A handful of prime mortgage rates all rose today. Both 30-year and 15-year fixed mortgage rates increased slightly. The most common type of adjustable rate mortgage is the 5/1 Adjustable Rate Mortgage (ARM) also climbed.
In 2022, mortgage rates have nearly reached levels not seen since before the pandemic, after nearly two years of record high rates.
Refinancing or buying your home doesn’t have to be put on hold. Although rates are higher than they were in 2021, 30-year fixed rates are still much lower than they were just a few years ago.
The fact is, a homebuyer’s decision involves more than just an interest rate. It’s a lifestyle decision. Despite the impact of the interest rate market on mortgages, it is not prudent to base your decision on just a few basis points. The most important thing to consider is setting a realistic home buying budget and sticking to it.
Let’s take a look at current mortgage rates, past rates, and what it all means for borrowers.
Mortgage rates are currently:
Mortgage rate forecast: what determines the evolution of mortgage rates?
Since the beginning of the year, mortgage rates have risen considerably. An economy recovering from the pandemic and high inflation are two of the factors behind the rate hike. Most of the year will be spent raising the Federal Reserve’s short-term interest rate and making other changes to deal with high inflation, which could increase borrowing costs.
Due to other trends, the market has become more uncertain and volatile. The first is Russia’s war in Ukraine, which has had repercussions on global financial markets, including rising gas prices and falling stock prices. Another concern is the resurgence of COVID-19. The Omicron variant has generally declined in the United States, but its future cannot be predicted with certainty.
Almost all experts agree that mortgage rates will rise throughout 2022. There will be a lot of short-term volatility.
Are current mortgage rates good for buying a home right now?
Despite the dramatic increases, mortgage rates remain at relatively low levels and are still considered historically favorable mortgage rates.
Low interest rates can help offset rising house prices. But as rates rise, this will also contribute to the rising cost of ownership. Prices have risen significantly from pre-pandemic levels, with a combination of limited supply of homes, higher construction costs and massive buyer demand driving the spike.
It’s also important to remember that while mortgage rates are significant and a difference of a point or two can mean a lot of money on a 30-year mortgage, experts advise against trying to time the market to get the best mortgage rate. Focus on finding the right home, and do it when your personal lifestyle and financial situation indicate it’s the right time. Shop around for a mortgage lender to get the best deal possible at that time – lender rates can vary widely.
30 Year Fixed Mortgage Rate History
Rates were well above 4% as recently as 2018 and 2019. Before the crash of 2008, a “good” rate was still above 5%. Current mortgage interest rates are still very good in the long term, even if they cross the psychological barrier of 4%.
This chart, which uses data from a Freddie Mac survey that differs slightly from but generally follows the Bankrate survey used by NextAdvisor, offers a look at how current rates compare to the past two decades. They’re up from the historically low years of 2020 and 2021, but they’re still not high if you zoom out more than a few years.
Closing costs and loan costs
If you take out a mortgage, be sure to pay close attention to closing costs. These fees include loan origination fees, prepaid interest and property taxes, and can range from 3-6% of the loan amount. Accepting a higher interest rate, in exchange for credits from the lender, can help you reduce your outgoings. costs. This strategy can save you money in the short term. So it’s worth thinking about if you plan to sell or refinance your home in the next five to eight years.
Today’s Mortgage Refinance Rates
Refinancing has become a little more expensive today as 30-year and 15-year fixed refinance mortgages have seen their average rates climb. Shorter-term 10-year fixed rate refinance mortgages also increased.
The average refinancing rates are as follows:
Take a look at mortgage rates for different types of loans.
30-year mortgage rates
The average 30-year fixed mortgage interest rate is 5.06%, an increase of 15 basis points from the previous week.
15-year fixed mortgage rates
The median rate for a 15-year fixed mortgage is 4.20%, up 13 basis points from seven days ago.
The monthly payment on a 15-year fixed rate mortgage is, undeniably, a much higher monthly payment than what you would get on a 30-year mortgage offering the same interest rate. But 15-year loans have huge advantages: you’ll pay thousands less in interest and pay off your loan much sooner.
5/1 ARM Mortgage Rates
A 5/1 ARM has an average rate of 3.46%, up 12 basis points from last week.
An ARM is ideal for borrowers who will refinance or sell before the rate changes. If not, their interest rates could end up being significantly higher after a rate adjustment.
For the first five years, a 5/1 ARM will typically have a lower interest rate than a 30-year fixed mortgage. Keep in mind that your rate could increase and your payment could increase by hundreds of dollars per month.
How We Determine Mortgage Rates
To see where mortgage rates are moving, we rely on information collected by Bankrate, which is owned by the same parent company as NextAdvisor. The Daily Rates survey focuses on mortgages where the borrower has a credit score of 740+, a loan-to-value (LTV) ratio of 80% or greater, and the home is owner-occupied.
The chart below compares today’s average rates to what they were a week ago and is based on information provided to Bankrate by lenders nationwide:
Rates exact as of April 11, 2022.
Use NextAdvisor’s mortgage calculator to see how your monthly mortgage payment changes based on factors like your mortgage rate, home insurance, and property taxes.
Frequently Asked Questions (FAQ) About Mortgage Rates:
How to get the best mortgage rate?
Shopping around for a home loan is one of the best ways to get the lowest mortgage rate.
Your mortgage rate depends on a number of factors that lenders take into account when assessing the likelihood of you paying off your home loan. Your credit score is a big part of that decision. And your loan-to-value (LTV) ratio matters too, so having a bigger down payment is better for your mortgage rate.
But banks will view your situation differently. Thus, you can give the same documentation to three different lenders and receive mortgage offers with very different rates and fees.
Should I lock in my mortgage rate now?
Mortgage rates go up and down daily, and it’s impossible to time the market. It is therefore wise to lock in your interest rate now, because overall rates are historically favorable.
When you lock your rate, ask your lender how long the lock is valid. A rate lock can be valid for 30 to 60 days, which usually gives you plenty of time to close before the lock expires. If you want to extend the rate lock, find out about fees, as many lenders charge a fee to extend a rate lock.