Mortgage Rate Update

For the week of May 10th-17th

Conventional Loan Programs

Government Loan Programs

After mortgage rates have stayed relatively flat with minimal change to the APR in recent weeks; rates among conventional and government programs increased substantially this week. The average overall change was an increase of +10.13% basis points. This is a large jump from last week and includes three programs that stayed the same in rate according to our calculations, these three programs include the 30-year fixed conventional, 30-year fixed conventional manufactured, and 30-year fixed VA programs. The 30-year fixed government VA and 30-year fixed conventional manufactured home programs both have been at the same rate for 4 weeks and did not move this week; the other program with no change, the 30-year fixed conventional, the most popular program, has been at a rate of 4.689% for the past three weeks. This 30-year conventional rate we calculated is slightly above the Freddie Mac average for the 30-year conventional program; Freddie Mac has the rate for this popular program as 4.61% the calculations we did above show that the rate for this program is slightly higher at 4.689%.

Take a look at the Freddie Mac Survey of the 30-year fixed rate movement over the past year:

The Freddie Mac 30-year mortgage rate increased by 6 basis points to an APR of 4.61%. The APR is now higher than it  was a year ago, at a level that is 59 basis points above where it was at this same time last year when it was at a level of 4.02%. This yearly increase of 59 basis points is substantial and is at the highest point its been at since May 19, 2011. In 2017 we were seeing a wide year on year gap averaging about a negative 55 basis point decrease to APR, however this year the change in rate is positive, as rates continue to rise and the year on year gap continues to wide.
Attributed to Sam Khater, Freddie Mac chief economist

“Healthy consumer spending and higher commodity prices spooked the bond markets and led to higher mortgage rates over the past week,” he said. “Not only are buyers facing higher borrowing costs, gas prices are currently at four-year highs just as we enter the important peak home sales season.”

Added Khater, “While this year’s higher mortgage rates have not caused much of a ripple in the strong demand levels for buying a home seen in most markets, inflationary pressures and the prospect of rates approaching 5 percent could begin to hit the psyche of some prospective buyers.”

Here is the Freddie Mac Survey of the 30-year fixed historical average rate movement over the past 30 years:

Above is the 30 year fixed Freddie Mac conventional program’s APR historic average data for the past 30 years dating back to 1987. In the late 1980’s, when the graph begins its recording, rates were at a 30 year high with all APR’s above the 10.00% mark, which is more than double where rates have been at in most recent years. In the early 1990’s rates began dropping for a four year on year decline from years 1989 to 1992. For the most part, APR averages on a yearly basis have been steadily declining in the past 30 years since 1987, with some years being an exception to this trend, but when looked at from a distance it appears rates are moving downward on a yearly averaged basis. 2017 was an exception to this trend as rates increased by more than 30 basis points: from the 30 year low of 3.65% APR in 2016. Since 2010 it appears that rates have been fluctuating at only a minimal pace.


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Calculation Notes

  • Mortgage rates assume purchase of a single-family, detached, owner-occupied, residential property.
  • Mortgage rates assume borrower credit score of 760 and a Debt-to-Income ratio of 35%. Rates for conventional loan programs assume a loan-to-value of 60%.
  • Loan amount is $453,100 for all programs (appraised value of $760,000), except for the high balance ($615,250 loan and $1,030,000 value), and Jumbo ($750,000 loan and $1,500,000 value)
  • Mortgage rates and APR subject to change
  • 30-year fixed, 15-year fixed, 30-year high balance, Manufactured, Jumbo
  • FHA, FHA 203k, Manufactured, USDA, VA