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The average 30-year fixed mortgage rate reached 6.29% this week. This is more than a quarter of a percentage point higher than last week, and an increase of more than three percentage points from the beginning of 2022, when it was at 3.22%, according to Freddie Mac.
The Federal Reserve met this week to determine its next step in its fight against inflation. He opted to raise the federal funds rate by 75 basis points, or 0.75 percentage point. This is the third consecutive rate increase of this size, and larger increases are likely to come at its next two meetings in November and December.
“We anticipate that the ongoing increases in the target range for the fed funds rate will be appropriate,” Fed Chairman Jerome Powell said at a news conference on Wednesday. “The pace of those increases will continue to depend on incoming data and developments in the outlook for the economy.”
The Fed fears cutting rate hikes prematurely and has made it clear that it is committed to raising rates until inflation shows sustained signs of slowing to its 2% annual rate target.
As long as inflation remains elevated and the Fed continues to raise rates, mortgage rates are likely to remain at their current levels and could rise further. But as inflation starts to come down, mortgage rates should too. The question is whether the Fed will be able to significantly curb price growth without throwing the economy into recession.
Current mortgage rates
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Current Refinance Rates
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Use our free mortgage calculator to see how current mortgage rates would affect your monthly payments. By entering different rates and terms, you’ll also understand how much you’ll pay over the entire life of your mortgage.
Your estimated monthly payment
- paying a 25% a higher down payment would save you $8,916.08 on interest charges
- Lower the interest rate in 1% I would save you $51,562.03
- Paying an additional $500 each month would reduce the length of the loan by 146 months
Click “More Details” for tips on how to save money on your mortgage over the long term.
30-year fixed mortgage rates
The current average 30-year fixed mortgage rate is 6.29%, according to Freddie Mac. This is the highest rate since 2008, and the fifth week in a row it has increased.
The 30-year fixed-rate mortgage is the most common type of home loan. With this type of mortgage, you’ll pay back what you borrowed over 30 years, and your interest rate won’t 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, which means you can keep your monthly payments lower and more manageable. The trade-off is that you will have a higher rate than you would with shorter terms or adjustable rates.
15-year fixed mortgage rates
The average 15-year fixed mortgage rate is 5.44%, an increase from the previous week, according to data from Freddie Mac. The last time this rate exceeded 5% was in 2009.
If you want the predictability that comes with a fixed rate but want to spend less on interest over the life of your loan, a 15-year fixed-rate mortgage might be a good option for you. Because these terms are shorter and have lower rates than 30-year fixed-rate mortgages, you could potentially save tens of thousands of dollars in interest. However, you will have a higher monthly payment than with a longer term.
Adjustable Mortgage Rates 5/1
The 5/1 average adjustable mortgage rate is 4.97%, a slight increase from the previous week.
Adjustable-rate mortgages can seem very attractive to borrowers when rates are high, because the rates on these mortgages are often lower than fixed mortgage rates. A 5/1 ARM is a 30-year mortgage. For the first five years, you will have a fixed rate. After that, your rate will be adjusted once a year. If rates are higher when your rate adjusts, you’ll have a higher monthly payment than you started with.
If you’re considering an ARM, make sure you understand how much your rate could increase each time it adjusts and how much it could ultimately increase over the life of the loan.
Are mortgage rates going up?
Mortgage rates began rising from record lows in the second half of 2021 and have risen significantly so far in 2022. More recently, rates have been relatively volatile.
In the last 12 months, the Consumer Price Index increased by 8.3%. The Federal Reserve has been working to rein in inflation and plans to raise the target federal funds rate two more times this year, following hikes at its last five meetings.
Although not directly tied to the fed funds rate, mortgage rates sometimes rise as a result of Federal Reserve rate increases and investor expectations about how those increases will affect the economy.
Inflation remains high, but has started to slow, which is a good sign for mortgage rates and the broader economy.
How do I find personalized mortgage rates?
Some mortgage lenders allow you to customize your mortgage rate on their websites by entering your down payment amount, zip code, and credit score. The resulting rate isn’t set in stone, but it can give you an idea of what you’ll pay.
If you’re ready to start buying homes, you can apply for pre-approval with a lender. The lender does a hard credit check 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 with multiple lenders. A lender looks at your overall finances and gives you an estimate of the rate you’ll pay.
If you are further along in the home buying process, you have the option to apply for pre-approval with multiple lenders, not just one company. By receiving letters from more than one lender, you can compare personalized rates.
Applying for a pre-approval requires a strong credit pull. Try to apply with multiple lenders within a few weeks, as grouping all of your hard credit claims into the same time period will hurt your credit score less.