Mortgage Rates on Jan. 17, 2023: Rates Slip

A couple of notable mortgage rates tailed off this last week, though rates remain high compared to a year ago. If you're in the market for a home loan, see how the Fed's interest rate hikes could affect you.

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A couple of principal mortgage rates fell over the last seven days. Fifteen- and 30-year fixed mortgage rates both dropped off, the latter quite significantly. We also saw a cut in the average rate of 5/1 adjustable-rate mortgages.

Mortgage rates increased dramatically in 2022, as the Federal Reserve hiked interest rates repeatedly throughout the year. 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 high rate of inflation, had an unmistakable impact on mortgage rates.

The outlook for 2023 remains uncertain. Though higher rates are likely to here to stay, the biggest increases may be behind us. That noted, trying to time the market is tricky. If inflation persists, more interest rate hikes could follow. As such, you may have better luck locking in a lower mortgage interest rate now instead of waiting; after all, you can always refinance later on. 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 6.41%, which is a decrease of 1 basis point compared to 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 mortgage will usually have a greater 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 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 5.73%, which is a decrease of 13 basis points compared to a week 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, if you're able to afford the monthly payments, there are several benefits to a 15-year loan. These include usually being able to get a lower interest rate, paying off your mortgage sooner, and paying less total interest in the long run.

5/1 adjustable-rate mortgages

A 5/1 adjustable-rate mortgage has an average rate of 5.46%, a decrease of 6 basis points from the same time last week. With an ARM mortgage, you'll usually get a lower interest rate than a 30-year fixed mortgage for the first five years. But since the rate shifts with the market rate, you could end up paying more after that time, as described in the terms of your loan. For borrowers who plan to sell or refinance their house before the rate changes, an adjustable-rate mortgage may be a good option. But if that's not the case, you could be on the hook for a much higher interest rate if the market rates shift.

Mortgage rate trends

Mortgage rates were historically low at the beginning of 2022 but rose steadily throughout the year. The Federal Reserve raised interest rates seven times in an attempt to curb record-high inflation. 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, keep in mind that the Fed has signaled it will continue to raise rates in 2023, and that those increases may drive mortgage rates even higher.

We use rates 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 nationwide:

Average mortgage interest rates

ProductRateLast weekChange
30-year fixed6.41%6.42%-0.01
15-year fixed5.73%5.86%-0.13
30-year jumbo mortgage rate6.40%6.38%+0.02
30-year mortgage refinance rate 6.48%6.41%+0.07

Rates as of Jan. 17, 2023.

How to find the best mortgage rates

To find a personalized mortgage rate, talk to your local mortgage broker or use an online mortgage service. In order to find the best home mortgage, you'll need to consider your goals and overall financial situation.

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 good 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 factors such as fees, closing costs, taxes and discount points. Be sure to shop around with multiple lenders -- including credit unions and online lenders in addition to local and national banks -- in order to get a mortgage that's the best fit for you.

What is a good loan term?

One important thing to consider when choosing a mortgage is the loan term, or payment schedule. The mortgage terms most commonly offered are 15 years and 30 years, although you can also find 10-, 20- and 40-year mortgages. Mortgages are further divided into fixed-rate and adjustable-rate mortgages. The interest rates in a fixed-rate mortgage are set for the duration 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 market rate.

When deciding between a fixed-rate and adjustable-rate mortgage, you should take into consideration how long you plan to stay in your home. Fixed-rate mortgages might be a better fit for those who plan on living in a home for a while. While adjustable-rate mortgages can sometimes offer lower interest rates upfront, fixed-rate mortgages are more stable in the long term. If you don't plan to keep your new home for more than three to 10 years, though, an adjustable-rate mortgage may give you a better deal. The best loan term is entirely dependent on your personal situation and goals, so make sure to think about what's important to you when choosing a mortgage.