A few notable mortgage rates slumped today. The average interest rates for both 15-year fixed and 30-year fixed mortgages had a downswing.
Mortgage rates have been slowly rising since the start of this year, and are expected to increase throughout 2022. Rates are now closer to 2018 levels than the historic lows seen during the height of the pandemic. Interest rates are dynamic -- they rise and fall on a daily basis depending on 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.
30-year fixed-rate mortgages
The 30-year fixed-mortgage rate average is 5.28%, which is a decrease of 12 basis points from one week ago. (A basis point is equivalent to 0.01%.) Thirty-year fixed mortgages are the most frequently used loan term. A 30-year fixed rate mortgage will usually have a lower monthly payment than a 15-year one -- but typically a higher interest rate. Although you'll pay more interest over time -- you're paying off your loan over a longer timeframe -- 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 4.60%, which is a decrease of 16 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 bigger 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.
Mortgage rate trends
While 2022 began with low mortgage rates, there has been an uptick in recent months, and rates will likely continue going up throughout 2022. Home loan rates are influenced by various economic factors. A major one is government policy set by the Fed, which raised rates by half a percentage point in May 2022, the highest increase in 22 years, in response to record-high inflation. This was the second rate increase by the Fed and several more are expected throughout the year. So, if you're looking to buy a house in 2022, expect mortgage rates to keep increasing.
We use rates 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 nationwide:
Today's mortgage interest rates
Rates accurate as of May 25, 2022.
How to find personalized mortgage rates
You can get a personalized mortgage rate by reaching out to your local mortgage broker or using an online calculator. When looking into home mortgage rates, consider your goals and current financial situation. A range of factors -- including your down payment, credit score, loan-to-value ratio and debt-to-income ratio -- will all affect the interest rate on your mortgage. Generally, you want a good credit score, a higher 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 other costs such as fees, closing costs, taxes and discount points. Make sure to shop around with multiple lenders -- like credit unions and online lenders in addition to local and national banks -- in order to get a mortgage loan that works best for you.
How does the loan term impact my mortgage?
One important thing you should 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 the same for the life of the loan. Unlike a fixed-rate mortgage, the interest rates for an adjustable-rate mortgage are only fixed for a certain amount of time (usually five, seven or 10 years). After that, the rate adjusts annually based on the market interest rate.
When deciding between a fixed-rate and adjustable-rate mortgage, you should think about how long you plan to live in your home. For those who plan on living long-term in a new house, fixed-rate mortgages may be the better option. Fixed-rate mortgages offer greater stability over time in comparison to adjustable-rate mortgages, but adjustable-rate mortgages might offer lower interest rates upfront. However you might get a better deal with an adjustable-rate mortgage if you're only planning to keep your house for a few years. There is no best loan term as a rule of thumb; it all depends on your goals and your current financial situation. It's important to do your research and understand your own priorities when choosing a mortgage.