A number of important mortgage rates all climbed up today. The amazing increase in borrowing costs for fixed-rate 30-year mortgages is notable, but 15-year fixed rates also increased. At the same time, average rates for 5/1 adjustable-rate mortgages (ARM) also crawled higher.
The averages for 30-year fixed, 15-year fixed, and 5/1 ARMs are:
Mortgage Rate Trends: Why Are Mortgage Rates Spiking?
When the pandemic hit, rates initially fell when economic activity slowed. As the pandemic progressed, supply chain shortages developed, which resulted in rising inflation and interest rates..
Right now we could be in the reverse situation, where the factors adding to inflation could slow economic activity. A sagging economy typically goes hand in hand with lower mortgage rates.
Nevertheless, this forecast is not certain and right now, it appears that rates could vary week-to-week, but won’t fall significantly. Russia’s invasion of Ukraine and China’s COVID lockdown are expected to drive up inflation in the long run as they affect supply chains.
As long as inflation lingers, the chances of returning to the glory days of low mortgage rates stay slim. “Until inflation is under control, the risk is certainly that rates move higher,” Danielle Hale, chief economist at Realtor.com told NextAdvisor.
Current Mortgage Rates: Are They Good For Buying a Home Right Now?
Homebuyers face rising prices and rising interest rates, a combination that reduces purchasing power rapidly.
This doesn’t mean that the current real estate market conditions have to delay your homebuying plans. Don’t rush into a home purchase because you’re afraid rates or prices will increase forever. You should instead take the time to find the right home for you at an affordable price if now is a good time for you to buy.
Owning a home is a better choice if you plan on staying for a long time. You can survive the inevitable fluctuations in the market by keeping the home for a longer period of time. When purchasing a home, stick to your budget and only purchase what you can comfortably afford. Generally, experts recommend not spending more than 28% of your pretax income on housing.
History of the 30-Year Fixed Mortgage Rate
Today’s rates fall within a typical historical range, even though they are higher than they were in 2020 or 2021. What this means is current mortgage interest rates are still very good from a long-term view despite breaking through the psychological barrier of 5%.
While NextAdvisor typically uses Bankrate data on mortgage rates, this chart pulls data from the government-sponsored entity, Freddie Mac. The rates in this chart differ slightly from the data elsewhere on this page, the historical trends generally track with each other. Looking back at Freddie Mac historical rates offers a good snapshot into how today’s rates compare with the past two decades.
Closing Costs & Loan Fees
The industry term for the upfront fees you pay when you get a home loan is closing costs. The fees for your appraisal, title insurance, and any lender origination charges are all part of your closing costs. In general, closing costs are 3% to 6% of your loan amount, so the larger your mortgage the more you’ll pay as a total dollar amount. Paying attention to the closing costs you pay is important because the higher your closing costs, the higher your annual percentage rate (APR) will be.
Looking at Today’s Mortgage Refinance Rates
Refinance rates grabbed headlines today. We saw an astonishing increase in rates for 30-year fixed loans. Interestingly, 15-year fixed-rate refinances moved in the opposite direction and went down. If you’ve been considering a 10-year refinance loan, just know average rates also saw growth.
The average refinance rates are as follows:
Compare nationwide home loan rates from various lenders .
30-Year Fixed Mortgage Rates
The median interest rate for a standard, 30-year, fixed mortgage is 5.97%, which is a growth of 42 basis points from last week.
15-Year Fixed Mortgage Rates
The median rate for a 15-year fixed mortgage is 5.15%, which is an increase of 45 basis points compared to a week ago.
A 15-year, fixed-rate mortgage’s monthly payment is larger and will take up a bigger chunk of your monthly budget than a 30-year mortgage would. However, 15-year loans have some considerable benefits: You’ll save thousands of dollars in interest and pay off your loan much earlier.
5/1 ARM Interest Rates
A 5/1 ARM has an average rate of 4.02%, which is a rise of 10 basis points compared to a week ago.
An ARM is ideal for households who will sell or refinance before the rate changes. If that’s not the case, their interest rates could end up being remarkably higher after a rate adjusts.
For the first five years, a 5/1 ARM will typically have a lower interest rate compared to a 30-year fixed mortgage. Keep in mind that your payment could end up being hundreds of dollars higher after a rate adjustment, depending on the terms of your loan.
How We Calculate Our Mortgage Interest Rates
To get an idea of where mortgage rate may move, we rely on information collected by Bankrate, which is owned by the same parent company as NextAdvisor. The daily rates survey focuses on home loans where the borrower has a high credit score (740+), a LTV of 80% or lower, and the home is occupied by the owner.
The mortgage interest rate data listed below and based on the Bankrate mortgage rate survey:
Rates as of June 15, 2022.
Pro Tip
Use our mortgage calculator to see how your monthly payment changes based on factors like your mortgage interest rate, property taxes, or down payment.
Mortgage Rate Frequently Asked Questions (FAQ):
How Do I Get the Lowest Mortgage Rate?
There are two main factors to getting the lowest mortgage interest rate: Loan-to-value ratio (LTV), and your credit score.
To get the lowest mortgage rate, you’ll need a credit score between 700 to 800. Having a credit score above 800 is nice, but will likely have a minimal impact on your rate.
Lenders give the largest mortgage rate discounts to borrowers that are seen as less risky. One surefire way to show you’re more likely to make your monthly payments is to bring a bigger down payment to the closing table. A down payment of 20% or more will save you money in two ways: with a more favorable mortgage rate, and you’ll be able to avoid paying for private mortgage insurance (PMI).
When Should I Lock in My Mortgage Rate?
It’s impossible to know what direction mortgage rates will go from day to day. That’s why a mortgage rate lock is such a useful tool because it protects you if rates go up. And with interest rates being relatively low right now, you should lock in your rate as soon as you can.
A rate lock will only last for a set amount of time, typically 30-60 days. If you hit a snag during closing and it looks like your rate lock will expire you should talk with your lender. It may offer an extension of the lock, however, you might have to pay a fee for that privilege.
