Mortgage rates play a key role in the overall cost of a mortgage. Unfortunately, mortgage rates have been very high as of late, making buying a home and taking out a mortgage very expensive compared to years past.
Considering this, buyers will have to budget accordingly to make sure their home purchase is financially doable. The article will outline how homebuyers in Washington State should navigate the real estate and mortgage market before buying a home.
During the first week of November 2023, the rate for a 30-year fixed-rate mortgage was 7.76%, and the rate for a 15-year fixed rate mortgage is currently at 7.03%.
High Washington Mortgage Rates
Last week, the government-sponsored mortgage corporation Freddie Mac announced that the average rate for a 30-year fixed mortgage sits at 7.76%, as mentioned. Rates have been on a steady increase – despite the odd fluctuations here and there – since early 2021.
In January 2021 – which is when rates stared to increase — mortgage rates in Washington State and across the nation were as low as 2.65% for a 30-year loan. Since then, rates have been on a steady incline.
Now, rates are just under the 8.0% mark. Granted, not all borrowers will qualify for the lowest mortgage rates. Washington home buyers with higher credit scores and other positive indicators tend to qualify for better interest rates. But the fact that we are seeing higher rates for 2023 means buyers must work even harder to qualify for a home loan.
Even the difference of one percent can make a massive difference in the overall amount of interest that would need to be paid over the life of a mortgage. Tens or even hundreds of thousands of dollars stand to be saved by Washington homeowners who refinance their mortgages and lock in at a rate that’s significantly lower than what they are stuck with right now.
But the rising rates have caused many homebuyer hopefuls and homeowners to put a pause on their plans of taking out a mortgage or refinancing.
MBA Reports Decreases in Purchase and Refinance Applications
According to the latest Mortgage Bankers Association (MBA) weekly survey, mortgage and refinance applications decreased from the week before.
As of the first week of November, mortgage applications decreased three weeks in a row as mortgage rates remained high. The current 30-year fixed rate has been sitting over the 7.0% mark since August 2023 and is close to 23-year highs. This is affecting both purchase and refinance mortgage contracts.
In fact, purchase applications dropped down to their lowest level in about three decades and refinance applications dipped to their lowest level since early 2023.
The Refinance Index showed a 4% decrease from the previous week, and was 12% lower compared to the same week in 2022.
According to a November 2nd report by the MBA:
“The Market Composite Index, a measure of mortgage loan application volume, decreased 2.1 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 3 percent compared with the previous week. The Refinance Index decreased 4 percent from the previous week and was 12 percent lower than the same week one year ago. The seasonally adjusted Purchase Index decreased 1 percent from one week earlier. The unadjusted Purchase Index decreased 2 percent compared with the previous week and was 22 percent lower than the same week one year ago.”
Earlier this year, the MBA predicted that the rate for a 30-year fixed mortgage would dip down below 6.0% by year-end. But as we can see, we’re nowhere near that point. In fact, the MBA has now revised its expectations and now anticipates that the average mortgage interest rate will remain above the 6.0% mark until 2025.
Different Products, Different Rates
It’s also worth mentioning that different loan products tend to have different rates. Washington State home buyers seeking the best possible mortgage rate should consider all of their financing options.
For example, adjustable mortgage loans (ARMs) usually start off with lower interest rates than their fixed counterparts — at least during the first few years. But the ARMs are also less predictable over the long term. So there’s a trade-off to be made. At the time of this writing, the mortgage rates for various loan products are as follows:
- 30-year fixed-rate mortgage rate: 7.76%
- 15-year fixed-rate mortgage rate: 7.03%
- 5/1 adjustable-rate mortgage rate: 6.06%
As you can see, the rate you get will depend on the type of mortgage product you apply for. Further, other factors will play a role, such as your credit score, financial profile, and the lender you work with.
Have Questions About Rates and Mortgages?
Are you thinking of buying a home in Washington and are ready to take advantage of today’s low interest rates? If so, Sammamish Mortgage can help. We are a local, family-owned company based in Bellevue, Washington and serve the entire state, as well as the broader Pacific Northwest region, including Idaho, Colorado, and Oregon since 1992. We offer a number of mortgage programs to suit your needs. Please contact us if you have mortgage-related questions.