Today a few important mortgage rates ticked up. Here's how that can affect your mortgage plans.
A variety of important mortgage rates moved up today. There's been a staggering gain in 30-year fixed mortgage rates, and 15-year fixed rates inched up as well. We also saw an inflation in the average rate of 5/1 adjustable-rate mortgages. Mortgage rates have been slowly rising since the start of this year, and are expected to increase throughout 2022. While rates are above their historic records set earlier in the pandemic, they're still relatively low. Interest rates are dynamic – they rise and fall on a daily basis due to numerous economic factors. In general, now is a good time for prospective homebuyers to lock in a lower rate rather than later this year. Speaking with multiple lenders will help you find the best rate available for your financial situation.
The average interest rate for a standard 30-year fixed mortgage is 4.89%, which is a growth of 36 basis points from one week ago. (A basis point is equivalent to 0.01%.) The most common loan term is a 30-year fixed mortgage. A 30-year fixed rate mortgage will usually have a lower monthly payment than a 15-year one -- but often a higher interest rate. 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.
The average rate for a 15-year, fixed mortgage is 4.05%, which is an increase of 20 basis points from the same time last week. 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, as long as you're able to 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.
A 5/1 ARM has an average rate of 4.91%, an increase of 39 basis points compared to a week ago. You'll typically 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 changes in the market could cause your interest rate to increase after that time, as detailed in the terms of your loan. If you plan to sell or refinance your house before the rate changes, an ARM could make sense for you. But if that's not the case, you could be on the hook for a significantly higher interest rate if the market rates shift.
While 2022 kicked off with low mortgage rates, there has been an uptick recently, and rates are expected to continue climbing throughout 2022. Home loan rates are influenced by different economic factors. A major one is government policy set by the Federal Reserve, which raised rates in March for the first time since 2018 in response to record-high inflation. The Fed anticipates raising interest rates six more times this year. However, with the ongoing war in Ukraine, we've seen some fluctuations in mortgage rates, as global instability generally causes interest rates to drop. While you can expect rates to go up and down for these reasons, in general, if you're looking to buy a house in 2022, you should be prepared for interest rates to keep going higher. We use information collected by Bankrate, which is owned by the same parent company as CNET, to track daily mortgage rate trends. This table summarizes the average rates offered by lenders nationwide:
|30-year jumbo mortgage rate||3.28%||3.17%||+0.11|
|30-year mortgage refinance rate||4.88%||4.49%||+0.39|
Rates as of March 31, 2022.
To find a personalized mortgage rate, meet with your local mortgage broker or use an online mortgage service. When researching home mortgage rates, take into account your goals and current 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 rate. Generally, you want a higher credit score, a larger down payment, a lower DTI and a lower LTV to 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 additional factors such as fees, closing costs, taxes and discount points. You should shop around with multiple lenders -- for example, credit unions and online lenders in addition to local and national banks -- in order to get a loan that works best for you.
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. The interest rates in a fixed-rate mortgage are the same for the duration of the loan. For adjustable-rate mortgages, interest rates are the same for a certain number of years (most frequently five, seven or 10 years), then the rate adjusts annually based on the market rate.
When deciding between a fixed-rate and adjustable-rate mortgage, you should take into consideration the length of time you plan to stay in your home. Fixed-rate mortgages might be a better fit for people who plan on living 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 have plans to keep your new house for more than three to 10 years, though, an adjustable-rate mortgage may give you a better deal. The best loan term all depends on your situation and goals, so be sure to think about what's important to you when choosing a mortgage.