Mortgage of the day, refinancing rate: July 26, 2022

Mortgage rates have fluctuated slightly over the past week, but have generally avoided any major spikes.

The Federal Open Market Committee of the Federal Reserve is meeting today to discuss raising the federal funds rate. On Wednesday, the committee will make its decision. Most forecasters expect the Fed to hike rates by 75 basis points, or 0.75 percentage points.

The Fed has moved more aggressively in recent months to fight inflation, which hit its highest level in June since 1981. The central bank is trying to dampen price growth without pushing the economy into recession. If he raises rates too high and too quickly, he could slow the economy enough to trigger a recession. But if he doesn’t raise rates enough, inflation could spiral even further out of control.

Mortgage rates are not tied to the federal funds rate, but Fed policy and investors’ expectations of its impact on the economy can drive mortgage rates up or down. If inflation continues to rise, mortgage rates could rise further. But if a recession starts to look more likely, rates could fall.

Mortgage rates today

Mortgage refinance rates today

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Use our free mortgage calculator to see how today’s interest rates will affect your monthly payments.

mortgage calculator

$1,161
Your estimated monthly payment

  • pay one 25% a higher down payment would save you $8,916.08 on interest charges
  • Lower the interest rate by 1% would save you $51,562.03
  • Pay an extra fee $500 each month would reduce the term of the loan by 146 month

By clicking on “More details”, you will also see the amount you will pay over the life of your mortgage, including the amount of principal versus interest.

30-year fixed mortgage rates

The current average 30-year fixed mortgage rate is 5.54%, according to Freddie Mac. This is the second week in a row that this rate has increased. Last week it was at 5.51%.

The 30-year fixed rate mortgage is the most common type of mortgage. With this type of mortgage, you’ll pay back what you borrowed over 30 years and your interest rate won’t change for the life of the loan.

The 30-year long term allows you to spread your payments out over a long period, which means you can keep your monthly payments lower and more manageable. The tradeoff is that you’ll get a higher rate than with shorter terms or adjustable rates.

15-year fixed mortgage rates

The average 15-year fixed mortgage rate is 4.75%, an increase from the previous week and the second week in a row that rate has risen, according to data from Freddie Mac.

If you’re looking for the predictability that comes with a fixed rate, but are looking to spend less on interest over the life of your loan, a 15-year fixed rate mortgage might be right for you. Since these terms are shorter and have lower rates than 30-year fixed rate mortgages, you could potentially save tens of thousands of dollars in interest. However, you will have a higher monthly payment than you would with a longer term.

5/1 Adjustable Mortgage Rates

The average 5/1 adjustable mortgage rate is 4.31%, down from the previous week.

Variable rate mortgages can seem very attractive to borrowers when rates are high, as the rates on these mortgages are usually lower than fixed mortgage rates. A 5/1 ARM is a 30 year mortgage. For the first five years, you will have a fixed rate. After that, your rate will adjust once a year. If rates are higher when your rate adjusts, you’ll have a higher monthly payment than you started with.

If you’re considering an ARM, make sure you understand how much your rate might increase each time it adjusts and how much it might ultimately increase over the life of the loan.

Will mortgage rates increase in 2022?

To help the US economy during the COVID-19 pandemic, the Federal Reserve has been aggressively buying assets, including mortgage-backed securities. This has helped keep mortgage rates at historically low levels.

However, the Fed has started to reduce the assets it holds and is expected to raise the federal funds rate four more times in 2022, following increases in March, May and June.

Average mortgage rates have risen recently, and announcements from the Fed indicate that mortgage rates could continue to rise in 2022. You might want to lock in a rate now instead of risking a higher rate later, but don’t worry. don’t rush to buy a house if you’re not ready.

What is a Fixed Rate Mortgage or an Adjustable Rate Mortgage?

Historically, adjustable mortgage rates have tended to be lower than 30-year fixed rates. When mortgage rates rise, ARMs may start to look like the best deal, but it depends on your situation.

Fixed rate mortgages lock in your rate for the life of your loan. Variable rate mortgages lock in your rate for the first few years, then your rate increases or decreases periodically.

Because adjustable rates start low, they are attractive options if you plan to sell your home before interest rates change. For example, if you get a 7/1 ARM and want to move before the end of the seven-year fixed rate period, you won’t risk paying a higher rate later.

But if you want to buy a house forever, a fixed rate might still be a better fit because you don’t risk your rate going up in a few years.

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