A few important mortgage rates went higher today. The average interest rates for both 15-year fixed and 30-year fixed mortgages both drifted higher. At the same time, average rates for 5/1 adjustable-rate mortgages were reduced.
Mortgage rates have been rather consistently going up since the start of this year, and are expected to climb throughout 2022. Of course, interest rates are dynamic and unpredictable — at least on a daily or weekly basis — as they respond to a wide variety of economic factors. At the moment, inflation and the federal funds rate are particularly influential. The Federal Reserve has increased interest rates three times this year and has signaled its intention to hike rates again to try to contain inflation. That will likely translate into higher mortgage rates and, for prospective borrowers, steeper monthly mortgage payments. As such, homebuyers may have better luck locking in a lower mortgage interest rate sooner than later. It’s always a good idea to interview multiple lenders to compare rates and fees to find the best mortgage for your specific situation.
30-year fixed-rate mortgages
The 30-year fixed-mortgage rate average is 5.79%, which is an increase of 7 basis points compared to one week ago. (A basis point is equivalent to 0.01%.) The most frequently used loan term is a 30-year fixed mortgage. A 30-year fixed mortgage will typically have a higher interest rate than a 15-year fixed rate mortgage — but also a lower monthly payment. You won’t be able to pay off your house as quickly and you’ll pay more interest over time, but a 30-year fixed mortgage is a good option if you’re looking to minimize your monthly payment.
15-year fixed-rate mortgages
The average rate for a 15-year, fixed mortgage is 4.97%, which is an increase of 8 basis points from the same time last week. 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, if you’re able to afford the monthly payments. You’ll usually get a lower interest rate, and you’ll pay less interest in total because you’re paying off your mortgage much quicker.
5/1 adjustable-rate mortgages
A 5/1 ARM has an average rate of 4.21%, a slide of 4 basis points compared to last week. You’ll typically get a lower interest rate (compared to a 30-year fixed mortgage) with a 5/1 adjustable-rate mortgage in the first five years of the mortgage. However, you could end up paying more after that time, depending on the terms of your loan and how the rate changes with the market rate. Because of this, an adjustable-rate mortgage might be a good option if you plan to sell or refinance your house before the rate changes. If not, changes in the market may significantly increase your interest rate.
Mortgage rate trends
Although mortgage rates were historically low at the beginning of 2022, they have been rising somewhat steadily since then. The Federal Reserve recently raised interest rates by 0.75 percentage points — the highest rate increase since 1994 — in an attempt to curb record-high inflation. As a general rule, when inflation is low, mortgage rates tend to be lower. When inflation is high, rates tend to be higher.
Although the Fed does not directly set mortgage rates, the central bank’s policy actions influence how much you pay to finance your home loan. And the Fed has signaled that it will continue to raise rates over the course of this year. So, if you’re looking to buy a house in 2022, expect mortgage rates to generally increase as the year goes on.
We use information collected by Bankrate, which is owned by the same parent company as CNET, to track daily mortgage rate trends. This table summarizes the average rates offered by lenders across the US:
Today’s mortgage interest rates
Rates accurate as of July 15, 2022.
How to find the best mortgage rates
To find a personalized mortgage rate, meet with your local mortgage broker or use an online mortgage service. Make sure to take into account your current finances and your goals when searching for a mortgage. A range of factors — including your down payment, credit score, loan-to-value ratio and debt-to-income ratio — will all affect your mortgage interest rate. Having a higher credit score, a larger down payment, a low DTI, a low LTV, or any combination of those factors can help you get a lower interest rate. Besides the mortgage interest rate, additional costs including closing costs, fees, discount points and taxes might also affect the cost of your home. You should shop around with multiple lenders — including credit unions and online lenders in addition to local and national banks — in order to get a mortgage loan that’s best for you.
What is a good loan term?
When choosing a mortgage, it is important to consider the loan term or payment schedule. The most common loan terms are 15 years and 30 years, although 10-, 20- and 40-year mortgages also exist. Mortgages are further divided into fixed-rate and adjustable-rate mortgages. For fixed-rate mortgages, interest rates are the same for the life of the loan. Unlike a fixed-rate mortgage, the interest rates for an adjustable-rate mortgage are only the same for a certain amount of time (most frequently five, seven or 10 years). After that, the rate adjusts annually based on the market rate.
One important factor to take into consideration when choosing between a fixed-rate and adjustable-rate mortgage is the length of time you plan on staying in your home. For people who plan on living long-term in a new house, fixed-rate mortgages may be the better option. Fixed-rate mortgages offer greater stability over time in comparison to adjustable-rate mortgages, but adjustable-rate mortgages can sometimes offer lower interest rates upfront. However, you could get a better deal with an adjustable-rate mortgage if you only have plans to keep your home for a couple of years. The best loan term is entirely dependent on your situation and goals, so make sure to consider what’s important to you when choosing a mortgage.