Some closely watched mortgage rates jumped today to their highest level since the start of 2020, including 15-year and 30-year fixed mortgage rates. We also saw a significant rise in the average 5/1 adjustable rate mortgage rate. Mortgage rates have been quite low over the past period, making it a good time for potential buyers to lock in a fixed rate. But rates are dynamic and should continue to rise. Before buying a home, remember to consider your personal needs and financial situation, and speak with several lenders to find the best one for you.
30 Year Fixed Rate Mortgages
For a 30-year fixed-rate mortgage, the average rate you’ll pay is 4.19%, up 19 basis points from a week ago. (One basis point equals 0.01%.) Thirty-year fixed-rate mortgages are the most common loan term. A 30 year fixed rate mortgage will usually have a lower monthly payment than a 15 year one, but usually a higher interest rate. Although you’ll pay more interest over time – you’re paying off your loan over a longer period – 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 15-year fixed mortgage rate is 3.44%, up 10 basis points from a week ago. Compared to a 30-year fixed mortgage, a 15-year fixed mortgage with the same loan value and interest rate will result in a higher monthly payment. However, if you can afford the monthly payments, a 15-year loan has several advantages. These typically include the ability to get a lower interest rate, pay off your mortgage sooner, and pay less total interest over the long term.
5/1 Adjustable Rate Mortgages
A 5/1 ARM has an average rate of 4.19%, up 18 basis points from last week. With an ARM mortgage, you’ll typically get a lower interest rate than a 30-year fixed mortgage for the first five years. However, you might end up paying more after this time, depending on the terms of your loan and how the rate changes with the market rate. For borrowers who plan to sell or refinance their home before the rate changes, an adjustable rate mortgage could be a good option. Otherwise, changes in the market could significantly increase your interest rate.
Mortgage Rate Trends
While 2022 started off with low mortgage rates, they have recently seen a rise. There are two major factors at play here: rising inflation rates and a growing economy. That said, rates can always go up and down for a variety of reasons. The spread of the omicron, for example, kept rates relatively low throughout December and into the new year. Overall, rates are expected to rise in 2022, especially with the Federal Reserve’s decision to raise interest rates.
We use information collected by Bankrate, which is owned by the same parent company as CNET, to track these daily rates. This table summarizes the average rates offered by lenders in the United States:
Current Average Mortgage Interest Rates
|Type of loan||Interest rate||A week ago||Change|
|30-year fixed rate||4.19%||4.00%||+0.19|
|Fixed rate over 15 years||3.44%||3.34%||+0.10|
|30-year jumbo mortgage rate||2.93%||2.88%||+0.05|
|30-year mortgage refinance rate||4.17%||4.03%||+0.14|
Updated February 21, 2022.
How to Find Custom Mortgage Rates
You can get a personalized mortgage rate by connecting with your local mortgage broker or using an online calculator. When shopping for residential mortgage rates, consider your current goals and finances. Factors that affect the interest rate you might get on your mortgage include: your credit score, your down payment, your loan-to-value ratio, and your debt-to-income ratio. Generally, you want a higher credit score, higher down payment, lower DTI, and lower LTV to get a lower interest rate. Besides the mortgage rate, factors such as closing costs, fees, discount points, and taxes can also affect the cost of your home. You should speak with several different lenders – such as local and national banks, credit unions, and online lenders – and compare prices to find the best loan for you.
What is the best loan term?
One important thing to consider when choosing a mortgage loan is the term of the loan or the payment schedule. The most common loan terms are 15 and 30 years, although there are also 10, 20 and 40 year mortgages. Mortgages are further divided into fixed rate and variable rate mortgages. The interest rates for a fixed rate mortgage are the same throughout the life of the loan. Unlike a fixed rate mortgage, an adjustable rate mortgage’s interest rates are only fixed for a certain amount of time (usually five, seven or 10 years). After that, the rate adjusts annually based on the current market interest rate.
An important factor to consider when choosing between a fixed rate and an adjustable rate mortgage is how long you plan to stay in your home. If you plan to stay in a new home for the long term, fixed rate mortgages may be the best option. While variable rate mortgages can sometimes offer lower interest rates upfront, fixed rate mortgages are more stable over time. However, you might get a better deal with an adjustable rate mortgage if you only plan to keep your home for a few years. The best loan term depends on your personal situation and goals, so be sure to consider what’s important to you when choosing a mortgage.