A few major mortgage rates slumped over the last seven days. The average interest rates for both 15-year fixed and 30-year fixed mortgages took a tumble. For variable rates, the 5/1 adjustable-rate mortgage also decreased.
Mortgage rates have been increasing consistently since the start of 2022, following in the wake of a series of. Interest rates are dynamic and unpredictable -- at least on a daily or weekly basis -- and they respond to a wide variety of economic factors. But the Fed's actions, designed to mitigate the , are having an unmistakable impact on mortgage rates.
If you're looking to buy a home, trying to time the market may not play to your favor. If inflation continues to increase and rates continue to climb, it will likely translate to higher interest rates -- and steeper monthly mortgage payments. As such, you may have better luck locking in a lower mortgage interest rate sooner rather than later. No matter when you decide to shop for a home, it's always a good idea to seek out multiple lenders to compare rates and fees to find the best mortgage for your specific situation.
30-year fixed-rate mortgages
The average interest rate for a standard 30-year fixed mortgage is 6.85%, which is a decrease of 9 basis points compared to one week ago. (A basis point is equivalent to 0.01%.) Thirty-year fixed mortgages are the most common loan term. A 30-year fixed mortgage will usually have a higher interest rate than a 15-year fixed rate mortgage -- but also a lower monthly payment. You won't be able to pay off your house as quickly and you'll pay more interest over time, but a 30-year fixed mortgage is a good option if you're looking to minimize your monthly payment.
15-year fixed-rate mortgages
The average rate for a 15-year, fixed mortgage is 6.21%, which is a decrease of 3 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. However, if you can afford the monthly payments, there are several benefits to a 15-year loan. You'll typically get a lower interest rate, and you'll pay less interest in total because you're paying off your mortgage much quicker.
5/1 adjustable-rate mortgages
A 5/1 ARM has an average rate of 5.49%, a downtick of 5 basis points compared to last week. You'll usually get a lower interest rate (compared to a 30-year fixed mortgage) with a 5/1 ARM in the first five years of the mortgage. But you may end up paying more after that time, depending on the terms of your loan and how the rate adjusts with the market rate. Because of this, an adjustable-rate mortgage might be a good option if you plan to sell or refinance your house before the rate changes. But if that's not the case, you could be on the hook for a significantly higher interest rate if the market rates change.
Mortgage rate trends
Though mortgage rates were historically low at the beginning of 2022, they have been climbing steadily since. The Federal Reserve recently raised interest rates by another 0.75 percentage points in an attempt to curb record-high inflation. The Fed has raised rates a total of six times this year, but inflation still remains high. As a general rule, when inflation is low, mortgage rates tend to be lower. When inflation is high, rates tend to be higher.
Though the Fed does not directly set mortgage rates, the central bank's policy actions influence how much you pay to finance your home loan. If you're looking to buy a house in 2022, keep in mind that the Fed has signaled it will continue to raise rates, and mortgage rates could increase as the year goes on. Whether rates follow their upward projection or begin to level out hinges on if inflation actually slows.
We use data collected by Bankrate, which is owned by the same parent company as CNET, to track changes in these daily rates. This table summarizes the average rates offered by lenders across the US:
Today's mortgage interest rates
|Loan term||Today's Rate||Last week||Change|
|30-year mortgage rate||6.85%||6.94%||-0.09|
|15-year fixed rate||6.21%||6.24%||-0.03|
|30-year jumbo mortgage rate||6.85%||6.90%||-0.05|
|30-year mortgage refinance rate||6.88%||6.91%||-0.03|
Rates accurate as of Nov. 23, 2022.
How to find the best mortgage rates
When you're ready to apply for a loan, you can connect with a local mortgage broker or search online. Make sure to take into account your current finances and your goals when looking for a mortgage.
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. Having a higher credit score, a higher down payment, a low DTI, a low LTV or any combination of those factors can help you get a lower interest rate.
The interest rate isn't the only factor that affects the cost of your home. Be sure to also consider other costs such as fees, closing costs, taxes and discount points. Make sure to comparison shop with multiple lenders -- such as credit unions and online lenders in addition to local and national banks -- in order to get a loan that's right for you.
How does the loan term impact my mortgage?
One important factor to consider when choosing a mortgage is the loan term, or payment schedule. The most common mortgage terms are 15 years and 30 years, although 10-, 20- and 40-year mortgages also exist. Mortgages are further divided into fixed-rate and adjustable-rate mortgages. For fixed-rate mortgages, interest rates are fixed for the life of the loan. Unlike a fixed-rate mortgage, the interest rates for an adjustable-rate mortgage are only set for a certain amount of time (usually five, seven or 10 years). After that, the rate fluctuates annually based on the current interest rate in the market.
When choosing between a fixed-rate and adjustable-rate mortgage, you should consider the length of time you plan to live in your home. Fixed-rate mortgages might be a better fit for those who plan on staying in a home for quite some time. While adjustable-rate mortgages might offer lower interest rates upfront, fixed-rate mortgages are more stable in the long term. However you could get a better deal with an adjustable-rate mortgage if you only plan to keep your house for a few years. The best loan term is entirely dependent on your own situation and goals, so be sure to take into consideration what's important to you when choosing a mortgage.