Mortgage rates have had a dramatic 2022.
After a few years of rates near record lows – around 3% or lower for a 30-year fixed rate – averages have roughly doubled since January. Inflation is the main reason why, and rates have escalated as the Federal Reserve has ratcheted up its interest rate to tame those high prices.
Higher mortgage rates have cooled off a piping hot housing market. Home prices have started to dip since the start of summer, and are falling faster in some communities. Unfortunately those higher rates also mean monthly payments are likely to be significantly higher. Run today’s mortgage rates through a calculator and give yourself plenty of breathing room, as rates are changing quickly.
Let’s look at today’s rates and what they mean for borrowers.
Looking at today’s mortgage rates a number of preeminent rates moved higher. The averages for both 30-year fixed and 15-year fixed mortgages both saw increases. For variable rates, the 5/1 adjustable-rate mortgage (ARM) also advanced.
The averages for 30-year fixed, 15-year fixed, and 5/1 ARMs are:
Mortgage Rate Forecast: Why Do Mortgage Rates Change?
Mortgage rates have been pushed up primarily by the highest inflation in four decades. The consumer price index showed prices up 8.2% year-over-year in September, compared to 8.3% in August. Inflation has remained higher than expected.
In response to that high inflation, the Federal Reserve has increased its benchmark short-term interest rate, known as the federal funds rate. In November it raised the federal funds rate by 75 basis points for the fourth time in a row. While the Fed’s changes don’t directly drive increases in mortgage rates, they have some correlation because they both respond to inflation.
“Inflation is absolutely in the driver’s seat, particularly as it pertains to mortgage rates. Until we get some sustained evidence that inflation is beginning to recede, the upward pressure on mortgage rates will remain,” says Odeta Kushi, deputy chief economist at First American Financial Corporation.
Are Current Mortgage Rates Good For Buying a Home Right Now?
This year’s dramatic surge in mortgage rates has complicated the math for homebuyers. Mortgage costs are significantly higher than they were just a few months ago, oftentimes wiping out any savings that would be seen from lower home prices.
Home prices remain near their all-time highs and are still higher than they were at the same point last year, despite some drops from their peaks earlier in the summer.
The most important thing is to do the math and calculate your expected monthly payment, and see if that fits your budget. The softening demand for homes could also mean you’re more likely to be able to find a deal or get a seller to agree to concessions, such as paying mortgage points to get you a lower interest rate.
“It’s always a good time to buy a home, if that’s what is important to you. It’s just about doing your research and making good informed decisions,” says Eileen Derks, head of mortgage at Laurel Road, an online lender owned by KeyBank that specializes in serving health care professionals.
Closing Costs & Loan Fees
If you take out a mortgage, you’ll want to be aware of the closing costs. Closing costs can be anywhere between 3-6% of the loan amount, and include fees such as loan origination charges, prepaid interest and property taxes. Choosing a higher interest rate in exchange for lender credit can reduce your upfront costs. This strategy can save you money in the short-term, so it’s worth looking into if there is a chance you’ll be selling the home or refinancing in five to eight years.
Looking at Today’s Mortgage Refinance Rates
Refinancing became a bit more expensive today as 30-year fixed and 15-year fixed refinance mortgages saw their average rates trend upward. Shorter term, 10-year fixed-rate refinance mortgages also moved up.
The average refinance rates are as follows:
Current Mortgage Rates.
30-Year Fixed Mortgage Rates
The average 30-year fixed mortgage interest rate is 7.29%, which is a growth of 15 basis points from the previous week.
15-Year Mortgage Interest Rates
The median rate for a 15-year fixed mortgage is 6.48%, which is an increase of 9 basis points compared to a week ago.
A 15-year, fixed-rate mortgage’s monthly payment will be much bigger. So finding room in your budget for a 30-year loan’s monthly payment would be easier. But, 15-year loans have some considerable benefits: You’ll save thousands of dollars in interest and pay off your loan much faster.
5/1 ARM Rates
A 5/1 ARM has an average rate of 5.59%, which is a climb of 7 basis points from seven days 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 rate could climb higher and your payment might grow by hundreds of dollars a month.
How We Calculate Our Mortgage Rates
NextAdvisor’s rate averages are pulled from Bankrate’s daily rate data.. These overnight rates are based on a specific personal financial profile, which only includes loans for primary residences where the borrower has a FICO score of 740+. Bankrate is part of the same parent company as NextAdvisor.
This table has current average rates based on information provided to Bankrate by lenders nationwide:
Rates accurate as of November 7, 2022.
Pro Tip
Add your interest rate and other estimated figures into our mortgage calculator to see an estimated monthly payment.
Mortgage Rate Frequently Asked Questions (FAQ):
How Do I Get the Best Mortgage Rate?
There are two key considerations to getting the lowest mortgage rate: Loan-to-value ratio (LTV), and your credit score.
Having a credit score of 750 or above will help you qualify for the best rate. But, even a score of over 700 can get you a noticeable rate reduction compared to a lower credit score. Once your score starts climbing above 800, the mortgage rate discount is negligible.
Lenders provide 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 make a larger down payment. 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).
Is It a Good Idea to Lock in My Mortgage Rate Right Now?
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.
When you lock in your rate, ask your lender how long the lock will last. A rate lock can be good for anywhere from 30 to 60 days, which typically will give you enough time to close before the lock expires. If something happens where you need to extend your rate lock, ask about fees as many lenders charge a fee for extending a rate lock.
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