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Hot economic data over the past few weeks has cemented the likelihood of more large rate hikes by the Federal Reserve, meaning mortgage rates are likely to remain high throughout 2022 and into the early months of 2023.
September’s strong jobs report coupled with higher-than-expected CPI data suggests the Fed will struggle to bring inflation down to its 2% annual target. As inflation has risen this year and the Fed has hiked the federal funds rate, mortgage rates have risen from historic lows.
Mortgage rates aren’t directly affected by Fed actions, but they can trend up or down depending on how investors expect the Fed’s rate hikes to affect the broader economy. With recent data showing that the Fed’s efforts are not moving the needle as much as it had hoped, inflation is likely to remain an issue throughout the year and at least part of next year. This means that borrowers will continue to face high mortgage interest rates.
Current mortgage rates
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Current refinancing rates
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Use our free mortgage calculator to see how today’s mortgage rates would affect your monthly payments. By entering different interest rates and terms, you will also understand how much you will pay over the life of your mortgage.
Your estimated monthly payment
- Pay a 25% you would save yourself a higher down payment $8,916.08 on interest charges
- interest rate reduction 1% would save you $51,562.03
- pay surcharge $500 each month would shorten the loan term by 146 Months
Click More Details for tips on how to save money on your mortgage in the long run.
30 year fixed mortgage rates
According to Freddie Mac, the current average interest rate for 30-year fixed-rate mortgages is 6.92%. This is the highest rate since 2002.
The 30-year fixed-rate mortgage is the most common form of home loan. With this type of mortgage, you pay back what you borrowed over 30 years, and your interest rate does not change over the life of the loan.
The long term of 30 years allows you to spread your payments over a long period of time, meaning you can keep your monthly payments lower and more manageable. The trade-off is that you have a higher rate than with shorter terms or adjustable rates.
15 year fixed mortgage rates
The average 15-year fixed-rate mortgage rate is 6.09%, up from the previous week, according to data from Freddie Mac. This is the first time since 2008 that this rate has exceeded 6%.
If you want the predictability of a fixed interest rate but want to spend less interest over the life of your loan, a 15-year fixed-rate mortgage may be right for you. Because these terms are shorter and have lower interest rates than 30-year fixed-rate mortgages, you could potentially save tens of thousands of dollars in interest. However, you have a higher monthly payment than with a longer term.
5/1 Adjustable Mortgage Rates
The average 5/1 mortgage rate is 5.81%, up from the previous week.
Adjustable rate mortgages can be very attractive to borrowers when interest rates are high because interest rates on these mortgages are typically lower than interest rates on fixed-rate mortgages. A 5/1 ARM is a 30-year mortgage. You receive a fixed price for the first five years. After that, your tariff will be adjusted once a year. If the rates are higher when you adjust your rate, you’ll have a higher monthly payment than when you started.
If you’re considering an ARM, make sure you understand how much your interest rate could increase with each adjustment, and how much it could ultimately increase over the life of the loan.
Are mortgage rates rising?
Mortgage rates started rising from historic lows in the second half of 2021 and have risen significantly so far in 2022.
In the last 12 months, the consumer price index rose by 8.2%. The Federal Reserve has been working to bring inflation under control and is expected to raise the federal funds rate twice more this year after raising it at its last five meetings.
While not directly tied to the federal funds rate, mortgage rates are sometimes pushed higher as a result of Fed rate hikes and investor expectations of how those increases will affect the economy.
Inflation remains high but has gradually slowed, which bodes well for mortgage rates and the broader economy.
How do I find personalized mortgage rates?
Some mortgage lenders allow you to adjust your mortgage rate on their websites by entering your down payment amount, zip code, and credit rating. The resulting rate isn’t set in stone, but it can give you an idea of what you’ll be paying.
When you’re ready to start buying houses, you can apply for pre-approval from a lender. The lender takes out a hard loan and looks at the details of your finances to secure a mortgage rate.
How do I compare mortgage rates between lenders?
You can apply for prequalification from multiple lenders. A lender will take a general look at your finances and give you an estimate of the rate you will pay.
As you get further along in the home buying process, you have the option to apply for pre-approval from multiple lenders, not just one company. By receiving letters from more than one lender, you can compare personalized rates.
Applying for pre-approval requires a hard credit pulldown. Try to apply to multiple lenders within a few weeks because lumping all your hard loans into the same time period will do less damage to your credit score.