Today’s Mortgage, Refinance Rates: Nov. 24, 2022

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Mortgage rates started inching up mid-week but are back down today. Rates remain the lowest they’ve been since early October.

Though rates have trended down somewhat compared to recent highs, they’re still more than three percentage points higher now than they were at the start of 2022. High rates have dramatically curbed homebuying demand, causing home prices to start to inch down.

Prices could continue to decline, possibly by a significant margin.

“As we near the end of 2022, home values are beginning to drop across most markets, so banks are likely going to be more tentative about extending loans for more than 80% to 90% of the value of the home,” says Eileen Derks, senior vice president and head of mortgage at Laurel Road. “They don’t want customers to be upside down – or owe more on the home than its current market value. As a result, they will likely encourage customers to put more down by increasing the rates for higher value loans. So, continuing to save for a down payment will not only help avoid private mortgage insurance but can yield a lower interest rate and monthly housing payment.”

The economy is slowing now, and it’s possible we’ll experience a mild recession in the new year. But as the economy stabilizes later in 2023, home prices will likely start trending back up. 

Today’s mortgage rates

Today’s refinance rates

Mortgage calculator

Use our free mortgage calculator to see how today’s mortgage rates will affect your monthly and long-term payments.

By plugging in different term lengths and interest rates, you’ll see how your monthly payment could change.

Mortgage rate projection for 2023

Mortgage rates started ticking up from historic lows in the second half of 2021 and have increased over three percentage points so far in 2022. They’ll likely remain near their current levels for the remainder of 2022.

But many forecasts expect rates to begin to fall next year. In their latest forecast, Fannie Mae researchers predicted that rates are currently peaking, and that 30-year fixed rates will trend down to 6.5% by the end of 2023.

The Mortgage Bankers Association also noted that a recession in the first half of 2023 could cause rates to fall even faster. It currently estimates that there’s a 50% likelihood that a mild recession will materialize in the next year.

Whether mortgage rates will drop in 2023 hinges on if the Federal Reserve can get inflation under control.

In the last 12 months, the Consumer Price Index rose by 7.7%. This is a slowdown compared to the previous month’s numbers, which means the Fed may be able to start easing up on its pace of hikes to the federal funds rate.

As inflation slows, mortgage rates will likely start to fall as well. If the Fed acts too aggressively and engineers a recession, mortgage rates could fall further than what current forecasts expect. But rates probably won’t drop to the historic lows borrowers enjoyed throughout the past couple of years.

Should I get a HELOC? Pros and cons

If you’re looking to tap into your home’s equity, a HELOC might be the best way to do so right now. Unlike a cash-out refinance, you won’t have to get a whole new mortgage with a new interest rate, and you’ll likely get a better rate than you would with a home equity loan.

But HELOCs don’t always make sense. It’s important to consider the pros and cons.

HELOC pros

• Only pay interest on what you borrow
• Typically have lower rates than alternatives, including home equity loans, personal loans, and credit cards
• If you have a lot of equity, you could potentially borrow more than you could get with a personal loan

HELOC cons

• Rates are variable, meaning your monthly payments could go up
• Taking equity out of your home can be risky if property values decline or you default on the loan
• Minimum withdrawal amount may be more than you want to borrow

When will house prices come down?

Home prices are starting to decline, but we likely won’t see huge drops, even if there’s a recession.

The S&P Case-Shiller Home Price Index shows that prices are still up year-over-year, though they fell on a monthly basis in July and August. Fannie Mae researchers expect prices to decline 1.5% in 2023, while the MBA expects a 2.8% increase in 2023 and a 2.1% increase in 2024.

Sky high mortgage rates have pushed many hopeful buyers out of the market, slowing homebuying demand and putting downward pressure on home prices. But rates may start to drop next year, which would remove some of that pressure. The current supply of homes is also historically low, which will likely keep prices from dropping too far.

What happens to house prices in a recession?

House prices usually drop during a recession, but not always. When it does happen, it’s generally because fewer people can afford to purchase homes, and the low demand forces sellers to lower their prices.

How much mortgage can I afford?

A mortgage calculator can help you determine how much you can afford to borrow. Play around with different home prices and down payment amounts to see how much your monthly payment could be, and think about how that fits in with your overall budget.

Typically, experts recommend spending no more than 28% of your gross monthly income on housing expenses. This means your entire monthly mortgage payment, including taxes and insurance, shouldn’t exceed 28% of your pre-tax monthly income.

The lower your rate, the more you’ll be able to borrow, so shop around and get preapproved with multiple mortgage lenders to see who can offer you the best rate. But remember not to borrow more than what your budget can comfortably handle.