Key mortgage rates, including 15-year fixed and 30-year fixed mortgages, are continuing to climb to the highest levels since before the pandemic. The average rate of 5/1 adjustable-rate mortgages has also gone up. With mortgage rates at historic lows over the last period, it’s been a fine time for prospective homebuyers to lock in a fixed rate. However, rates fluctuate and are projected to keep going up. Before you buy a house, consider your personal needs and financial situation, and remember to speak with multiple lenders to find the best one for you.
30-year fixed-rate mortgages
The 30-year fixed-mortgage rate average is 3.84%, which is an increase of 6 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 smaller monthly payment than a 15-year one — but often 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 3.23%, which is an increase of 5 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 most likely 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 3.84%, an increase of 6 basis points compared to last week. With an adjustable-rate mortgage mortgage, you’ll usually get a lower interest rate than a 30-year fixed mortgage for the first five years. However, since the rate adjusts with the market rate, you may 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 ARM might be a good option. If not, changes in the market could 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 and increase interest rates.
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 across the country:
Current average mortgage interest rates
|A week ago
|30-year fixed rate
|15-year fixed rate
|30-year jumbo mortgage rate
|30-year mortgage refinance rate
Updated on Feb. 4, 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. When looking into home mortgage rates, consider 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 the interest rate on your mortgage. Generally, you want a good credit score, a larger down payment, a lower DTI and a lower LTV to get a lower interest rate. Besides the mortgage rate, other factors including closing costs, fees, discount points and taxes might also affect the cost of your house. You should speak with a variety of lenders — including 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 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. For fixed-rate mortgages, interest rates are stable for the life of the loan. Unlike a fixed-rate mortgage, the interest rates for an adjustable-rate mortgage are only stable for a certain amount of time (most frequently five, seven or 10 years). After that, the rate fluctuates annually based on the market interest rate.
When deciding between a fixed-rate and adjustable-rate mortgage, you should think about the length of time you plan to live in your house. 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 may offer lower interest rates upfront, fixed-rate mortgages are more stable in the long term. If you don’t have plans to keep your new home for more than three to 10 years, though, an adjustable-rate mortgage could give you a better deal. There is no best loan term as an overarching rule; it all depends on your goals and your current financial situation. Be sure to do your research and think about your own priorities when choosing a mortgage.