A few major mortgage rates rose again today. Both 15-year and 30-year fixed mortgage rates increased. The average rate of the most common type of variable rate mortgage, the 5/1 variable rate mortgage, also increased slightly.
Mortgage rates have been slowly rising since the beginning of this year and are expected to rise throughout 2022. Although rates are above their all-time highs set at the start of the pandemic, they are still relatively low. Interest rates are dynamic – they go up and down daily due to many economic factors. In general, now is a good time for potential buyers to lock in a lower rate rather than later this year. Talking with several lenders will help you find the best rate available for your financial situation.
30 Year Fixed Rate Mortgages
The average 30-year fixed mortgage rate is 5.28%, up 22 basis points from a week ago. (One basis point equals 0.01%.) The most commonly used loan term is a 30-year fixed mortgage. A 30 year fixed rate mortgage will generally have a smaller monthly payment than a 15 year mortgage, but often 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 rate for a 15-year fixed mortgage is 4.45%, an increase of 15 basis points from seven days ago. Compared to a 30-year fixed mortgage, a 15-year fixed mortgage with the same loan value and interest rate will have a higher monthly payment. But a 15-year loan will usually be the best deal, as long as you can afford the monthly payments. You will most likely get a lower interest rate and pay less interest in total because you are paying off your mortgage much faster.
5/1 Adjustable Rate Mortgages
A 5/1 ARM has an average rate of 5.23%, an increase of 22 basis points from a week ago. You will typically get a lower interest rate (compared to a 30 year fixed mortgage) with a 5/1 variable rate mortgage in the first five years of the mortgage. However, you may end up paying more after this period, depending on the terms of your loan and how the rate adjusts to the market rate. If you plan to sell or refinance your home before the rate changes, an adjustable rate mortgage may be right for you. But if not, you may have to pay a much higher interest rate if market rates change.
Mortgage Rate Trends
Although 2022 started with low mortgage rates, there has been a steady increase recently and rates are expected to continue to rise throughout 2022. Mortgage rates are influenced by multiple economic factors. One of the main ones is government policy set by the Federal Reserve, which raised rates in March for the first time since 2018 in response to record inflation. The Fed plans to raise interest rates six more times this year. However, with the ongoing war in Ukraine, we have seen some fluctuations in mortgage rates, as global instability usually leads to lower interest rates. While you can expect rates to rise and fall for these reasons, in general, if you’re looking to buy a home in 2022, you should be prepared for interest rates to continue to rise.
We use rates collected by Bankrate, which is owned by the same parent company as CNET, to track daily mortgage rate trends. This table summarizes the average rates offered by lenders across the country:
Today’s Mortgage Interest Rates
Rates exact as of April 21, 2022.
How to Find Custom Mortgage Rates
To find a personalized mortgage rate, meet with your local mortgage broker or use an online mortgage service. Be sure to consider your current financial situation and goals when trying to find a mortgage. Things that affect the mortgage interest rate you might get include: your credit score, your down payment, your loan-to-value ratio, and your debt-to-income ratio. Typically, you want a higher credit score, larger down payment, lower DTI, and lower LTV to get a lower interest rate. The interest rate isn’t the only factor that affects the cost of your home. Also be sure to consider other costs such as fees, closing costs, taxes and discount points. You should shop around with multiple lenders – including 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 the best loan term?
When choosing a mortgage, you need to consider the length 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. Another important distinction is between fixed rate and adjustable rate mortgages. For fixed rate mortgages, the interest rates are the same throughout the life of the loan. For adjustable rate mortgages, the interest rates are the same for a number of years (usually five, seven or 10 years), then the rate fluctuates annually depending on the prevailing market interest rate .
When choosing between a fixed rate and an adjustable rate mortgage, you need to consider how long you plan to live in your home. Fixed rate mortgages might be better suited for people who plan to stay in a home for a while. Fixed rate mortgages offer more stability over time than adjustable rate mortgages, but adjustable rate mortgages can offer lower interest rates upfront. If you don’t plan to keep your new home for more than three to ten years, an adjustable rate mortgage might give you a better deal. There is no best loan term as a general rule; it all depends on your goals and your current financial situation. It’s important to do your research and understand your own priorities when choosing a mortgage.