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Mortgage rates fell slightly this week. The average interest rate on 30-year fixed-rate mortgages fell to 6.66% from 6.7% the previous week.
Interest rates have been somewhat volatile in recent weeks as investors weigh the likelihood of a looming recession.
“Mortgage rates are down slightly this week amid ongoing economic uncertainty,” said Sam Khater, Freddie Mac’s chief economist, in a press release. “However, rates remain quite high compared to a year ago, meaning housing remains more expensive for prospective homebuyers.”
The average 30-year fixed-rate mortgage rate has doubled since January, adding hundreds of dollars to the average monthly mortgage payment.
Mortgage rates today
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Today’s refinancing rates
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Use our free mortgage calculator to see how today’s mortgage rates are affecting your monthly and long-term payments.
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
By entering different terms and interest rates, you can see how your monthly payment might change.
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 8.3%. 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.
What do high rates mean for the housing market?
When mortgage rates rise, homebuyers’ purchasing power falls because more of their expected housing budget has to be devoted to paying interest. If interest rates get high enough, buyers can be squeezed out of the market entirely, dampening demand and putting pressure on home price growth.
However, that doesn’t mean that property prices will fall. Prices have risen overall this year, just at a slower pace than in previous years.
What is a good mortgage rate?
It can be difficult to know if a lender is offering you a good rate, which is why it’s so important to get pre-approved by multiple mortgage lenders and compare each offer. Apply for pre-approval from at least two or three lenders.
Your fare isn’t the only thing that matters. Be sure to compare both your monthly costs and your upfront costs, including any lender fees.
Although mortgage rates are heavily influenced by economic factors beyond your control, there are some things you can do to ensure you’re getting a good rate:
- Consider fixed vs adjustable rates. You may be able to get a lower introductory rate with an adjustable rate mortgage, which can be good if you want to move before the end of the introductory period. But a fixed rate might be better if you’re buying a forever home because you don’t risk your interest rate going up later. Look at the interest rates your lender is offering and weigh your options.
- Look at your finances. The better your financial situation, the lower your mortgage rate should be. Look for ways to improve your credit score or reduce your debt-to-income ratio, if necessary. Saving up for a higher down payment also helps.
- Choose the right lender. Each lender charges different mortgage rates. Choosing the right one for your financial situation will help you get a good interest rate.