Author: KEJATARIM

When gone awry, compensation plans (or a lack thereof) can cause a lot of problems, including pay disparities, inequity, employee dissatisfaction, confusion, and more. 

That’s why it’s so important to get it right and to be thoughtful and purposeful about defining your compensation philosophy and building a compensation plan that aligns with it. 

In this article, we’ll cover what a compensation philosophy is and how you can use it to design your first compensation plan for your organization. 

What is a compensation philosophy? How do you build one?

According to the Society for Human Resource Management, a compensation philosophy is a “formal statement documenting the company’s position about employee compensation. It explains the ‘why’ behind employee pay and creates a framework for consistency.”

During the Pando Horizons virtual event, Melanie Naranjo, the VP of People at Ethena, a compliance training platform, said building a compensation philosophy starts by defining your company’s values. It’s asking yourself, “Who are we as a company? What is it that we want to strive for? What are we optimizing for? What can we afford?”

When it came down to it, Naranjo said Ethena chose to optimize for attracting top talent, so their compensation policy reflects top-of-market value. They optimize to be at the 75th percentile or above of market value. As a result, Ethena’s largest expense is its people.

As they make offers, Naranjo and her team use their compensation philosophy to be consistent and make sure they don’t low-ball candidates. They also rolled out a “no negotiation” policy to help with that consistency; their first offer is their final offer. 

“The reason why we stand by that is because it means we aren’t forced to negotiate against ourselves. Hiring managers are incentivized to offer the highest amount that they think someone is worth from the start. You offer the most you can offer, and you have to be willing to walk away from a candidate if they say no,” Naranjo said. 

Compensation philosophy also comes down to what you can afford as a company. For example, Ethena knew it wanted to optimize for pay, so maybe there’s not as much money for benefits or perks. Or perhaps a company doesn’t have as much money to invest in pay, so they optimize for equity or flexibility. It’s about the full compensation package. 

A good compensation philosophy starts with deeply understanding your values as a company and what you want to optimize for. Then, it comes down to sticking to that philosophy and being consistent to avoid inequities.

Four steps to design and roll out your first compensation plan

Once you’ve decided what your compensation philosophy will be, it’s time to build a compensation plan. Here are four steps to design your first compensation plan:

1. Get buy-in from your executive leadership team

As with anything in business, it’s critical to get buy-in from your executive leadership team in order to design a successful compensation plan. 

One great way to do this is to involve the executive team in creating your compensation philosophy so they understand where you’re coming from, what values the philosophy is based on, what you’re optimizing for, and so on. Make sure they understand why the compensation philosophy is the way it is. 

Alexis McEvoy, the Chief People Officer at Chapter, describes this process as 80% science and 20% art. She says it’s about reminding leadership that the goal is to pay people well and to make sure the policies are fair and equitable. Make sure leadership understands market rates, especially in this fluctuating economy. 

McEvoy added that it’s critical to help your executive leadership team understand the risks if they choose to make a decision that doesn’t align with the compensation philosophy. For example, if an executive leader chooses to pay someone more than the pay band allows, help them understand the downstream effects of that decision and work to mitigate those risks. 

In the end, it’s about reminding leadership what they’re optimizing for, what the ultimate goal is as a company, and what kind of company they want to be.

2. Create standardized job levels and pay bands

A critical element of any good compensation plan or policy is to create standardized job levels and pay bands across the company. Group similar roles into job levels (or families, as some organizations call it) with a similar set of required competencies and skills. Then, create standardized pay bands for each job level.

Job levels and pay bands not only make it easier to design an equitable, transparent compensation plan, but they also make it easier for employees to understand where they stand in the organization and what’s required of them to move up. Too many companies skip job leveling and pay bands and assign compensation based on who’s willing to negotiate, which immediately leads to pay inequities company-wide. 

“It’s creating clarity and transparency for your employees who might be sitting there wondering, ‘How did you decide that this is how much I’m worth?’ You can point to something that’s public and show them where they fall on it and how you came up with it,” Naranjo said. “Anything that you can put in writing, that you can share with your teams, is always going to help.”

Learn how Pando can help you establish standardized job levels with competencies, skills, and compensation tied to each level. Schedule a demo.

3. Decide how you’ll pay across regions

If you’re designing a compensation plan for a hybrid or remote workforce, in particular, one very important early decision to make is how you’ll pay employees across regions. Will you pay based on the cost of living in each region? Will you pay the same across all regions? Will there be a tiered structure? Will you use different bands for different countries? Something in between?

Naranjo said Ethena uses a blended model. They blend all US markets together and pay the 75th percentile or above of that. While that can be super competitive for candidates from some markets, it might look less attractive to candidates from more expensive markets like San Francisco and New York City. Naranjo said the company has to be okay with that. 

“Candidates are welcome to feel how they like about it. Our job is to be really transparent and upfront so that when you join the company, you know that this is something you’re signing up for,” Naranjo said. “Some people might not be okay with that, and that’s okay. Maybe Ethena is not the company for you.”

“Embrace who you are, and don’t be scared to scare people away. The people who want to join based on your compensation philosophy as it is are, ideally, probably more likely to stick around,” Naranjo said. 

McEvoy said that if you’re not willing to be honest and transparent about something, you should ask why and work through what might actually be blocking you. More often than not, it’s better to be forthright.

“If you don’t give them the story, they’ll create it themselves. And you have no control over what people create when you’re not there to help move them in the right direction,” McEvoy said. 

One thing to keep in mind as you decide how you’ll pay across regions is the amount of administrative time it will take to pay differently based on region. Someone (likely on your team) will have to create that tiered structure and enforce it. Can your company afford that administrative time? Or is it ultimately more cost-effective to pay the same across all regions?

It’s also important to remember that this policy is not static. Your company can change it at any time based on the market or the company’s goals. (Just remember to state that in your compensation policy clearly!)

4. Decide how to roll out your compensation plan

First and foremost, it’s crucial to have leadership alignment before you roll out your compensation plan. And make sure you have everything written down. 

Once you have that in place, consider hosting a training for all of your managers. That way, you can train them on the compensation philosophy, how salary bands work, and how it all applies to performance reviews. 

Then, you can put out an FAQ that answers all the basic questions about your compensation philosophy and tackles the controversial questions you anticipate you’ll get. Make sure you store that information in a place that’s visible and easy to find. 

This is how Naranjo and the people team at Ethena handled the rollout of their compensation plan; they embraced the challenge and optimized for proactive transparency.

“We just answered the tough questions,” Naranjo said. 

Jacqueline (Jac) Meyer, Chief People Officer at Boll and Branch, added that it’s important to always share your compensation philosophy and salary band information with new hires, as well. 

McEvoy describes a good rollout plan as a pyramid. The smallest set of people who need to be in sync on the high-level compensation philosophy is at the top, and then you move down to managers, individual contributors, etc. 

“As you define those groups, ask yourself, ‘What do people currently think? What do they need to understand? And what is most important for us to make it a scalable thing that folks can run with on their own versus us having to field every single question?’” McEvoy said. 

“By doing that thought exercise upfront, it will help you figure out your communication strategy better, as well, as you filter down to larger groups,” she said. 

Conclusion

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Iran’s Supreme Leader Ali Hosseini Khamenei has called on Muslim states to cease oil and food exports to Israel, demanding an end to the bombardment of the Gaza Strip.

“The bombings on Gaza must stop immediately … the path of oil and food exports to the Zionist regime should be stopped,” Khamenei said in a speech on Wednesday, according to Iranian state media.

He suggested that the “people of Gaza have mobilised the public’s conscience by their patience,” referring to the pro-Palestinian protests around the world.

“Look at what’s happening in the world. In the UK, France, Italy, and the US, many people came out to the street and chanted slogans against Israel and the United States. They have lost their credibility and really, there is no remedy for them as they cannot justify Israel’s attack,” Khamenei said.

“The world of Islam shouldn’t forget in the case of Gaza it was the US, France, and the UK that stood against the oppressed people of Gaza, it wasn’t just the Zionist regime.”

Thousands of dead

Israel has promised to wipe out Tehran-backed Hamas, the armed group that rules Gaza, following an October 7 attack that Israel says killed 1,405 people and saw hundreds taken as captives.

Israel has launched an unprecedented bombardment of Gaza and imposed a siege on the enclave. Palestinian authorities say almost 8,800 people have been killed.

Iran’s clerical rulers have warned Israel of an escalation if does not end aggression against Palestinians, indicating that Tehran-backed proxies in the region are ready to act.

Iran’s top diplomat Hossein Amirabdollahian said on Tuesday that “it is natural that the resistance groups and movements do not remain silent against all these crimes” committed by Israel.

“They will not wait for anyone’s advice, therefore we need to use the last political opportunities to stop the war,” he continued, warning the situation could “get out of control”.

That statement came hours after Iran-aligned Houthi rebels in Yemen claimed they launched a “large number” of ballistic missiles and drones towards southern Israel, with the group promising to continue its attacks.

The same day, the Israeli military said its forces intercepted a “surface-to-surface missile” fired towards Israeli territory from the area of the Red Sea, saying it was “successfully intercepted” by the Arrow aerial defence system.

WASHINGTON (AP) — Republicans unanimously elected Rep. Mike Johnson as House speaker on Wednesday, eagerly elevating a deeply conservative but lesser-known leader to the major seat of U.S. power and ending for now the weeks of political chaos in their majority.

Johnson, 51, of Louisiana, swept through on the first ballot with support from all Republicans anxious to put the past weeks of tumult behind and get on with the business of governing. He was quickly sworn into office, second in line to the presidency.

“The people’s House is back in business,” Johnson declared after taking the gavel.

A lower-ranked member of the House GOP leadership team, Johnson emerged as the fourth Republican nominee in what had become an almost absurd cycle of political infighting since Kevin McCarthy’s ouster as GOP factions jockeyed for power. While not the party’s top choice for the gavel, the deeply religious and even-keeled Johnson has few foes and an important GOP backer: Donald Trump.

“I think he’s gonna be a fantastic speaker,” Trump said Wednesday at the New York courthouse where the former president, who is now the Republican front-runner for president in 2024, is on trial over a lawsuit alleging business fraud.

Three weeks on without a House speaker, the Republicans have been wasting their majority status — a maddening embarrassment to some, democracy in action to others, but not at all how the House is expected to function.

President Joe Biden called to congratulate the new speaker and said it’s “time for all of us to act responsibly” with challenges ahead to fund the government and provide aid for Ukraine and Israel.

“We need to move swiftly,” the president said in a statement.

In the House, far-right members had refused to accept a more traditional speaker, and moderate conservatives didn’t want a hard-liner. While Johnson had no opponents during a private party roll call late Tuesday, some two dozen Republicans did not vote, more than enough to sink his nomination.

But when GOP Conference Chair Rep. Elise Stefanik rose to introduce Johnson’s name Wednesday as their nominee, Republicans jumped to their feet for a standing ovation.

“House Republicans and Speaker Mike Johnson will never give up,” she said.

Democrats again nominated their leader Rep. Hakeem Jeffries of New York, criticizing Johnson as an architect of Trump’s legal effort to overturn the 2020 presidential election he lost to Democrat Biden.

With Republicans controlling the House only 221-212 over Democrats, Johnson could afford just a few detractors to win the gavel. He won 220-209, with a few absences.

Jeffries said House Democrats will find “common ground” work with Republicans whenever possible for the “good of the country.”

Lawmakers quickly reconvened to get back to work, approving a resolution saying the House “stands with Israel” and “condemns Hamas’ brutal war.” Next, they turned to a stalled government funding bill.

Overnight the endorsements for Johnson started pouring in, including from the failed speaker hopefuls. Rep. Jim Jordan, the hard-charging Judiciary Committee chairman backed by Trump, gave his support, as did Majority Leader Steve Scalise, the fellow Louisiana congressman rejected by Jordan’s wing, who stood behind Johnson after he won the nomination.

“Mike! Mike! Mike!” lawmakers chanted at a press conference after the late-night internal vote, surrounding Johnson and posing for selfies in a show of support.

Anxious and exhausted, Republican lawmakers are desperately trying to move on.

Johnson’s rise comes after a tumultuous month, capped by a head-spinning Tuesday that within a span of a few hours saw one candidate, Rep. Tom Emmer, the GOP Whip, nominated and then quickly withdraw when it became clear he would be the third candidate unable to secure enough support from GOP colleagues after Trump bashed his nomination.

“He wasn’t MAGA,” said Trump, referring to his Make America Great Again campaign slogan.

Attention quickly turned to Johnson. A lawyer specializing in constitutional issues, Johnson had rallied Republicans around Trump’s legal effort to overturn the 2020 election results.

Elevating Johnson to speaker gives Louisianians two high-ranking GOP leaders, putting him above Scalise.

Affable and well liked, colleagues swiftly started giving Johnson their support. In no time, his name replaced McCarthy’s on the sign outside the speaker’s office in the Capitol.

The congressman, who drew on his Christian beliefs, said to the American people watching: “Our mission here is to serve you well and to restore the people’s faith in this House.”

Rep. Matt Gaetz, R-Fla., who led a small band of hard-liners to engineer McCarthy’s ouster at the start of the month, posted on social media that “Mike Johnson won’t be the Speaker the Swamp wants but, he is the Speaker America needs.”

Republicans have been flailing all month, unable to conduct routine business as they fight amongst themselves with daunting challenges ahead.

The federal government risks a shutdown in a matter of weeks if Congress fails to pass funding legislation by a Nov. 17 deadline to keep services and offices running. More immediately, President Biden has asked Congress to provide $105 billion in aid — to help Israel and Ukraine amid their wars and to shore up the U.S. border with Mexico. Federal aviation and farming programs face expiration without action.

Many hard-liners have been resisting a leader who voted for the budget deal that McCarthy struck with Biden earlier this year, which set federal spending levels that far-right Republicans don’t agree with and now want to undo. They are pursuing steeper cuts to federal programs and services with next month’s funding deadline.

Rep. Marjorie Taylor Greene of Georgia said she wanted assurances the candidates would pursue impeachment inquiries into Biden and other top Cabinet officials.

In all, some 15 congressmen, but no women, competed for the gavel over the past several weeks.

During the turmoil, the House was led by a speaker pro tempore, Rep. Patrick McHenry, R-N.C., the bow tie-wearing chairman of the Financial Services Committee. His main job was to elect a more permanent speaker.

Some Republicans — and Democrats — wanted to give McHenry more power to get on with the routine business of governing. But McHenry, the first person to be in the position that was created in the aftermath of the Sept. 11, 2001, terror attacks as an emergency measure, declined to back those overtures. He, too, received a standing ovation.

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Associated Press writers Jill Colvin in New York and Darlene Superville contributed to this report.

Thursday marks World Teachers’ Day. Photo: Gallo Images/Rapport

While teacher education programmes have been overhauled to include the importance of social justice and democratic forms of engagement, tensions reside in the contextual cultures of schools, writes Nuraan Davids.

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World Teachers’ Day is celebrated annually on 5 October to acknowledge teachers’ important role in educating and nurturing the next generation of upstanding citizens that every society needs. 

While one would like to highlight the positive contributions of teachers on such a day, the reality is that South African schools are unfortunately filled with some teachers who cannot be trusted – neither in their teaching capacity nor in their hearts to treat all pupils with dignity and respect. All teachers cannot be trusted to act ethically in relation to their pupils or their profession. 

At the height of the ‘#BlackLivesMatter’ protests, following the murder of George Floyd by a police officer in Minneapolis in 2020, pupils across South Africa took to social media under the banner @yousilenceweamplify to expose their own experiences of harm by certain teachers at historically ‘white’ schools.

READ | Crawford teacher’s racist lesson: Experts question who is teaching educators about diversity and discrimination

Although reduced to a series of Instagram postings, the accounts captured entire schooling careers characterised by subjections to racism, ridicule, exclusion, and humiliation by a few teachers. Underscoring narratives of painful encounters and exchanges are profound pupil experiences of disappointment and mistrust not only in teachers but in their own capacities to be who they are and to pursue what they desire to become. 

Protection of school’s image 

While a few schools mentioned in the learners’ reports responded with serious intentions to revisit institutional cultures and traditions, as well as specific teachers’ conduct, most school principals preferred to interpret the social media accounts as baseless allegations. Ironically, the reluctance by schools in owning the experiences highlighted in @yousilenceweamplify, stems from a fear of losing or compromising the trust placed in the school by learners and parents. They fear that by acknowledging that some (if not all) of the social media accounts are true, or if they make available the information gleaned from investigations, that those implicated, as well as the school, will be brought into disrepute. 

There is, therefore, a pre-emptive position of protecting the image of the school, so that the mistrust experienced by some learners is not transferred onto the school. Hence, in order for them to retain the trust of parents and learners, it is better for them to take the risk of not attending to the allegations made by the learners on @yousilenceweamplify, than to risk their trustworthiness by acknowledging that there are indeed incidents of structural racism and othering at the schools. It also reflects a judgment by the school about the school as being more trustworthy than the complaints made by some pupils.

READ | OPINION: Palesa Morudu Rosenberg  – Fish Hoek High meltdown – doing the diversity grift

The @yousilenceweamplify reports show that most schools have not succeeded in creating and cultivating integrated learning and social spaces for learners. Thus, we must pay closer attention to our schools, not only as schools but as the bedrocks of our society. Post-apartheid educational policies are replete with references to ‘the teacher’, with no attentive pause to considering who ‘the teacher’ is, and how teachers perceive their professional role in a changing society. It is not just that teachers were largely excluded from the design and formation of most policies that directly impacted their roles and responsibilities. It is also the case that no attention has been given to the reality that most teachers at desegregated schools had previously only taught in segregated settings. 

Potential critics might counter that we have had nearly 30 years for teacher education programmes to get it right and ensure that the kinds of teachers being prepared know how to engage with diversity and difference and understand the criticality of their roles as caring and trusting teachers. Teacher education programmes have indeed been overhauled to include the importance of social justice and democratic forms of engagement. 

Misaligned 

The arising tensions, however, reside in the contextual cultures of schools. On the one hand, schools have retained their historical racial identities, both in terms of teacher and pupil demography, unreflective of the country’s diversity. On the other hand, in desegregated schools, learners, who are not connected with the historical identity of a school are still not integrated and often struggle to find a sense of inclusion and trust. It seems fair to argue, therefore, that most of our schools are wholly misaligned from what the myriad educational policies have in mind. 

Efforts at diversifying and democratising schools, as envisaged in a democratic society, cannot discount the critical and powerful role and influence of teachers. Firstly, it is imperative to understand that an idealised persona of ‘the teacher’ simply does not exist. There are only teachers whose professional identities are deeply embedded in their own personal beliefs and values and who, at times, struggle to reconcile these with the complexities of teaching and engaging with a diverse classroom of learners. Teachers are not mythical beings. They are not immune to the kinds of prejudices that sustained apartheid for 46 years. They are also not above the racism that persists in most communities across the country. 

Secondly, teacher education programmes need to be especially cognisant and reflective of the demands of teaching in our schools. This includes awakening pre-service teachers to their own biases and stereotypes so that they might be open to learning from and with difference. 

Thirdly, when teachers betray the trust afforded to them by their profession, parents and learners, the harm they inflict is not limited to a momentary lapse in judgment. There are long-term consequences for young people in how they see themselves, how they come to their learning and how they trust in their own relationships. The matter of trust, therefore, is critical not only in teaching-learning encounters but for the kinds of citizens schools produce and cultivate. 

– Nuraan Davids is Professor of Philosophy of Education and Chair of the Department of Education Policy Studies at Stellenbosch University. This article is based, in part, on her presentation at the Remgro Schools’ mini-conference.

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Disclaimer: News24 encourages freedom of speech and the expression of diverse views. The views of columnists published on News24 are therefore their own and do not necessarily represent the views of News24. 

Terra’s re-pegging is in focus as the community votes to stop minting.

The minting of TerraClassicUSD (USTC) will be terminated following an important decision ended last week. A proposal submitted on September 14 aimed to stop all minting and reminting of USTC and facilitate the re-peg through the burning of the stablecoin supply. The proposal passed on September 21 with 59.42% of the vote.

With this new development, the community expects that burning tokens could eventually restore USTC’s peg to the US dollar. As described, “this proposal opens the door for institutions like Binance to start burning USTC knowing that the minting and reminting is over.”

TerraUSD is Back in Action?

TerraUSD is an algorithmic stablecoin linked to the notorious blockchain ecosystem Terra Classic, in addition to its sister token LUNA. The stablecoin aimed to maintain a value of $1 for each USTC (formerly UST).

However, in May 2022, the value of LUNA collapsed from over $120 to zero, wiping out over $50 billion in market capitalization of UST/LUNA and causing over $400 billion in losses for the broader cryptocurrency markets.

The Terra saga was a major setback for the cryptocurrency industry. It caused a crisis of trust across the broad communities and raised serious questions about the viability of algorithmic stablecoins. The event had a cascading effect on other crypto projects, with many crypto companies declaring insolvency within months.

On the other hand, the Terra collapse has accelerated global regulatory scrutiny. Earlier this year, the European Union (EU) passed the Markets in Crypto Assets (MiCA) Regulations.

Stablecoin issuers and Crypto Asset Service Providers (CASPs) must comply with these new rules to operate in the region.

Hong Kong was also among the first to step up to regulate stablecoins. The country plans to establish a regulatory framework for stablecoins by the end of 2024. The country’s regulators are reportedly collecting public comments on stablecoins.

Terra Classic and FTX in Revival Efforts

The collapse of the FTX exchange, under the management of Sam Bankman-Fried (SBF), was one of the most scandalous events in crypto history, in addition to the Terra/LUNA crash. According to recent reports, both entities are finding ways to rejoin the crypto market.

FTX, now under new leadership, is engaged in discussions with potential investors as they prepare to redefine the global exchange’s future, according to Wall Street Journals. CEO John J. Ray III also confirmed this strategic plan.

Since insolvency, FTX’s new management team has been working to recover assets to repay creditors and customers. The revival plan aims to speed up the repayment process. Plus, it may help the company deal with extremely high costs for consulting, operating, and pursuing legal proceedings.

However, FTX’s former CEO, Sam Bankman-Fried (SBF), has voiced opposition to the restructuring plan.

The Terra community, on the other hand, is divided regarding the project’s revival. In May 2022, Terraform Labs announced the launch of Terra 2.0, a fork blockchain from Terra Classic with its own native token, LUNA.

Do Kwon, co-founder of Terraform Labs, who is currently in custody in Montenegro, revealed in February this year that he was developing new products for Terra 2.0.

Terra 2.0 (LUNA) is committed to resolving congestion, which was one of the reasons behind the withdrawal and deposit problems with Luna Classic (LUNC), TerraClassicUSD (USTC), Anchor Protocol (ANC) and Mirror Protocol (MIR).

However, some Terra Classic investors have chosen to support the original blockchain.

While the confidence in Terra Classic and FTX has significantly decreased, it’s undeniable that these two initiatives were formerly impactful forces in the crypto sector, and many loyal users have continued to support the projects. But only time will tell if these initiatives can overcome their past setbacks and chart a new course for their future.

Mortgage rates over the last seven days were varied, but an important rate moved up. Average 15-year fixed mortgage rates receded, while average 30-year fixed mortgage rates grew. We also saw a downward slide in the average rate of 5/1 adjustable-rate mortgages.

In March 2022, the Federal Reserve stepped in to combat surging inflation by hiking its key interest rate. Mortgage rates, which are not set by the central bank but are indirectly influenced by rate hikes, increased alongside. After 11 nearly consecutive rate increases, average mortgage rates are now above 7%.

While inflation has dropped from its record highs, it’s still above target. That means the Fed could continue to raise rates as it sees fit to increase the cost of borrowing and slow down the economy.

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About these rates: Like CNET, Bankrate is owned by Red Ventures. This tool features partner rates from lenders that you can use when comparing multiple mortgage rates.

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However, experts predict the Fed will hold off on another rate increase during its September meeting this week. Progress on inflation and other key economic indicators may ease some of the upward pressure on mortgage rates. But, if future inflation data comes in hotter than expected, mortgage rates could keep going up in 2023.

Fluctuations in the mortgage and housing markets are always going to happen. That’s why experts say it’s a good idea for homebuyers to focus on what they can control: getting the best rate for their financial situation.

To increase your odds of qualifying for the lowest rate available, take steps to improve your credit score and save for a down payment. Also, be sure to look at the annual percentage rate, or APR, which reflects the mortgage interest rate plus other borrowing charges. By looking at the total cost of borrowing from multiple lenders, you can make a more accurate apples-to-apples comparison.

30-year fixed-rate mortgages

The 30-year fixed-mortgage rate average is 7.59%, which is a growth of 3 basis points from seven days ago. (A basis point is equivalent to 0.01%.) Thirty-year fixed mortgages are the most frequently used loan term. A 30-year fixed rate mortgage will usually have a smaller monthly payment than a 15-year one — but usually a higher interest rate. Although you’ll pay more interest over time — you’re paying off your loan over a longer timeframe — if you’re looking for a lower monthly payment, a 30-year fixed mortgage may be a good option.

15-year fixed-rate mortgages

The average rate for a 15-year, fixed mortgage is 6.81%, which is a decrease of 1 basis point from seven days ago. Compared to a 30-year fixed mortgage, a 15-year fixed mortgage with the same loan value and interest rate will have a bigger monthly payment. But a 15-year loan will usually be the better deal, as long as you’re able to afford the monthly payments. These include usually being able to get a lower interest rate, paying off your mortgage sooner, and paying less total interest in the long run.

5/1 adjustable-rate mortgages

A 5/1 ARM has an average rate of 6.54%, a decrease of 1 basis point compared to a week ago. You’ll typically get a lower interest rate (compared to a 30-year fixed mortgage) with a 5/1 ARM in the first five years of the mortgage. However, changes in the market could cause your interest rate to increase after that time, as detailed in the terms of your loan. If you plan to sell or refinance your house before the rate changes, an adjustable-rate mortgage could make sense for you. Otherwise, changes in the market mean your interest rate might be significantly higher once the rate adjusts.

Mortgage rate trends

Mortgage rates were historically low throughout most of 2020 and 2021 but increased steadily throughout 2022 as the Federal Reserve began aggressively hiking interest rates. The top question is what the rest of 2023 has in store for prospective homebuyers.

“Today’s high mortgage rates are not the only challenge we have in the current market,” said Erin Sykes, chief economist at Nest Seekers International. “The combination of high interest rates plus sustained property prices and persistent inflation are making day-to-day life more expensive.”

While experts say mortgage rates are unlikely to return to the rock-bottom levels in the early pandemic, there’s a good chance we could see mortgage rates dip before the end of the year.

In order for that to happen, though, Sykes says we need to see inflation pull back on a consistent basis for at least four to six readings. If the federal funds rate remains steady, that should also help stabilize mortgage rates going into 2024.

Fannie Mae calls for the average 30-year fixed mortgage rate to close out the year at 7.1%. 

30-year fixed-rate mortgages

The 30-year fixed-mortgage rate average is 7.59%, which is a growth of 3 basis points from seven days ago. (A basis point is equivalent to 0.01%.) Thirty-year fixed mortgages are the most frequently used loan term. A 30-year fixed rate mortgage will usually have a smaller monthly payment than a 15-year one — but usually a higher interest rate. Although you’ll pay more interest over time — you’re paying off your loan over a longer timeframe — if you’re looking for a lower monthly payment, a 30-year fixed mortgage may be a good option.

15-year fixed-rate mortgages

The average rate for a 15-year, fixed mortgage is 6.81%, which is a decrease of 1 basis point from seven days ago. Compared to a 30-year fixed mortgage, a 15-year fixed mortgage with the same loan value and interest rate will have a bigger monthly payment. But a 15-year loan will usually be the better deal, as long as you’re able to afford the monthly payments. These include usually being able to get a lower interest rate, paying off your mortgage sooner, and paying less total interest in the long run.

5/1 adjustable-rate mortgages

A 5/1 ARM has an average rate of 6.54%, a decrease of 1 basis point compared to a week ago. You’ll typically get a lower interest rate (compared to a 30-year fixed mortgage) with a 5/1 ARM in the first five years of the mortgage. However, changes in the market could cause your interest rate to increase after that time, as detailed in the terms of your loan. If you plan to sell or refinance your house before the rate changes, an adjustable-rate mortgage could make sense for you. Otherwise, changes in the market mean your interest rate might be significantly higher once the rate adjusts.

Mortgage rate trends

Mortgage rates were historically low throughout most of 2020 and 2021 but increased steadily throughout 2022 as the Federal Reserve began aggressively hiking interest rates. The top question is what the rest of 2023 has in store for prospective homebuyers.

“Today’s high mortgage rates are not the only challenge we have in the current market,” said Erin Sykes, chief economist at Nest Seekers International.

While inflation has dropped from its record highs, it’s still above target. That means the Fed could continue to raise rates as it sees fit to increase the cost of borrowing and slow down the economy.

However, experts predict the Fed will hold off on another rate increase during its September meeting this week. Progress on inflation and other key economic indicators may ease some of the upward pressure on mortgage rates. But, if future inflation data comes in hotter than expected, mortgage rates could keep going up in 2023.

Fluctuations in the mortgage and housing markets are always going to happen. That’s why experts say it’s a good idea for homebuyers to focus on what they can control: getting the best rate for their financial situation.

To increase your odds of qualifying for the lowest rate available, take steps to improve your credit score and save for a down payment. Also, be sure to look at the annual percentage rate, or APR, which reflects the mortgage interest rate plus other borrowing charges. By looking at the total cost of borrowing from multiple lenders, you can make a more accurate apples-to-apples comparison.

30-year fixed-rate mortgages

The 30-year fixed-mortgage rate average is 7.59%, which is a growth of 3 basis points from seven days ago. (A basis point is equivalent to 0.01%.) Thirty-year fixed mortgages are the most frequently used loan term. A 30-year fixed rate mortgage will usually have a smaller monthly payment than a 15-year one — but usually a higher interest rate. Although you’ll pay more interest over time — you’re paying off your loan over a longer timeframe — if you’re looking for a lower monthly payment, a 30-year fixed mortgage may be a good option.

15-year fixed-rate mortgages

The average rate for a 15-year, fixed mortgage is 6.81%, which is a decrease of 1 basis point from seven days ago. Compared to a 30-year fixed mortgage, a 15-year fixed mortgage with the same loan value and interest rate will have a bigger monthly payment. But a 15-year loan will usually be the better deal, as long as you’re able to afford the monthly payments. These include usually being able to get a lower interest rate, paying off your mortgage sooner, and paying less total interest in the long run.

5/1 adjustable-rate mortgages

A 5/1 ARM has an average rate of 6.54%, a decrease of 1 basis point compared to a week ago. You’ll typically get a lower interest rate (compared to a 30-year fixed mortgage) with a 5/1 ARM in the first five years of the mortgage. However, changes in the market could cause your interest rate to increase after that time, as detailed in the terms of your loan. If you plan to sell or refinance your house before the rate changes, an adjustable-rate mortgage could make sense for you. Otherwise, changes in the market mean your interest rate might be significantly higher once the rate adjusts.

Mortgage rate trends

Mortgage rates were historically low throughout most of 2020 and 2021 but increased steadily throughout 2022 as the Federal Reserve began aggressively hiking interest rates. The top question is what the rest of 2023 has in store for prospective homebuyers.

“Today’s high mortgage rates are not the only challenge we have in the current market,” said Erin Sykes, chief economist at Nest Seekers International.

11%20nearly%20consecutive%20rate%20increases,%20average%20mortgage%20rates%20are%20now%20above%207%.%20

While%20inflation%20has%20dropped%20from%20its%20record%20highs,%20it%E2%80%99s%20still%20above%20target.%20That%20means%20the%20Fed%20could%20continue%20to%20raise%20rates%20as%20it%20sees%20fit%20to%20increase%20the%20cost%20of%20borrowing%20and%20slow%20down%20the%20economy.%20

However,%20experts%20predict%20the%20Fed%20will%20hold%20off%20on%20another%20rate%20increase%20during%20its%20September%20meeting%20this%20week.%20Progress%20on%20inflation%20and%20other%20key%20economic%20indicators%20may%20ease%20some%20of%20the%20upward%20pressure%20on%20mortgage%20rates.%20But,%20if%20future%20inflation%20data%20comes%20in%20hotter%20than%20expected,%20mortgage%20rates%20could%20keep%20going%20up%20in%202023.

Fluctuations%20in%20the%20mortgage%20and%20housing%20markets%20are%20always%20going%20to%20happen.%20That%E2%80%99s%20why%20experts%20say%20it%E2%80%99s%20a%20good%20idea%20for%20homebuyers%20to%20focus%20on%20what%20they%20can%20control:%20getting%20the%20best%20rate%20for%20their%20financial%20situation.

To%20increase%20your%20odds%20of%20qualifying%20for%20the%20lowest%20rate%20available,%20take%20steps%20to%20improve%20your%20credit%20score%20and%20save%20for%20a%20down%20payment.%20Also,%20be%20sure%20to%20look%20at%20the%20annual%20percentage%20rate,%20or%20APR,%20which%20reflects%20the%20mortgage%20interest%20rate%20plus%20other%20borrowing%20charges.%20By%20looking%20at%20the%20total%20cost%20of%20borrowing%20from%20multiple%20lenders,%20you%20can%20make%20a%20more%20accurate%20apples-to-apples%20comparison.

30-year%20fixed-rate%20mortgages

The%2030-year%20fixed-mortgage%20rate%20average%20is%207.59%,%20which%20is%20a%20growth%20of%203%20basis%20points%20from%20seven%20days%20ago.%20(A%20basis%20point%20is%20equivalent%20to%200.01%.)%20Thirty-year%20fixed%20mortgages%20are%20the%20most%20frequently%20used%20loan%20term.%20A%2030-year%20fixed%20rate%20mortgage%20will%20usually%20have%20a%20smaller%20monthly%20payment%20than%20a%2015-year%20one%20–%20but%20usually%20a%20higher%20interest%20rate.%20Although%20you’ll%20pay%20more%20interest%20over%20time%20–%20you’re%20paying%20off%20your%20loan%20over%20a%20longer%20timeframe%20–%20if%20you’re%20looking%20for%20a%20lower%20monthly%20payment,%20a%2030-year%20fixed%20mortgage%20may%20be%20a%20good%20option.

15-year%20fixed-rate%20mortgages

The%20average%20rate%20for%20a%2015-year,%20fixed%20mortgage%20is%206.81%,%20which%20is%20a%20decrease%20of%201%20basis%20point%20from%20seven%20days%20ago.%20Compared%20to%20a%2030-year%20fixed%20mortgage,%20a%2015-year%20fixed%20mortgage%20with%20the%20same%20loan%20value%20and%20interest%20rate%20will%20have%20a%20bigger%20monthly%20payment.%20But%20a%2015-year%20loan%20will%20usually%20be%20the%20better%20deal,%20as%20long%20as%20you’re%20able%20to%20afford%20the%20monthly%20payments.%20These%20include%20usually%20being%20able%20to%20get%20a%20lower%20interest%20rate,%20paying%20off%20your%20mortgage%20sooner,%20and%20paying%20less%20total%20interest%20in%20the%20long%20run.

5/1%20adjustable-rate%20mortgages

A%205/1%20ARM%20has%20an%20average%20rate%20of%206.54%,%20a%20decrease%20of%201%20basis%20point%20compared%20to%20a%20week%20ago.%20You’ll%20typically%20get%20a%20lower%20interest%20rate%20(compared%20to%20a%2030-year%20fixed%20mortgage)%20with%20a%205/1%20ARM%20in%20the%20first%20five%20years%20of%20the%20mortgage.%20However,%20changes%20in%20the%20market%20could%20cause%20your%20interest%20rate%20to%20increase%20after%20that%20time,%20as%20detailed%20in%20the%20terms%20of%20your%20loan.%20If%20you%20plan%20to%20sell%20or%20refinance%20your%20house%20before%20the%20rate%20changes,%20an%20adjustable-rate%20mortgage%20could%20make%20sense%20for%20you.%20Otherwise,%20changes%20in%20the%20market%20mean%20your%20interest%20rate%20might%20be%20significantly%20higher%20once%20the%20rate%20adjusts.

Mortgage%20rate%20trends

Mortgage%20rates%20were%20historically%20low%20throughout%20most%20of%202020%20and%202021%20but%20increased%20steadily%20throughout%202022%20as%20the%20Federal%20Reserve%20began%20aggressively%20hiking%20interest%20rates.%20The%20top%20question%20is%20what%20the%20rest%20of%202023%20has%20in%20store%20for%20prospective%20homebuyers.%20

%E2%80%9CToday%E2%80%99s%20high%20mortgage%20rates%20are%20not%20the%20only%20challenge%20we%20have%20in%20the%20current%20market,%E2%80%9D%20said%20Erin%20Sykes,%20chief%20economist%20at%20Nest%20Seekers%20International.”>https://www.cnet.com/personal-finance/banking/the-fed-just-hiked-rates-again-that-means-different-things-for-your-money>11 nearly consecutive rate increases, average mortgage rates are now above 7%.

While inflation has dropped from its record highs, it’s still above target. That means the Fed could continue to raise rates as it sees fit to increase the cost of borrowing and slow down the economy.

However, experts predict the Fed will hold off on another rate increase during its September meeting this week. Progress on inflation and other key economic indicators may ease some of the upward pressure on mortgage rates. But, if future inflation data comes in hotter than expected, mortgage rates could keep going up in 2023.

Fluctuations in the mortgage and housing markets are always going to happen. That’s why experts say it’s a good idea for homebuyers to focus on what they can control: getting the best rate for their financial situation.

To increase your odds of qualifying for the lowest rate available, take steps to improve your credit score and save for a down payment. Also, be sure to look at the annual percentage rate, or APR, which reflects the mortgage interest rate plus other borrowing charges. By looking at the total cost of borrowing from multiple lenders, you can make a more accurate apples-to-apples comparison.

30-year fixed-rate mortgages

The 30-year fixed-mortgage rate average is 7.59%, which is a growth of 3 basis points from seven days ago. (A basis point is equivalent to 0.01%.) Thirty-year fixed mortgages are the most frequently used loan term. A 30-year fixed rate mortgage will usually have a smaller monthly payment than a 15-year one — but usually a higher interest rate. Although you’ll pay more interest over time — you’re paying off your loan over a longer timeframe — if you’re looking for a lower monthly payment, a 30-year fixed mortgage may be a good option.

15-year fixed-rate mortgages

The average rate for a 15-year, fixed mortgage is 6.81%, which is a decrease of 1 basis point from seven days ago. Compared to a 30-year fixed mortgage, a 15-year fixed mortgage with the same loan value and interest rate will have a bigger monthly payment. But a 15-year loan will usually be the better deal, as long as you’re able to afford the monthly payments. These include usually being able to get a lower interest rate, paying off your mortgage sooner, and paying less total interest in the long run.

5/1 adjustable-rate mortgages

A 5/1 ARM has an average rate of 6.54%, a decrease of 1 basis point compared to a week ago. You’ll typically get a lower interest rate (compared to a 30-year fixed mortgage) with a 5/1 ARM in the first five years of the mortgage. However, changes in the market could cause your interest rate to increase after that time, as detailed in the terms of your loan. If you plan to sell or refinance your house before the rate changes, an adjustable-rate mortgage could make sense for you. Otherwise, changes in the market mean your interest rate might be significantly higher once the rate adjusts.

Mortgage rate trends

Mortgage rates were historically low throughout most of 2020 and 2021 but increased steadily throughout 2022 as the Federal Reserve began aggressively hiking interest rates. The top question is what the rest of 2023 has in store for prospective homebuyers.

“Today’s high mortgage rates are not the only challenge we have in the current market,” said Erin Sykes, chief economist at Nest Seekers International.

Fannie Mae

calls for the average 30-year fixed mortgage rate to close out the year at 7.1%.

We use rates collected by Bankrate to track rate changes over time. This table summarizes the average rates offered by lenders across the US:

Today’s mortgage interest rates

Loan term	Today’s Rate	Last week	Change
30-year mortgage rate	7.59%	7.56%	+0.03
15-year fixed rate	6.81%	6.82%	-0.01
30-year jumbo mortgage rate	7.63%	7.59%	+0.04
30-year mortgage refinance rate	7.78%	7.77%	+0.01

Rates as of Sept. 20, 2023.

How to find the best mortgage rates

When you are ready to apply for a loan, you can connect with a local mortgage broker or search online. In order to find the best home mortgage, you’ll need to consider your goals and current finances.

Specific mortgage rates will vary based on factors including credit score, down payment, debt-to-income ratio and loan-to-value ratio. Having a higher credit score, a higher down payment, a low DTI, a low LTV or any combination of those factors can help you get a lower interest rate.

Aside from the interest rate, additional costs including closing costs, fees, discount points and taxes might also affect the cost of your house. Make sure to comparison shop with multiple lenders — like credit unions and online lenders in addition to local and national banks — in order to get a loan that works best for you.

What’s the best loan term?

When picking a mortgage, you should consider the loan term, or payment schedule. The loan terms most commonly offered are 15 years and 30 years, although you can also find 10-, 20- and 40-year mortgages. Mortgages are further divided into fixed-rate and adjustable-rate mortgages. For fixed-rate mortgages, interest rates are fixed for the life of the loan. Unlike a fixed-rate mortgage, the interest rates for an adjustable-rate mortgage are only set for a certain amount of time (usually five, seven or 10 years). After that, the rate adjusts annually based on the current interest rate in the market.

One thing to consider when choosing between a fixed-rate and adjustable-rate mortgage is how long you plan on staying in your house. Fixed-rate mortgages might be a better fit for people who plan on living in a home for a while. While adjustable-rate mortgages can sometimes offer lower interest rates upfront, fixed-rate mortgages are more stable in the long term. However, you might get a better deal with an adjustable-rate mortgage if you only plan to keep your house for a couple years. There is no best loan term as a general rule; it all depends on your goals and your current financial situation. Make sure to do your research and know what’s most important to you when choosing a mortgage.