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 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 30-year fixed-mortgage rate average is 3.78%, which is a growth of 11 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 mortgage will typically 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 3.18%, which is an increase of 16 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. But a 15-year loan will usually be the better deal, if you can afford the monthly payments. These include typically 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 3.78%, an uptick of 10 basis points from seven days 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. However, you may end up paying more after that time, depending on the terms of your loan and how the rate changes with the market rate. For borrowers who plan to sell or refinance their house before the rate changes, an adjustable-rate mortgage may be a good option. If not, changes in the market may significantly increase your interest rate.
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 information 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:
Today’s mortgage interest rates
Rates accurate as of Jan. 28, 2022.
How to shop for the best mortgage rate
When you are ready to apply for a loan, you can reach out to a local mortgage broker or search online. In order to find the best home mortgage, you’ll need to consider your goals and overall financial situation. Things that affect what mortgage interest rate you might get include: your credit score, down payment, loan-to-value ratio and your debt-to-income ratio. Having a good credit score, a larger down payment, a low DTI, a low LTV, or any combination of those factors can help you get a lower interest rate. Besides the mortgage rate, other costs including closing costs, fees, discount points and taxes might also factor into the cost of your house. Make sure you speak with several different lenders — like local and national banks, credit unions and online lenders — and comparison shop to find the best mortgage for you.
What’s the best loan term?
One important thing to consider when choosing a mortgage is the loan term, or payment schedule. The most common loan 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 stable for the life of the loan. For adjustable-rate mortgages, interest rates are fixed for a certain number of years (usually five, seven or 10 years), then the rate fluctuates annually based on the market interest rate.
One factor to consider when choosing between a fixed-rate and adjustable-rate mortgage is how long you plan on staying in your home. Fixed-rate mortgages might be a better fit for people who plan on living in a home for quite some time. While adjustable-rate mortgages might have lower interest rates upfront, fixed-rate mortgages are more stable over time. However you might get a better deal with an adjustable-rate mortgage if you only have plans to keep your home for a few years. There is no best loan term as a general rule; it all depends on your goals and your current financial situation. Be sure to do your research and understand your own priorities when choosing a mortgage.
