Mortgage rates are lower this week compared to last Monday. Rates have been somewhat volatile in recent weeks due to the offsetting forces of inflation and fears of recession.
But even though rates are trending lower, they’re still significantly higher than they were at the start of 2022, which has created affordability issues for many buyers.
“It is certainly understandable that potential home buyers are concerned and possibly overwhelmed by current levels of inflation, rising rates, low inventory levels, high home prices and macroeconomic uncertainty,” Steve said. Kaminski, head of U.S. residential lending at TD Bank. “But as always, I strongly recommend anyone entering the market right now to focus on something imperative that they box control – the fundamentals of preparation.”
If you’re looking for a home, be sure to review all of your mortgage options and how rate fluctuations could affect your budget.
Mortgage rates today
Mortgage refinance rates today
Use our free mortgage calculator to see how today’s interest rates will affect your monthly payments.
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 5.3%, according to Freddie Mac. This is a decrease from last week, when it was 5.54%.
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 lets you 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 4.58%, down from the previous week, 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 4.29%, 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 three more times in 2022, following increases in March, May, June and July.
Mortgage rates have been volatile recently as the Fed struggles to control inflation. If prices continue to rise, mortgage rates could also rise. But if the economy starts to slow, rates could drop.
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.