, , , , ,

BRAND FINANCE HOTELS 50 2023

Hilton checks in as the world’s most valuable hotel brand

  • Hotel industry sees gradual return to normality as pre-pandemic travel patterns resume while over half of top 50 hotel brands remain below pre-pandemic values
  • Hilton delivers exceptional service as the reigning champion of hotel brands, valued at US$11.7 billion
  • Le Méridien is named the fastest-growing hotel brand as a new entrant to Top 50 ranking
  • Conrad takes an extraordinary leap to become the world’s strongest hotel brand, with an AAA+ rating
  • Hilton has the highest Sustainability Perceptions Value (SPV), at US$565 million, while Taj has the highest Sustainability Perceptions Score, at 5.04 out of 10

Hotel industry sees gradual return to normality as pre-pandemic travel patterns resume, while over half of top 50 hotel brands remain below pre-pandemic values

After two years of global travel restrictions and economic uncertainty, the past year has witnessed an increasing return to pre-pandemic travel patterns. However, Brand Finance research finds that the hotel industry is slow to recover from the pandemic’s long-lasting effects, as 27 out of 50 hotel brands (54%) remain below their pre-pandemic values.

Hilton delivers exceptional service as the reigning champion of hotel brands, valued at US$11.7 billion

Hilton (brand value down 2% to US$11.7 billion) retains its title as the world’s most valuable hotel brand, according to the latest report from leading brand valuation consultancy, Brand Finance. 2022 was an exceptional year of brand value growth for Hilton, with revenue soaring as both business and leisure travel surged post-pandemic. This year’s result indicates a slight slowdown in this growth momentum, as the industry returns to a more normal trajectory. That said, Hilton’s brand value remains above its pre-pandemic level, and it is almost double that of runner-up, Hyatt (brand value up 3% to US$6.1 billion).

Henry Farr, Associate Director at Brand Finance, commented,

“In the post-pandemic world, Hilton has demonstrated remarkable resilience and a steadfast commitment to delivering exceptional experiences. With an unwavering focus on guest satisfaction, Hilton has not only recovered but has emerged stronger in several aspects, solidifying its position as a leading global brand. Through innovative strategies and a dedication to shifting consumer needs, it has retained its title as the world’s most valuable hotel brand.”

Le Méridien is named the fastest-growing hotel brand as a new entrant to Top 50 ranking

Le Méridien (brand value up 375% to US$669.4 million) checks into the 2023 top 50 ranking in 23rd as the fastest-growing hotel brand. Part of the Marriott (brand value up 33% to US$3.1 billion) International portfolio, Le Méridien has been expanding its presence across the globe in the past year. Most recently, Le Méridien established Le Méridien Melbourne. Its premium location and luxury features have attracted both tourists and locals, further boosting the hotel’s revenue from bookings in one of Australia’s most popular coastal cities. Other significant growth milestones for Le Méridien include its second hotel opening in New York City, which is hoped to boost its familiarity score in the US and globally.

Conrad takes an extraordinary leap to become the world’s strongest hotel brand, with an AAA+ rating

In addition to calculating brand value, Brand Finance also determines the relative strength of brands through a balanced scorecard of metrics evaluating marketing investment, stakeholder equity, and business performance. Compliant with ISO 20671, Brand Finance’s assessment of stakeholder equity incorporates original market research data from over 100,000 respondents in 38 countries and across 31 sectors.

Conrad (brand value up 65% to US$537.82 million) has jumped up 16 spots to 31st position overall, while jumping an astonishing 38 spots into the winning position for brand strength, scoring 91/100. Known for its luxurious options and personalised service, Conrad has boosted its brand strength this year through significant global expansion. Hilton opened six new Conrad Hotels and Resorts in various desirable locations, including LA and Shanghai, with the aim of enhancing its long-standing reputation for seamless luxury and exceptional hotel design.

Hilton has highest Sustainability Perceptions Value (SPV) at US$565 million, while Taj has the highest Sustainability Perceptions Score, at 5.04 out of 10

As part of its analysis, Brand Finance assesses the role that specific brand attributes play in driving overall brand value. One such attribute, is sustainability. Brand Finance assesses how sustainable specific brands are perceived to be, represented by a ‘Sustainability Perceptions Score’. This is an indexed score that provides a view of the role of sustainability in driving positive brand reputation. The value that is linked to sustainability perceptions, the ‘Sustainability Perceptions Value’, is then calculated for each brand.

Hilton has the highest Sustainability Perceptions Value (SPV) at US$565 million. Although Hilton has committed to becoming more sustainable, its position at the top of the SPV table is not an assessment of its overall sustainability performance. Rather, it indicates how much brand value it has tied up in sustainability perceptions. Hilton’s commitment to sustainability is evident through its ESG program, Travel with Purpose. The brand has set ambitious targets, aiming to reduce emissions intensity by 75% in Hilton-managed hotels and 56% in Hilton-franchised hotels by 2030.

India based hotels group, Taj (brand value up 19% to US$374.35 million) earns the highest Sustainability Perceptions Score in the Hotels 50 2023 ranking at 5.04 out of 10. In 2022, Taj’s parent company, IHCL, launched the Paathya sustainability programme, encompassing several key initiatives, including eliminate the use of single-use plastics across its hotels, and installing electric vehicle (EV) charging stations.

/by
, , , ,

Patrick Hansen Group Chief Executive Officer – Luxaviation

Patrick Hansen

Group Chief Executive Officer

Patrick Hansen was born in Luxembourg. He holds a Commercial Engineering degree from ICHEC, Brussels and an MBA Finance degree from McGill University, Montreal. He started his career in finance and banking in London and Moscow and successfully created several companies, one of which was sold to Nasdaq-quoted Company (MMW) and another one to a company listed on the Australian Stock Exchange (REA).

In 2007, he co-founded Edison Capital Partners S.A., an asset management company specialising in shipping, aviation and industrial participations. He founded Luxaviation Luxembourg in 2008 and became its Chief Executive Officer.

Luxaviation Group

/by
, , , , ,

Jumeirah Group Joins the Sustainable Hospitality Alliance for a More Responsible Future

Jumeirah Group Joins the Sustainable Hospitality Alliance for a More Responsible Future

United Arab Emirates, Dubai, January 2023: Jumeirah Group has become the newest member of the Sustainable Hospitality Alliance, joining forces with other world-leading hotel brands and partners to address key challenges and collectively accelerate towards a more responsible industry.

Operating a range of initiatives spanning both the environment and community engagement, the luxury hospitality leader and member of Dubai Holding is bolstering its commitment to sustainability through this partnership. Its eco initiatives include working to eliminate single-use plastics, beginning with the removal of plastic straws and transitioning to sustainable packaging across their properties and restaurants. In addition, the Group has begun to roll out onsite water bottling and filtration systems providing guests with safe bottled drinking water in glass or reusable bottles and preventing over nine million single-use plastic bottles from reaching landfills and the ocean per year.

Jumeirah Group has also played a pivotal role in protecting biodiversity through the Dubai Turtle Rehabilitation Project, releasing 2,050 rehabilitated turtles back to their natural habitat since its inception in 2004, combined with free environmental education programmes for school children. Other initiatives include setting up an on-site hydroponic farm to supply fresh produce to their restaurants which uses 70% less water per yield, and implementing innovative food tech systems to not only help reduce waste but also convert the waste to fertiliser for local use.

The Group is also focused on gender equality and community engagement. Through its partnership with Evolvin Women, it invites female placements from developing nations and provides training to build the skillsets for successful hospitality careers in their home countries, raising the economic potential within their own communities. The company, which recently appointed Katerina Giannouka as its first female CEO, also has robust corporate governance, combined with learning and development programmes, to support equal opportunity, gender parity, equal pay and other indicators of gender equality.

By joining the Sustainable Hospitality Alliance, Jumeirah Group has become part of the world’s leading responsible hospitality network, which brings together 40% of the industry by rooms along with strategic and supply chain partners to create shared solutions for environmental and social challenges. Their work includes climate action, water stewardship and responsible resourcing, alongside human rights, employability and equity, diversity and inclusion.

Thomas B. Meier, Chief Operating Officer of Jumeirah Group said: “Jumeirah Group is committed to identifying and co-creating new ways to incorporate sustainable and inclusive practices across our business ecosystem, to shape the best possible future where everyone can thrive. The hospitality industry touches many communities and industries worldwide, and we believe we have the opportunity with the Sustainable Hospitality Alliance to bring about transformative change, by working alongside our industry peers and finding practical solutions that will ultimately set the foundations for long term value creation and sustainable growth.”

 

Glenn Mandziuk, CEO of the Sustainable Hospitality Alliance, added: “Each new member brings a unique perspective and set of experiences which complement our existing community of responsible businesses, which enables us to better support the wider hotel industry around the world – at all stages of their sustainability journeys. We are delighted to welcome Jumeirah Group to the Alliance and look forward to their insights and contribution as, together, we support the industry to achieve net positive hospitality.”

For more information about Jumeirah Group, please visit www.jumeirah.com.

Instagram
@jumeirahgroup
#TimeExceptionallyWellSpent

/by
Grant Dalton, Emirates Team New Zealand CEO
, , , , , , , , ,

Italian brand SLAM becomes Official Apparel Supplier to America’s Cup Defender Emirates Team New Zealand

La marca italiana SLAM se convierte en proveedor oficial de indumentaria de America’s Cup Defender Emirates Team New Zealand

La marca italiana de ropa de navegación de alto rendimiento SLAM ha unido fuerzas con el cuatro veces ganador de la America’s Cup, el Emirates Team New Zealand, en la preparación de la 37.ª edición del icónico evento en Barcelona el próximo año.

Grant Dalton, Emirates Team New Zealand CEO

Grant Dalton, Emirates Team New Zealand CEO

SLAM, una marca global que se fundó en Génova en 1979, se sumará a la campaña de Nueva Zelanda como proveedor oficial de indumentaria mientras el equipo prepara su defensa de la America’s Cup en octubre de 2024.

Emirates Team New Zealand defendió con éxito la America’s Cup en Auckland en 2021 después de haber ganado previamente la competencia deportiva internacional más antigua del mundo en 1995, 2000 y luego nuevamente en 2017.

SLAM cambió de manos en 2021, fue comprada por VAM Investment Group y se embarcó en un nuevo viaje de alto perfil con el regatista campeón del mundo Enrico Chieffi a la cabeza como director ejecutivo y un fuerte enfoque en ropa de navegación de clase mundial técnicamente innovadora y de alto rendimiento.

El Emirates Team New Zealand defenderá la America’s Cup contra los ganadores de la Challenger Series, que será disputada por cinco equipos ultracompetitivos: el INEOS Britannia del Reino Unido dirigido por el multicampeón olímpico Sir Ben Ainslie; los dos veces ganadores de la Copa de Suiza Alinghi Red Bull Racing; el equipo italiano Luna Rossa Prada Pirelli dirigido por Max Sirena como director y patrón del equipo; American Magic dirigido por Terry Hutchinson con los ganadores de la medalla de oro olímpica Tom Slingsby y Paul Goodison; y el K-Challenge francés liderado por Stephan Kandler.

Enrico Chieffi, director ejecutivo de SLAM
El CEO de Emirates Team New Zealand, Grant Dalton, dijo: “SLAM ha demostrado su estrategia clara y positiva al trabajar para convertirse en una de las mejores marcas de ropa de navegación de alto rendimiento del mundo y todos nosotros en Emirates Team New Zealand esperamos trabajar junto a ellos en eso”. misión.

“Somos un equipo de más de 100 personas en una amplia gama de roles vitales, desde ingeniería hasta construcción de barcos y navegación, que deben trabajar juntos para ganar la Copa América. Esta filosofía se extiende a todos nuestros socios y SLAM y su compromiso con su indumentaria de calidad”.

El acuerdo hará que SLAM suministre ropa técnica al Emirates Team New Zealand luego de una colaboración en el desarrollo de materiales y diseño de productos. Se comercializará a nivel mundial una versión réplica de la indumentaria que viste el equipo con las mismas características técnicas.

Enrico Chieffi dijo: “Es un verdadero honor firmar este acuerdo y unirme a la campaña del Emirates Team New Zealand. Haremos todo lo posible para contribuir a su defensa de la America’s Cup. Grant Dalton y yo nos conocemos desde hace muchos años. Siempre ha existido una sintonía y un profundo respeto entre nosotros, incluso cuando a menudo fuimos protagonistas en los eventos más importantes de la vela mundial, primero como atletas y luego como gerentes.

“SLAM ha desempeñado un papel central en el mundo de la navegación durante más de 40 años y nuestro objetivo es establecer su lugar entre las mejores marcas de navegación de alto rendimiento del mundo. Esta asociación es un paso importante en ese camino”. The Emirates Team New Zealand la ropa técnica es el resultado de una estrecha colaboración en el desarrollo de materiales y diseño de productos”, agregó Chieffi, quien fue campeón mundial en las clases 470 y Star, doble regatista olímpico y táctico en el retador de la Copa América de Italia Il Moro di Venezia. en 1992.

Acerca de Slam
Slam S.p.A. es una reconocida marca italiana de ropa de navegación de alto rendimiento fundada en Génova en 1979. La empresa es propiedad de VAM Investment Group desde 2021, y Enrico Chieffi, campeón mundial, atleta olímpico, táctico de la Copa América y exitoso hombre de negocios, es el director ejecutivo. Con el apoyo clave del nuevo socio financiero y estratégico de la empresa, Chieffi se encarga de llevar adelante la misión de gestionar la nueva fase de desarrollo de SLAM, con el objetivo de desbloquear todo el potencial de la marca y establecer a SLAM entre las mejores marcas de navegación de alto rendimiento del mundo.

Acerca de VAM Investment Group spa
VAM es una sociedad de cartera de capital privado dirigida por el consejero delegado y accionista Marco Piana, controlada por el presidente Francesco Trapani y participada por Tages, una sociedad internacional de gestión de activos activa en fondos alternativos, infraestructura y, a través de sus accionistas, deuda en dificultades/NPL, con Umberto Quadrino como presidente y Panfilo Tarantelli como director general. VAM realiza inversiones de capital privado junto con empresarios y gerentes, proporcionando una combinación exclusiva en el mercado de conjuntos de habilidades comerciales, administrativas y financieras. A los socios de VAM se une un grupo cercano de oficinas familiares italianas e internacionales de alto perfil que conforman el VAM Investments Club. Recientemente, VAM ha llevado a cabo operaciones de inversión clave, incluida la del Grupo Florence, nombre líder en la cadena de suministro textil de Italia, y la cotización de un SPAC valorado en 210 millones en la bolsa de valores de Ámsterdam.

/by
2022 deliveries: Porsche posts a slight increase
, , , , ,

2022 deliveries: Porsche posts a slight increase

2022 deliveries: Porsche posts a slight increase

Porsche put in a robust performance in fiscal year 2022, with a slight increase in deliveries. The sports car manufacturer delivered a total of 309,884 cars over the past 12 months, 3 per cent more than in 2021 – despite several global crises.

Porsche fulfills the dreams of its customers, as strong delivery figures and the continued good order situation for fiscal year 2022 demonstrate. Worldwide, the sports car manufacturer delivered 309,884 vehicles to customers last year, an increase of 3 per cent over the previous year.

Detlev von Platen, Executive Board Member for Sales and Marketing at Porsche AG

“The many challenges caused by the war in Ukraine, interrupted supply chains and the ongoing semiconductor crisis have shaped the past year and put us to the test,” says Detlev von Platen, Executive Board Member for Sales and Marketing at Porsche AG. “So I am all the prouder of the entire Porsche team. In this difficult environment, we have succeeded in fulfilling the dream of owning a Porsche for more customers than ever before.”

Deliveries in Europe 7 per cent above previous year

In the Europe sales region, Porsche delivered 62,685 cars in 2022. This is 7 per cent more than in the previous year. In its home market of Germany, 29,512 customers took delivery of their cars – an increase of 3 per cent. In North America, Porsche recorded 79,260 deliveries, matching the previous year’s level. This was a particularly strong performance in view of logistical and supply challenges that started the year. In what remains the biggest single market, China, 93,286 cars were delivered to customers     (-2 per cent). The slight dip here is mainly due to the effects of the COVID pandemic. Waves of infection, COVID-related lockdowns and logistical challenges affected the deliveries. The Overseas and Emerging Markets sales region continues to develop positively with an increase in deliveries of 13 per cent. Some 45,141 cars were delivered to customers in this region during 2022.

SUVs remain popular among customers

The models with the highest demand again in 2022 were the brand’s SUVs: the Porsche Cayenne was delivered a total of 95,604 times. The Macan followed in second place with 86,724 units delivered. With 40,410 deliveries (+5 per cent) the Porsche 911 remains very popular as well. The sports saloon Panamera was delivered to 34,142 customers (+13 per cent).

The Taycan remains at a high level of orders. In 2022, Porsche delivered 34,801 cars from the model line worldwide (-16 percent). The decline was due to supply chain bottlenecks and limited component availability. Both issues affected the electric sports car in particular. Customers took delivery of 18,203 units of the 718 Boxster and 718 Cayman models.


Taycan GTS and Taycan GTS Sport Turismo

“On the sales side, results have been positive in 2022,” says von Platen. “Porsche is in a solid position. And we’re building on that basis.”

Porsche AG
Deliveries		 January – December
2021 2022 Difference
Worldwide 301,915 309,884 +3%
Germany 28,565 29,512 +3%
North America 79,166 79,260  0%
China 95,671 93,286 -2%
Europe (excluding Germany) 58,576 62,685 +7%
Overseas and Emerging Markets 39,937 45,141 +13%

Disclaimer

This announcement contains ‘forward-looking statements’ that reflect the Porsche’s current view of the future events.

Words such as ‘will’, ‘presume’, ‘as a goal’, ‘could’, ‘possibly’, ‘should’, ‘believe’, ‘intend’, ‘plan’, ‘in preparation’, and ‘aim’ are used to indicate statements relating to the future. These statements are subject to a variety of risks, uncertainties and assumptions. If any of these risks or uncertainties materialise or if the assumptions underlying Porsche’s forward-looking statements should prove unfounded, the actual results could differ significantly from the ones that Porsche has expressly or implicitly assumed in these statements. Forward-looking statements in this press release are based solely on the circumstances pertaining on the day of publication.

These forward-looking statements will not be updated later. These statements are true on the day of publication and may be overtaken by later events.

www.porsche.com

/by
, , , , ,

Current Mortgage Rates Drop Back Below 3%

Current Mortgage Rates Drop Back Below 3%

Money; Getty Images

Current mortgage rates moved lower this week with the average rate on a 30-year fixed-rate mortgage settling in at 2.99%, according to Freddie Mac. The average rate for a 15-year fixed-rate mortgage moved down to 2.23%, while the rate for 5/1 adjustable-rate mortgage increased to 2.52%.

Mortgage rates slipped back under 3% this week after decreasing by just 0.02 percentage points from last week. However, rates remain above the 2.86%-2.88% range that had dominated in August and September.

Mortgage interest rates for the week of October 7, 2021

Money

Mortgage rate trends

The average rate for most types of loans trended lower this week:

  • The current rate for a 30-year fixed-rate mortgage is 2.99% with 0.7 points paid, down 0.02 percentage points week-over-week. Last year, the interest rate averaged 2.87%The interest rate during the same week last year was 2.88%.
  • The current rate for a 15-year fixed-rate mortgage is 2.23% with 0.7 points paid, 0.05 percentage points lower than a week ago. A year ago, the 15-year rate was 2.37%.
  • The current rate on a 5/1 adjustable-rate mortgage is 2.52% with 0.3 points paid, up 0.04 percentage points from the previous week. A year ago, the 5/1 ARM rate was 2.89%.

“Mortgage rates continue to hover around three percent again this week due to rising economic and financial market uncertainties,” said Sam Khater, chief economist at Freddie Mac. “Unfortunately, with the expectation that both mortgage rates and home prices will continue to rise, competition remains high and housing affordability is declining.”

With home prices still near record highs, homebuyers are paying an average of $50 more on their mortgage payments over the last six weeks than earlier this year, according to a report from real estate brokerage Redfin.

Today’s mortgage rates and your monthly payment

The rate on your mortgage makes a big difference in how much home you can afford and the size of your monthly payments.

If you bought a $250,000 home and made a 20% down payment — $50,000 — you would end up with a starting loan balance of $200,000. On a $200,000 home loan with a fixed rate for 30 years:

  • At 3% interest rate = $843 in monthly payments (not including taxes, insurance, or HOA fees)
  • At 4% interest rate = $955 in monthly payments (not including taxes, insurance, or HOA fees)
  • At 6% interest rate = $1,199 in monthly payments (not including taxes, insurance, or HOA fees)
  • At 8% interest rate = $1,468 in monthly payments (not including taxes, insurance, or HOA fees)

You can experiment with a mortgage calculator to find out how much a lower rate or other changes could impact what you pay.

Other factors that determine how much you’ll pay each month include:

  • Loan Term: Choosing a 15-year mortgage instead of a 30-year mortgage will increase monthly mortgage payments but reduce the amount of interest paid throughout the life of the loan.
  • Fixed vs. ARM: The mortgage rates on adjustable-rate mortgages reset regularly (after an introductory period) and monthly payments change with it. With a fixed-rate loan payments remain the same throughout the life of the loan.
  • Taxes, HOA Fees, Insurance: Homeowners insurance premiums, property taxes and homeowners association fees are often bundled into your monthly mortgage payment. Check with your real estate agent to get an estimate of these costs.
  • Mortgage Insurance: Mortgage insurance costs up to 1% of your home loan’s value per year. Borrowers with conventional loans can avoid private mortgage insurance by making a 20% down payment or reaching 20% home equity. FHA borrowers pay a mortgage insurance premium throughout the life of the loan.
  • Closing Costs: Some buyers finance their new home’s closing costs into the loan, which adds to the debt and increases monthly payments. Closing costs generally run between 2% and 5% and the sale prices.

The latest information on current mortgage rates

Will current mortgage rates last?

Mortgage rates saw very little movement this week compared to last week, as the 30-year rate decreased by just 0.02 percentage points to 2.99%. Last week, the average rate jumped 0.13 percentage points to 3.01%. It was the first time rates crossed above 3% since June.

Despite today’s decline, there may be more upward pressure on rates over the coming weeks. COVID-19 infections are slowing down and consumer spending was higher than expected in August. If the September jobs report due out on Friday is strong, the Federal Reserve may start tightening monetary policy sooner rather than later, leading to higher rates.

For now, expect mortgage rates to stay relatively low with the strong possibility of increases over the coming weeks unless there is negative news on the economic front.

On Thursday, the yield on the 10-year Treasury note opened at 1.531%. There tends to be a spread of about 1.8 percentage points between the 10-year Treasury and average mortgage rates. This suggests rates could go higher.

How are mortgage rates impacting home sales?

The overall number of mortgage applications decreased by 6.9% for the week ending October 1, according to the Mortgage Bankers Association. The biggest drop occurred in the refinance loan category, which decreased by double digits week-over-week.

  • Purchase applications were down by 2% from the previous week and 13% less than the same week last year.
  • The number of refinance loan applications was down by 10% from the previous week and 16% lower year-over-year. Despite the drop, refinances are still making up most of the mortgage loan activity, representing almost 65% of all loan activity.

“Higher rates are reducing borrowers’ incentive to refinance, as declines were seen across all loan types,” said Joel Kan, MBA’s Associate vice president of economic and industry forecasting. “Purchase activity also fell, driven by a drop in conventional loan applications.”

Current Mortgage Rates Guide

What is a good interest rate on a mortgage?

Today’s mortgage rates are near historic lows. Freddie Mac’s average rates show what a borrower with a 20% down payment and a strong credit score might be able to get if they were to speak to a lender this week. If you are making a smaller down payment, have a lower credit score or are taking out a non-conforming (or jumbo) mortgage, you may see a higher rate. A good mortgage rate is one where you can comfortably afford the monthly payments and where the other loan details (such as the length of the loan, whether the rate is fixed or adjustable and other fees) fit your needs.

How much does the interest rate affect mortgage payments?

In general, the lower the interest rate the lower your monthly payments will be. For example —

  • If you have a $300,000 fixed-rate 30-year mortgage at 4% interest, your monthly payment will be $1,432 (not including property taxes and insurance). You’ll pay a total of $215,608 in interest over the full loan term.
  • The same-sized loan at 3% interest will have a monthly payment of $1,264. You will pay a total of $155,040 in interest — a savings of over $60,000.

You can use a mortgage calculator to determine how different mortgage rates and down payments will affect your monthly payment. Consider steps for improving your credit score in order to qualify for a better rate.

How are mortgage rates set?

Lenders use a number of factors to set prevailing rates each day. Every lender’s formula will be a little different but will take into account things like the current Federal Funds rate (a short-term rate set by the Federal Reserve), competitor rates and even how much staff they have available to underwrite loans.

In general, rates track the yields on the 10-year Treasury notes. Average mortgage rates are usually about 1.8 percentage points higher than the yield on the 10-year note. Yields matter because lenders don’t keep the mortgage they originate on their books for long. Instead, in order to free up money to keep originating more loans, lenders sell their mortgages to entities like Freddie Mac and Fannie Mae. These mortgages are then packaged into what are called mortgage-backed securities and sold to investors. Investors will only buy if they can earn a bit more than they can on the government notes.

Why is my mortgage rate higher than average?

Not all applicants will receive the very best rates when taking out a new mortgage or refinancing. Credit scores, loan term, interest rate types (fixed or adjustable), down payment size, home location and the loan size will all affect mortgage rates offered to individual home shoppers.

Rates also vary between mortgage lenders. It’s estimated that about half of all buyers only look at one lender, primarily because they tend to trust referrals from their real estate agent. Yet this means that they may miss out on a lower rate elsewhere.

Freddie Mac estimates that buyers who got offers from five different lenders averaged 0.17 percentage points lower on their interest rate than those who didn’t get multiple quotes. If you want to find the best rate and term for your loan, it makes sense to shop around first.

Should you refinance your mortgage when interest rates drop?

Determining whether it’s the right time to refinance your home loan or not involves a number of factors. Most experts agree you should consider refinancing if your current mortgage rate exceeds today’s mortgage rates by 0.75 percentage points. It doesn’t make sense to refinance every time rates decline a little bit because mortgage fees would cut into your savings. You also have to consider whether your credit score would qualify you for today’s best refinance rates.

Many online lenders can give you free rate quotes to help you decide whether the money you’d save in interest charges justifies the cost of a new loan. Try to get a quote with a soft credit check which won’t hurt your credit score.

You could enhance interest savings by going with a shorter loan term such as a 15-year mortgage. Your payments may be higher, but you could save in interest charges over time and you’d pay off your house sooner.

Should you buy mortgage points?

Many lenders sell mortgage points (also known as discount points). Buying points means you’d pay more up front to lower your mortgage rate which could save you money long-term. A mortgage discount point normally costs 1% of your loan amount and could shave 0.25 percentage points off your interest rate. (So, with a $200,000 mortgage loan, a point would cost $2,000.) Discount points only pay off if you keep the home long enough. Selling the home or refinancing the mortgage before you break even would short circuit the discount point strategy.

In some cases, it makes more sense to put extra cash toward your down payment instead of discount points If a larger down payment could help you avoid paying PMI premiums, for example.

How to shop for the best mortgage rate

Shopping around for the best mortgage rate can not only help you qualify for a lower rate and but also save money. Borrowers who get a rate quote from one additional lender are able to save $1,500 over the life of the loan, according to Freddie Mac. That number goes up to $3,000 if you get five additional quotes.

The best mortgage lender for you will be the one that can give you the lowest rate and the terms you want. Your local bank or credit union is one place to look. Online lenders have expanded their market share over the past decade and promise to get you pre-approved within minutes.

Shop around to compare rates and terms, and make sure your lender has the loan option you need. Not all lenders write USDA-backed mortgages or VA loans, for example. If you’re not sure about a lender’s credentials, ask for its NMLS number and search for online reviews.

Summary of current mortgage rates

Current mortgage rates are lower today, with the 30-year mortgage rate dropping 0.02 percentage points from last week. The 15-year rate also moved lower.

  • The current rate for a 30-year fixed-rate mortgage is 2.99% with 0.7 points paid, down 0.02 percentage points week-over-week. Last year, the interest rate averaged 2.87%The interest rate during the same week last year was 2.88%.
  • The current rate for a 15-year fixed-rate mortgage is 2.23% with 0.7 points paid, 0.05 percentage points lower than a week ago. A year ago, the 15-year rate was 2.37%.
  • The current rate on a 5/1 adjustable-rate mortgage is 2.52% with 0.3 points paid, up 0.04 percentage points from the previous week. A year ago, the 5/1 ARM rate was 2.89%.

 

/by