A number of mortgage rates surged today to the highest they’ve been since early 2020, including 15-year fixed and 30-year fixed mortgage rates. We also saw a significant rise in the average rate of 5/1 adjustable-rate mortgages. Mortgage rates have been quite low over the last period, making it a good time for prospective homebuyers to lock in a fixed rate. But rates are dynamic and are projected to continue to rise. Before you buy a house, remember to consider your personal needs and financial situation, and speak with multiple lenders to find the best one for you.
30-year fixed-rate mortgages
The average 30-year fixed mortgage interest rate is 3.68%, which is a growth of 16 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 mortgage will often have a greater 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 3.01%, which is an increase of 17 basis points from the same time last week. You’ll definitely have a bigger monthly payment with a 15-year fixed mortgage compared to a 30-year fixed mortgage, even if the interest rate and loan amount are the same. But a 15-year loan will usually be the better deal, if you’re able to afford the monthly payments. You’ll usually 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 3.69%, an uptick of 18 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 adjustable-rate mortgage in the first five years of the mortgage. But since the rate adjusts with the market rate, you might 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 might 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 change.
Mortgage rate trends
While 2022 kicked off with low mortgage rates, they have seen an uptick recently. There are two major factors at play here: increasing inflation rates and a growing economy. That said, rates can always rise and fall for a variety of reasons. The spread of omicron, for instance, kept rates relatively low throughout December and the start of the new year. Overall, rates are expected to go up in 2022, particularly with the Federal Reserve’s decision to reduce its bond purchases.
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 country:
Today’s mortgage interest rates
Rates accurate as of Jan. 24, 2022.
How to find the best mortgage rates
You can get a personalized mortgage rate by connecting with your local mortgage broker or using an online calculator. In order to find the best home mortgage, you’ll need to take into account your goals and overall financial situation. Specific mortgage interest rates will vary based on factors including credit score, down payment, debt-to-income ratio and loan-to-value ratio. 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. Besides the interest rate, factors including closing costs, fees, discount points and taxes might also factor into the cost of your home. Make sure you talk to several different lenders — such as local and national banks, credit unions and online lenders — and comparison shop to find the best loan for you.
How does the loan term impact my mortgage?
One important thing to keep in mind when choosing a mortgage is the loan term, or payment schedule. The loan terms most commonly offered are 15 years and 30 years, although you can also find 10-, 20- and 40-year mortgages. Another important distinction is between fixed-rate and adjustable-rate mortgages. The interest rates in a fixed-rate mortgage are stable for the duration of the loan. Unlike a fixed-rate mortgage, the interest rates for an adjustable-rate mortgage are only the same for a certain amount of time (most frequently five, seven or 10 years). After that, the rate changes annually based on the market interest rate.
One thing to think about when deciding between a fixed-rate and adjustable-rate mortgage is how long you plan on living in your home. For people who plan on staying 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 only plan to keep your house for a couple 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 know your own priorities when choosing a mortgage.