Some prime mortgage rates went up today. The unusual increase in the interest rate for 30-year fixed rate mortgages is notable, but 15-year fixed rates have also increased. At the same time, average rates for 5/1 adjustable rate mortgages were also inflated. 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 4.86%, up 33 basis points from a week ago. (One basis point equals 0.01%.) Thirty-year fixed-rate mortgages are the most common loan term. A 30-year fixed rate mortgage will generally have a higher interest rate than a 15-year fixed rate mortgage, but also a lower monthly payment. 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 4.09%, up 26 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 generally be the best deal, if you can afford the monthly payments. You will generally 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 variable rate mortgage has an average rate of 4.90%, up 36 basis points from seven days ago. For the first five years, you’ll typically get a lower interest rate with a 5/1 ARM compared to a 30-year fixed mortgage. However, changes in the market may cause your interest rate to increase after this period, as stated in the terms of your loan. For this reason, an adjustable rate mortgage can be a good option if you plan to sell or refinance your home before the rate changes. But if not, you may end up paying 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 various 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 data collected by Bankrate, which is owned by the same parent company as CNET, to track rate changes over time. This table summarizes the average rates offered by lenders across the country:
Current Average Mortgage Interest Rates
|Type of loan||Interest rate||A week ago||Change|
|30-year fixed rate||4.86%||4.53%||+0.33|
|Fixed rate over 15 years||4.09%||3.83%||+0.26|
|30-year jumbo mortgage rate||3.27%||3.15%||+0.12|
|30-year mortgage refinance rate||4.85%||4.50%||+0.35|
Updated March 29, 2022.
How to Shop for the Best Mortgage Rate
You can get a personalized mortgage rate by connecting with your local mortgage broker or using an online calculator. In order to find the best home loan, you will need to consider your current goals and finances. A range of factors, including your down payment, credit score, loan-to-value ratio, and debt-to-income ratio, will all affect your mortgage interest rate. Typically, you want a higher credit score, larger down payment, lower DTI, and lower LTV to get a lower interest rate. Beyond the interest rate, factors such as closing costs, fees, discount points and taxes can also factor into the cost of your home. Be sure to compare with multiple lenders – for example, credit unions and online lenders in addition to local and national banks – to get the 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. Mortgages are further divided into fixed rate and variable rate mortgages. For fixed rate mortgages, interest rates are stable for the life of the loan. Unlike a fixed rate mortgage, the interest rates on an adjustable rate mortgage are only fixed for a certain period of time (most often five, seven or 10 years). After that, the rate adjusts annually based on the market interest rate.
One thing to consider when choosing between a fixed rate and variable rate mortgage is how long you plan to stay in your home. Fixed rate mortgages might be more suitable for those who plan to stay in a home for a while. Fixed rate mortgages offer more stability over time compared to adjustable rate mortgages, but adjustable rate mortgages may 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 get 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. Be sure to do your research and know your own priorities when choosing a mortgage.