A few notable mortgage rates decreased today. The average interest rates for both 15-year fixed and 30-year fixed mortgages slid down. For variable rates, the 5/1 adjustable-rate mortgage also decreased. Mortgage rates have been consistently going up since the start of this year, and are expected to keep climbing 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, two of those factors — inflation and the federal funds rate — are particularly influential. The Federal Reserve has already increased interest rates three times this year and has signaled its intention to hike rates again to contain inflation. That will almost certainly 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 average 30-year fixed mortgage interest rate is 5.61%, which is a decline of 22 basis points as of 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 mortgage will usually have a higher interest rate than a 15-year fixed rate mortgage — but also a lower monthly payment. 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 4.87%, which is a decrease of 21 basis points from the same time last week. You’ll definitely have a bigger monthly payment with a 15-year fixed mortgage compared to a 30-year fixed mortgage, even if the interest rate and loan amount are the same. However, if you can afford the monthly payments, there are several benefits to a 15-year loan. These typically include 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 adjustable-rate mortgage has an average rate of 4.27%, a slide of 2 basis points compared to last week. For the first five years, you’ll typically get a lower interest rate with a 5/1 adjustable-rate mortgage compared to a 30-year fixed mortgage. However, since the rate adjusts with the market rate, you may end up paying more after that time, as described in the terms of your loan. Because of this, an ARM might be a good option if you plan to sell or refinance your house before the rate changes. But if that’s not the case, you may be on the hook for a much higher interest rate if the market rates shift.
Mortgage rate trends
Although mortgage rates were historically low at the beginning of 2022, they have been rising steadily since then. The reason: The Federal Reserve has raised interest rates by 0.75 percentage points just this month — 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 increase as the year goes on. We use data collected by Bankrate, which is owned by the same parent company as CNET, to track rate changes over time. This table summarizes the average rates offered by lenders nationwide:
Today’s mortgage interest rates
|Loan term||Today’s Rate||Last week||Change|
|30-year mortgage rate||5.61%||5.83%||-0.22|
|15-year fixed rate||4.87%||5.08%||-0.21|
|30-year jumbo mortgage rate||5.53%||5.79%||-0.26|
|30-year mortgage refinance rate||5.58%||5.80%||-0.22|
Rates accurate as of Jul. 4, 2022.
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 take into account your goals and current finances. Specific interest rates will vary based on factors including credit score, down payment, debt-to-income ratio and loan-to-value ratio. Generally, you want a higher credit score, a larger down payment, a lower DTI and a lower LTV to get a lower interest rate. The interest rate is not the only factor that affects the cost of your home — be sure to also consider other factors such as fees, closing costs, taxes and discount points. Make sure to compare shop with multiple lenders — such as credit unions and online lenders in addition to local and national banks — in order to get a mortgage that’s right for you.
What is a good loan term?
One important thing you should consider when choosing a mortgage is the loan term or payment schedule. The most common mortgage 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 fixed for the life of the loan. For adjustable-rate mortgages, interest rates are fixed for a certain number of years (usually five, seven or 10 years), then the rate fluctuates annually based on the market rate. One thing to think about when deciding between a fixed-rate and adjustable-rate mortgage is the length of time you plan on staying in your home. For those who plan on staying long-term in a new house, fixed-rate mortgages may be the better option. Fixed-rate mortgages offer greater stability over time compared to adjustable-rate mortgages, but adjustable-rate mortgages may offer lower interest rates upfront. If you don’t have plans to keep your new home for more than three to 10 years, though, an adjustable-rate mortgage may give you a better deal. The best loan term all depends on your own situation and goals, so make sure to think about what’s important to you when choosing a mortgage.