192,873 189,372 3,501 1.85% 33.352 mi² 5,678/mi²
126 Tallahassee Florida 190,894 181,376 9,518 5.25% 100.4 mi² 1,901/mi²
127 Grand Prairie Texas 190,682 175,396 15,286 8.72% 72.3 mi² 2,637/mi²
Spring Valley Nevada 190,661 178,395 12,266 6.88% 33.226 mi² 5,369/mi²
128 Overland Park Kansas 188,966 173,372 15,594 8.99% 75.1 mi² 2,516/mi²
129 Knoxville Tennessee 186,239 178,874 7,365 4.12% 98.5 mi² 1,891/mi²
130 Port St. Lucie Florida 185,132 164,603 20,529 12.47% 118.9 mi² 1,557/mi²
131 Worcester Massachusetts 184,508 181,045 3,463 1.91% 37.4 mi² 4,933/mi²
132 Brownsville Texas 183,823 175,023 8,800 5.03% 132.5 mi² 1,387/mi²
133 Tempe Arizona 182,498 161,719 20,779 12.85% 40.0 mi² 4,562/mi²
134 Santa Clarita California 181,972 176,320 5,652 3.21% 52.8 mi² 3,446/mi²
135 Newport News Virginia 181,825 180,719 1,106 0.61% 69.1 mi² 2,631/mi²
136 Cape Coral Florida 179,804 154,305 25,499 16.53% 105.6 mi² 1,703/mi²
137 Providence Rhode Island 179,219 178,042 1,177 0.66% 18.4 mi² 9,740/mi²
138 Fort Lauderdale Florida 178,752 165,521 13,231 7.99% 34.6 mi² 5,166/mi²
139 Chattanooga Tennessee 177,571 167,674 9,897 5.90% 143.1 mi² 1,241/mi²
140 Rancho Cucamonga California 176,534 165,269 11,265 6.82% 40.0 mi² 4,413/mi²
141 Oceanside California 175,464 167,086 8,378 5.01% 41.3 mi² 4,249/mi²
142 Santa Rosa California 175,155 167,815 7,340 4.37% 41.3 mi² 4,241/mi²
143 Garden Grove California 174,858 170,883 3,975 2.33% 18.0 mi² 9,714/mi²
144 Vancouver Washington 174,826 161,791 13,035 8.06% 46.9 mi² 3,728/mi²
145 Sioux Falls South Dakota 174,360 153,888 20,472 13.30% 75.4 mi² 2,312/mi²
146 Ontario California 173,212 163,924 9,288 5.67% 49.9 mi² 3,471/mi²
147 McKinney Texas 172,298 131,117 41,181 31.41% 63.0 mi² 2,735/mi²
148 Elk Grove California 169,743 153,015 16,728 10.93% 42.2 mi² 4,022/mi²
149 Jackson Mississippi 169,148 173,514 -4,366 -2.52% 111.0 mi² 1,524/mi²
150 Pembroke Pines Florida 168,587 154,019 14,568 9.46% 33.0 mi² 5,109/mi²
151 Salem Oregon 167,419 154,637 12,782 8.27% 48.6 mi² 3,445/mi²
152 Springfield Missouri 167,319 159,498 7,821 4.90% 82.3 mi² 2,033/mi²
153 Corona California 166,785 152,374 14,411 9.46% 39.5 mi² 4,222/mi²
154 Eugene Oregon 166,575 156,185 10,390 6.65% 44.1 mi² 3,777/mi²
155 Fort Collins Colorado 164,207 143,986 20,221 14.04% 55.8 mi² 2,943/mi²
156 Peoria Arizona 164,173 154,065 10,108 6.56% 175.7 mi² 934/mi²
157 Frisco Texas 163,656 116,989 46,667 39.89% 67.7 mi² 2,417/mi²
158 Cary North Carolina 162,320 135,234 27,086 20.03% 56.5 mi² 2,873/mi²
159 Lancaster California 160,106 156,633 3,473 2.22% 94.3 mi² 1,698/mi²
160 Hayward California 158,937 144,186 14,751 10.23% 45.5 mi² 3,493/mi²
161 Palmdale California 157,356 152,750 4,606 3.02% 106.0 mi² 1,484/mi²
162 Salinas California 157,218 150,441 6,777 4.50% 23.6 mi² 6,662/mi²
163 Alexandria Virginia 155,810 139,966 15,844 11.32% 15.0 mi² 10,387/mi²
164 Lakewood Colorado 154,393 142,980 11,413 7.98% 42.9 mi² 3,599/mi²
165 Springfield Massachusetts 154,074 153,060 1,014 0.66% 31.9 mi² 4,830/mi²
166 Pasadena Texas 153,351 149,043 4,308 2.89% 43.5 mi² 3,525/mi²
167 Sunnyvale California 152,771 140,081 12,690 9.06% 22.0 mi² 6,944/mi²
168 Macon Georgia 152,555 91,351 61,204 67.00% 249.3 mi² 612/mi²
169 Pomona California 152,494 149,058 3,436 2.31% 23.0 mi² 6,630/mi²
170 Hollywood Florida 151,998 140,768 11,230 7.98% 27.3 mi² 5,568/mi²
171 Kansas City Kansas 151,709 145,786 5,923 4.06% 124.8 mi² 1,216/mi²
172 Escondido California 151,613 143,911 7,702 5.35% 37.1 mi² 4,087/mi²
173 Clarksville Tennessee 150,287 132,929 17,358 13.06% 98.3 mi² 1,529/mi²
174 Joliet Illinois 148,262 147,433 829 0.56% 64.4 mi² 2,302/mi²
175 Rockford Illinois 147,651 152,871 -5,220 -3.41% 63.5 mi² 2,325/mi²
176 Torrance California 147,195 145,438 1,757 1.21% 20.5 mi² 7,180/mi²
177 Naperville Illinois 147,122 141,853 5,269 3.71% 38.7 mi² 3,802/mi²
178 Paterson New Jersey 147,000 146,199 801 0.55% 8.4 mi² 17,500/mi²
179 Savannah Georgia 146,763 136,286 10,477 7.69% 103.6 mi² 1,417/mi²
180 Bridgeport Connecticut 145,936 144,229 1,707 1.18% 16.1 mi² 9,064/mi²
Metairie Louisiana 144,772 138,481 6,291 4.54% 23.222 mi² 5,963/mi²
181 Mesquite Texas 143,736 139,824 3,912 2.80% 47.2 mi² 3,045/mi²
182 Killeen Texas 143,400 127,921 15,479 12.10% 53.5 mi² 2,680/mi²
183 Syracuse New York 143,378 145,170 -1,792 -1.23% 25.0 mi² 5,735/mi²
184 McAllen Texas 142,212 129,877 12,335 9.50% 58.4 mi² 2,435/mi²
185 Pasadena California 142,059 137,122 4,937 3.60% 23.0 mi² 6,176/mi²
186 Bellevue Washington 141,400 122,363 19,037 15.56% 33.5 mi² 4,221/mi²
187 Fullerton California 140,721 135,161 5,560 4.11% 22.4 mi² 6,282/mi²
188 Orange California 140,504 136,416 4,088 3.00% 25.4 mi² 5,532/mi²
189 Dayton Ohio 140,489 141,527 -1,038 -0.73% 55.7 mi² 2,522/mi²
190 Miramar Florida 138,449 122,041 16,408 13.44% 29.4 mi² 4,709/mi²
191 Thornton Colorado 136,703 118,772 17,931 15.10% 35.7 mi² 3,829/mi²
192 West Valley City Utah 136,574 129,480 7,094 5.48% 35.5 mi² 3,847/mi²
193 Olathe Kansas 135,473 125,872 9,601 7.63% 60.9 mi² 2,225/mi²
194 Hampton Virginia 135,410 137,436 -2,026 -1.47% 51.5 mi² 2,629/mi²
195 Warren Michigan 135,125 134,056 1,069 0.80% 34.4 mi² 3,928/mi²
196 Midland Texas 134,610 111,147 23,463 21.11% 74.4 mi² 1,809/mi²
197 Waco Texas 134,432 124,805 9,627 7.71% 89.0 mi² 1,510/mi²
198 Charleston South Carolina 134,385 120,083 14,302 11.91% 109.0 mi² 1,233/mi²
199 Columbia South Carolina 134,309 129,272 5,037 3.90% 133.5 mi² 1,006/mi²
200 Denton Texas 133,808 113,383 20,425 18.01% 93.4 mi² 1,433/mi²
201 Carrollton Texas 133,351 119,097 14,254 11.97% 36.3 mi² 3,674/mi²
202 Surprise Arizona 132,677 117,517 15,160 12.90% 107.9 mi² 1,230/mi²
203 Roseville California 132,671 118,788 13,883 11.69% 43.0 mi² 3,085/mi²
204 Sterling Heights Michigan 132,427 129,699 2,728 2.10% 36.5 mi² 3,628/mi²
205 Murfreesboro Tennessee 131,947 108,755 23,192 21.32% 55.9 mi² 2,360/mi²
206 Gainesville Florida 131,591 124,354 7,237 5.82% 62.3 mi² 2,112/mi²
207 Cedar Rapids Iowa 131,127 126,326 4,801 3.80% 70.8 mi² 1,852/mi²
208 Visalia California 131,074 124,442 6,632 5.33% 37.5 mi² 3,495/mi²
209 Coral Springs Florida 130,059 121,096 8,963 7.40% 23.8 mi² 5,465/mi²
210 New Haven Connecticut 129,934 129,779 155 0.12% 18.7 mi² 6,948/mi²
Enterprise Nevada 129,620 108,481 21,139 19.49% 46.513 mi² 2,332/mi²
211 Stamford Connecticut 129,113 122,643 6,470 5.28% 37.6 mi² 3,434/mi²
212 Thousand Oaks California 128,888 126,683 2,205 1.74% 55.2 mi² 2,335/mi²
213 Concord California 128,726 122,067 6,659 5.46% 30.5 mi² 4,221/mi²
214 Elizabeth New Jersey 128,640 124,969 3,671 2.94% 12.3 mi² 10,459/mi²
215 Lafayette Louisiana 127,626 120,623 7,003 5.81% 53.8 mi² 2,372/mi²
216 Kent Washington 127,514 92,411 35,103 37.99% 33.7 mi² 3,784/mi²
217 Topeka Kansas 126,808 127,473 -665 -0.52% 61.5 mi² 2,062/mi²
218 Simi Valley California 126,327 124,237 2,090 1.68% 41.5 mi² 3,044/mi²
219 Santa Clara California 125,948 116,468 9,480 8.14% 18.4 mi² 6,845/mi²
East Los Angeles California 124,191 126,496 -2,305 -1.82% 7.448 mi² 16,984/mi²
220 Athens Georgia 123,371 115,452 7,919 6.86% 116.4 mi² 1,060/mi²
221 Hartford Connecticut 123,243 124,775 -1,532 -1.23% 17.4 mi² 7,083/mi²
222 Victorville California 122,265 115,903 6,362 5.49% 73.3 mi² 1,668/mi²
223 Abilene Texas 122,225 117,063 5,162 4.41% 106.7 mi² 1,146/mi²
224 Norman Oklahoma 122,180 110,925 11,255 10.15% 178.8 mi² 683/mi²
225 Vallejo California 121,299 115,942 5,357 4.62% 30.7 mi² 3,951/mi²
226 Berkeley California 121,240 112,580 8,660 7.69% 10.5 mi² 11,547/mi²
227 Round Rock Texas 120,892 99,887 21,005 21.03% 35.6 mi² 3,396/mi²
228 Ann Arbor Michigan 120,782 113,934 6,848 6.01% 28.1 mi² 4,298/mi²
229 Fargo  North Dakota 120,762 105,549 15,213 14.41% 49.3 mi² 2,450/mi²
230 Columbia Missouri 120,612 108,500 12,112 11.16% 65.0 mi² 1,856/mi²
231 Allentown Pennsylvania 120,443 118,032 2,411 2.04% 17.5 mi² 6,882/mi²
232 Evansville Indiana 119,477 117,429 2,048 1.74% 47.3 mi² 2,526/mi²
233 Beaumont Texas 118,299 118,296 3 0.00% 82.1 mi² 1,441/mi²
234 Odessa Texas 117,871 99,940 17,931 17.94% 45.2 mi² 2,608/mi²
235 Wilmington North Carolina 117,525 106,476 11,049 10.38% 51.6 mi² 2,278/mi²
236 Arvada Colorado 117,453 106,433 11,020 10.35% 38.6 mi² 3,043/mi²
237 Independence Missouri 117,030 116,830 200 0.17% 77.8 mi² 1,504/mi²
238 Provo Utah 116,868 112,488 4,380 3.89% 41.7 mi² 2,803/mi²
239 Lansing Michigan 116,020 114,297 1,723 1.51% 39.1 mi² 2,967/mi²
240 El Monte California 115,807 113,475 2,332 2.06% 9.6 mi² 12,063/mi²
241 Springfield Illinois 115,715 116,250 -535 -0.46% 60.1 mi² 1,925/mi²
242 Fairfield California 114,756 105,321 9,435 8.96% 40.9 mi² 2,806/mi²
243 Clearwater Florida 114,361 107,685 6,676 6.20% 25.9 mi² 4,415/mi²
244 Peoria Illinois 114,265 115,007 -742 -0.65% 48.2 mi² 2,371/mi²
245 Rochester Minnesota 114,011 106,769 7,242 6.78% 54.6 mi² 2,088/mi²
246 Carlsbad California 113,952 105,328 8,624 8.19% 37.7 mi² 3,023/mi²
247 Westminster Colorado 113,875 106,114 7,761 7.31% 31.7 mi² 3,592/mi²
248 West Jordan Utah 113,699 103,712 9,987 9.63% 32.3 mi² 3,520/mi²
249 Pearland Texas 113,570 91,252 22,318 24.46% 46.3 mi² 2,453/mi²
250 Richardson Texas 113,347 99,223 14,124 14.23% 28.6 mi² 3,963/mi²
251 Downey California 113,267 111,772 1,495 1.34% 12.4 mi² 9,134/mi²
252 Miami Gardens Florida 113,058 107,167 5,891 5.50% 18.2 mi² 6,212/mi²
253 Temecula California 113,054 100,097 12,957 12.94% 37.3 mi² 3,031/mi²
254 Costa Mesa California 112,822 109,960 2,862 2.60% 15.7 mi² 7,186/mi²
255 College Station Texas 112,141 93,857 18,284 19.48% 51.0 mi² 2,199/mi²
256 Elgin Illinois 112,123 108,188 3,935 3.64% 37.4 mi² 2,998/mi²
257 Murrieta California 111,674 103,466 8,208 7.93% 33.6 mi² 3,324/mi²
258 Gresham Oregon 111,523 105,594 5,929 5.61% 23.3 mi² 4,786/mi²
259 High Point North Carolina 111,223 104,371 6,852 6.57% 55.2 mi² 2,015/mi²
260 Antioch California 110,898 102,372 8,526 8.33% 29.4 mi² 3,772/mi²
261 Inglewood California 110,654 109,673 981 0.89% 9.1 mi² 12,160/mi²
262 Cambridge Massachusetts 110,651 105,162 5,489 5.22% 6.4 mi² 17,289/mi²
263 Lowell Massachusetts 110,558 106,519 4,039 3.79% 13.6 mi² 8,129/mi²
264 Manchester New Hampshire 110,506 109,565 941 0.86% 33.1 mi² 3,339/mi²
265 Billings Montana 110,323 104,170 6,153 5.91% 43.7 mi² 2,525/mi²
266 Pueblo Colorado 110,291 106,595 3,696 3.47% 53.6 mi² 2,058/mi²
267 Palm Bay Florida 110,104 103,190 6,914 6.70% 65.7 mi² 1,676/mi²
268 Centennial Colorado 109,932 100,377 9,555 9.52% 29.5 mi² 3,727/mi²
269 Richmond California 109,813 103,701 6,112 5.89% 30.1 mi² 3,648/mi²
Brandon Florida 109,784 103,483 6,301 6.09% 33.101 mi² 3,126/mi²
270 Ventura California 109,592 106,433 3,159 2.97% 21.8 mi² 5,027/mi²
271 Pompano Beach Florida 109,393 99,845 9,548 9.56% 24.0 mi² 4,558/mi²
272 North Charleston South Carolina 109,298 97,471 11,827 12.13% 73.7 mi² 1,483/mi²
273 Everett Washington 109,043 103,019 6,024 5.85% 33.3 mi² 3,275/mi²
274 Waterbury Connecticut 108,272 110,366 -2,094 -1.90% 28.5 mi² 3,799/mi²
275 West Palm Beach Florida 108,161 99,919 8,242 8.25% 55.1 mi² 1,963/mi²
276 Boulder Colorado 108,090 97,385 10,705 10.99% 24.8 mi² 4,358/mi²
277 West Covina California 107,847 106,098 1,749 1.65% 16.0 mi² 6,740/mi²
278 Broken Arrow Oklahoma 107,403 98,850 8,553 8.65% 61.7 mi² 1,741/mi²
279 Clovis California 106,583 95,631 10,952 11.45% 24.2 mi² 4,404/mi²
280 Daly City California 106,472 101,123 5,349 5.29% 7.6 mi² 14,009/mi²
281 Lakeland Florida 106,420 97,422 8,998 9.24% 65.9 mi² 1,615/mi²
282 Santa Maria California 106,290 99,553 6,737 6.77% 22.8 mi² 4,662/mi²
283 Norwalk California 106,178 105,549 629 0.60% 9.7 mi² 10,946/mi²
284 Sandy Springs Georgia 105,703 93,853 11,850 12.63% 37.7 mi² 2,804/mi²
285 Hillsboro Oregon 105,164 91,611 13,553 14.79% 25.0 mi² 4,207/mi²
286 Green Bay Wisconsin 105,139 104,057 1,082 1.04% 45.4 mi² 2,316/mi²
287 Tyler Texas 104,798 96,900 7,898 8.15% 56.6 mi² 1,852/mi²
288 Wichita Falls Texas 104,724 104,553 171 0.16% 72.2 mi² 1,450/mi²
289 Lewisville Texas 104,659 95,290 9,369 9.83% 36.7 mi² 2,852/mi²
290 Burbank California 104,447 103,340 1,107 1.07% 17.4 mi² 6,003/mi²
291 Greeley Colorado 103,990 92,889 11,101 11.95% 47.8 mi² 2,176/mi²
292 San Mateo California 103,959 97,207 6,752 6.95% 12.1 mi² 8,592/mi²
293 El Cajon California 103,768 99,478 4,290 4.31% 14.5 mi² 7,156/mi²
294 Jurupa Valley California 103,541 103,541 0.00% 42.9 mi² 2,414/mi²
295 Rialto California 103,314 99,171 4,143 4.18% 22.3 mi² 4,633/mi²
296 Davenport Iowa 102,612 99,685 2,927 2.94% 62.9 mi² 1,631/mi²
297 League City Texas 102,010 83,560 18,450 22.08% 51.2 mi² 1,992/mi²
298 Edison New Jersey 101,996 99,967 2,029 2.03% 30.1 mi² 3,389/mi²
299 Davie Florida 101,871 91,992 9,879 10.74% 34.9 mi² 2,919/mi²
300 Las Cruces New Mexico 101,759 97,618 4,141 4.24% 76.9 mi² 1,323/mi²
301 South Bend Indiana 101,735 101,168 567 0.56% 41.4 mi² 2,457/mi²
302 Vista California 101,659 93,834 7,825 8.34% 18.7 mi² 5,436/mi²
303 Woodbridge New Jersey 101,389 99,585 1,804 1.81% 23.3 mi² 4,351/mi²
304 Renton Washington 100,953 90,927 10,026 11.03% 23.4 mi² 4,314/mi²
305 Lakewood New Jersey 100,758 92,843 7,915 8.53% 24.7 mi² 4,079/mi²
306 San Angelo Texas 100,702 93,200 7,502 8.05% 59.9 mi² 1,681/mi²
307 Clinton Michigan 100,392 96,796 3,596 3.72% 28.1 mi² 3,573/mi²

National Average Mortgage Rates

Mortgage rates vary depending upon the down payment of the consumer, their credit score, and the type of loan that will be acquired by the consumer. For instance, in February, 2010, the national average mortgage rate for a 30 year fixed rate loan was at 4.750 percent (5.016 APR). The 15 year fixed was at 4.125 percent (4.312 APR) and the 5/1 ARM was at 3.875 percent (3.122 APR). These prices are just a snapshot of the average and will constantly change day to day, though the relative values will remain roughly the same. Namely, longer duration debt & fixed rate loans are typically charged a higher initial interest rate to lock in the certainy. This relationship makes sense because homeowners have the ability to refinance a fixed rate mortgage if rates drop, but if interest rates increase lenders have no way to adjust the fixed rate upward.

The general rule of thumbs are

  • mortgage rates typically trade above 10-year treasury rates,
  • longer loan duration is associated with a higher rate, and
  • adjustable rate loans typically have a lower initial rate, but over the course of the loan that rate may shift significantly

The Consumer Fiance Protection Bureau offers a home buyer's checklist and a free online tool for checking typical mortgage rates within your state for a given credit score range.

Consumer Finance Protection Bureau.

Historical Mortgage Rates

Here are historical average annual interest rates for popular home loan products.

Year 30-YR FRM Rate 30-YR Points 15-YR FRM Rate 15-YR Points 1-YR ARM Rate 1-YR Points 1-YR Margin 5/1-YR ARM Rate 5/1-YR Points 5/1-YR Margin
2017 3.99 0.5 3.27 0.5 3.20 0.4 2.74
2016 3.65 0.5 2.93 0.5 2.87 0.5 2.74
2015 3.85 0.6 3.09 0.6 2.53 0.3 2.74 2.94 0.5 2.74
2014 4.17 0.6 3.29 0.6 2.44 0.4 2.73 3.02 0.5 2.74
2013 3.98 0.7 3.11 0.7 2.62 0.4 2.76 2.88 0.5 2.75
2012 3.66 0.7 2.93 0.7 2.69 0.5 2.76 2.78 0.6 2.74
2011 4.45 0.7 3.68 0.7 3.03 0.6 2.76 3.31 0.6 2.74
2010 4.69 0.7 4.1 0.7 3.78 0.6 2.76 3.82 0.6 2.74
2009 5.04 0.7 4.57 0.7 4.7 0.6 2.75 4.75 0.6 2.74
2008 6.03 0.6 5.62 0.6 5.17 0.6 2.74 5.74 0.6 2.75
2007 6.34 0.4 6.03 0.4 5.56 0.6 2.75 6.07 0.5 2.76
2006 6.41 0.5 6.07 0.5 5.54 0.7 2.76 6.08 0.6 2.77
2005 5.87 0.6 5.42 0.6 4.49 0.7 2.77 5.32 0.6 2.78
2004 5.84 0.7 5.21 0.6 3.9 0.7 2.77
2003 5.83 0.6 5.17 0.6 3.76 0.6 2.76
2002 6.54 0.6 5.98 0.6 4.62 0.7 2.77
2001 6.97 0.9 6.5 0.9 5.82 0.9 2.77
2000 8.05 1 7.72 1 7.04 1 2.78
1999 7.44 1 7.06 1 5.99 1.1 2.79
1998 6.94 1.1 6.59 1.1 5.58 1.1 2.79
1997 7.6 1.7 7.13 1.7 5.61 1.4 2.79
1996 7.81 1.7 7.32 1.7 5.67 1.4 2.79
1995 7.93 1.8 7.48 1.8 6.06 1.5 2.8
1994 8.38 1.8 7.86 1.8 5.36 1.5 2.79
1993 7.31 1.6 6.83 1.6 4.58 1.5 2.77
1992 8.39 1.7 7.96 1.7 5.62 1.7 2.76
1991 9.25 2 7.09 1.9 2.77
1990 10.13 2.1 8.36 2.1 2.77
1989 10.32 2.1 8.8 2.3 2.77
1988 10.34 2.1 7.9 2.3 2.75
1987 10.21 2.2 7.83 2.2
1986 10.19 2.2 8.43 2.3
1985 12.43 2.5 10.05 2.5
1984 13.88 2.5 11.51 2.5
1983 13.24 2.1
1982 16.04 2.2
1981 16.63 2.1
1980 13.74 1.8
1979 11.2 1.6
1978 9.64 1.3
1977 8.85 1.1
1976 8.87 1.1
1975 9.05 1.1
1974 9.19 1.2
1973 8.04 1
1972 7.38 0.9

Source: Freddie Mac PMMS

Conforming Mortgages

Fixed Rate Mortgages

Fixed rates are based upon the national average, but vary from state to state. They possess the same interest rate throughout the duration of the loan. Consumers desire these loans if they plan to remain in their homes for the duration of the loan. For example, the consumer obtains a mortgage when interest rates are at their lowest and then interest rates rise. The consumer does not have to worry about their rates increasing because the interest rate is “fixed”. If the interest rates decrease, the consumer may have the option of refinancing, if the costs of refinancing are less than the overall savings.

These loans are typically available in 15 year and 30 year loan options. The rates are higher than variable rate loans, as consumers pay a premium to lock in the security of a fixed rate while maintaining the ability to refinance. The longer the term, the higher the rate, because banks will lose money as purchasing power decreases due to inflation.

Adjustable Rate Mortgage (ARM)

Adjustable rates are typically lower than fixed rates when the loan is initially established. ARMs may adjust on a monthly basis in keeping with the Federal Reserve or on a bi-annual or annual basis. The consumer should be aware that as interest rates increase, so will their monthly payments. While ARMs may be appealing because the initial rates are lower, ARMs can also be a gamble. ARMs may be beneficial to investors or consumers who only plan to keep the loan for a short period of time. During that time, the consumer can enjoy low interest rates.

Hybrid Adjustable Rate Mortgage (ARM)

Hybrid Adjustable Rate Mortgages offer the consumer a low interest rate for a certain period of time. Then, they increase or adjust to the current rate after fixed rate period has elapsed. These rates can be an entire point lower than 30 year fixed rates. Therefore, there may be significant savings in terms of interest paid to the lender. Some common hybrid ARMs are 1 year fixed, 1 year adjustable rates (1/1); 5 years fixed, 1 year adjustable (5/1); and 7 years fixed, 1 year adjustable (7/1). The adjustable rates will be based upon the federal rate when the fixed term elapses. These loans are also appealing to investors or home buyers who plan to sell in a short period of time.

Jumbo Loans

Conforming Mortgage Limits

As of 2018 Congress set the conforming loan limit for single unit homes across the continental United States to $453,100, with a ceiling of 150% that amount in areas where median home values are higher. The limit is as follows for 2, 3, and 4-unit homes $580,150, $701,250, and $871,450. The limits are higher in Alaska, Hawaii, Guam & the U.S. Virgin Islands. Borrowers who exceed these limits will need to obtain a jumbo mortgage.

Homes NOT in Designated High-cost Areas

The limits in the first row apply to all areas of Alabama, Arizona, Arkansas, Delaware, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Michigan, Minnesota, Mississippi, Missouri, Montana, Nevada, New Mexico, North Dakota, Ohio, Oklahoma, Rhode Island, South Carolina, South Dakota, Texas, Vermont, Wisconsin & most other parts of the continental United States.

The limits in the second row apply to all parts of Alaska, Guam, Virgin Islands, Washington D.C & some parts of Hawaii.

Units 1 2 3 4
Continental U.S. $453,100 $580,150 $701,250 $871,450
Alaska, Hawaii, Guam & U.S. Virgin Islands $679,650 $870,225 $1,051,875  $1,307,175

Homes in Designated High-cost Areas

The areas covered in this table are further detailed below the map in state-by-state tables.

Units 1 2 3 4
Continental U.S. $679,650 $870,225 $1,051,875  $1,307,175
Alaska, Hawaii, Guam & U.S. Virgin Islands $1,019,475 $1,305,325 $1,577,800 $1,960,750

The FHFA offers an interactive map of conforming limits by county. A static version of the map is included below.

Nationwide Map of Conforming Loan Limits.

 

Federal Loan Programs

FHA Loans

The FHA secures loans made by private lenders. These loans are provided to Americans who have a low to middle income. This loan is available to those people who cannot afford a large down payment or higher interest rates. Interest rates for these loans are lower than the national average for a fixed rate loan. Individual banks determine the interest rates; therefore, the consumer should do research prior to accepting a loan at a particular bank. The consumer can receive a loan for as little as 3 percent down and also receive as much as 6 percent on closing costs. This means that the consumer can borrow up to 97 percent of the cost of the home.

VA Loans

VA loans are offered to veterans. The loans assist veterans in obtaining 100 percent financing. The United States Department of Veterans Affairs is the governing body that establishes the rules for the recipients of the VA loans. They also insure the VA loans and establish the terms of the loans offered to veterans.

USDA Loans & Grants

USDA loans can help people with low incomes in rural parts of the state qualify for a subsidized low-interest loan.

Comparison of Mortgage Rates

Fixed rates are best for individuals who intend to remain in their homes for the duration of the loan. The initial interest rate may be higher than an ARM; however, there will be no hidden increases over the duration of the loan.

During the fixed rate period of a hybrid ARM, the consumer can enjoy the low interest rates and low payments. However, individuals who are not prepared may see an increase in their loan premiums that they cannot afford.

ARM interest rates change each month with the Federal Reserve. This loan is typically recommended for a short term investor who will sell quickly.

Fixed rate loans are by far the safest loans for consumers over a period of time.

When is the best time to obtain a mortgage?

The best time to secure a mortgage or refinance is when the rates are the lowest. Compare the National Mortgage Rate average over the past 10 to 20 years. If the rate is at one of its lowest points historically, then it can be a safe entry point into the market. Many investors over-extended themselves by purchasing multiple properties when prices were high. If the market turns, the home buyers may owe more than the house is worth. Those who wish to sell cannot fully recoup the costs of the home. Therefore, instead of having equity in the home, consumers owe more than the home is worth. Many individuals, in this instance will negotiate with the bank and “short sell” in order to relieve themselves of the debt.

A person who is making a purchase where they are using a large down payment or paying cash would likely be better off buying when mortgage rates are higher, since most people (who may compete to buy the same property) budget based on the montly payment rather than the total price of the house.

Below is a chart of historical montly mortgage rates from the Federal Reserve Economic Data series.

As stated above, the rates change based upon the Federal Reserve and the desire to keep the economy stable. Read the reports from the office and inquire with lenders to get a fair prediction of the direction of the Federal Reserve. If the Federal Reserve decides that consumers need to spend and borrow, interest rates will remain low. However, if the Federal Reserve decides that it needs consumers to save, invest, and deposit money, the interest rates will remain high. Other factors beyond the Federal Reserve which impact housing prices include:

Hidden Costs of Home Ownership

A home is not just an asset, but also has many costs beyond financing; including regular repairs, homeowner's insurance, and property taxes.

If your down payment on a conforming loan is below 20% of the home's value you will likely be required to carry private mortgage insurance (PMI) until the loan's balance is below 80% of the home's value. Government loan programs like FHA and VA loans do not require PMI, however they have their own seperate insurance requirements, which may require the insurance to remain throughout the duration of the loan.

Beware of ARMs. The interest rates will typically increase after the introductory period and may cause a home buyer financial stress when the rates increase. Some individuals even foreclose when this happens, because they cannot handle the increased payments.

Purchasing mortgage discount points can be a viable option if you are fairly certain you will live in the house for many years. However, if you move after a couple years then paying a significant upfront fee to lock in lower rates for the life of the loan will be money wasted.

Other hidden costs may be associated with refinancing. For instance, an individual with a fixed interest rate may decide to refinance the loan if the interest rates decrease during the duration of the loan. However, the consumer must incur costs to have the loan refinanced. The consumer should make certain that the cost of refinancing is less than the savings from a lower interest rate. Otherwise, refinancing may not be in the best interest of the consumer. Some loans also contain pre-payment penalties, which increase the cost of refinancing.