The 30-year fixed mortgage rate average, which acts as the metric of the mortgage market, has clearly resumed its climb above 4.5 percent and peaking 4.575 as of June 27. This is a little bit of a fallback from Tuesday's activity, however, which almost made the 4.6 percent mark.
What's important to note this week about the rates is not the climb; this was expected. Instead, it's the large amount of variation between lenders, which is a sign that competition is all over the board versus being clumped together and offering little choice for consumers. That said, most borrowers are seeing quotes and offers in an even higher range of 4.6 to 4.75 percent in exchange for decreased borrowing fees and one-time charges.
The challenge for lenders is convincing people that the current mid point 4 rates are still extremely good borrowing costs historically. The general public has become so used to low rates in the 3s that the current movement has scared people off. Yet, historically, 4.5 percent is an extremely low cost of interest for a home loan. For example, in the early 1980s people paid well over 10 percent. So lenders have their work cut out for them educating and re-educating a whole new generation of homebuyers, especially Millennials who are now coming into the homebuying market en masse.
So for consumers the realistic 30-year fixed average today is well between 4.6 and 4.75 percent, with the 15-year counterpart rising as well over 3.75 percent. The FHA/Veteran's Administration home loans have also jumped in on the bandwagon, resetting at 4.25 to 4.5 percent for eligible borrowers. Finally, the 5-year adjustable rate mortgage average is the last bastion of rates below 3 percent with a range of 2.8 to 3.75 percent. That said, few will see a loan actually below the 3 percent mark.