A couple of important 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 4.23%, which is a growth of 27 basis points as seven days ago. (A basis point is equivalent to 0.01%.) The most frequently used 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 usually 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 3.54%, which is an increase of 22 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 larger 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 ARM has an average rate of 4.25%, an addition of 28 basis points compared to last week. For the first five years, you’ll typically get a lower interest rate with a 5/1 adjustable-rate mortgage compared to a 30-year fixed mortgage. But shifts in the market may cause your interest rate to increase after that time, as detailed in the terms of your loan. If you plan to sell or refinance your house before the rate changes, an ARM could make sense for you. But if that’s not the case, you might 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 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 US:
Today’s mortgage interest rates
Rates accurate as of Feb. 16, 2022.
How to find personalized mortgage rates
To find a personalized mortgage rate, meet with your local mortgage broker or use an online mortgage service. When researching 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. Having a higher 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. The interest rate isn’t the only factor that affects the cost of your home — be sure to also consider additional factors such as fees, closing costs, taxes and discount points. Be sure to talk to multiple lenders — such as local and national banks, credit unions and online lenders — and comparison shop to find the best loan for you.
What is a good loan term?
When picking a mortgage, remember to consider 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. Another important distinction is between 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 the same for a certain amount of time (typically five, seven or 10 years). After that, the rate fluctuates annually based on the current interest rate in the market.
When deciding between a fixed-rate and adjustable-rate mortgage, you should consider how long you plan to stay in your house. Fixed-rate mortgages might be a better fit for people who plan on staying in a home for quite some time. Fixed-rate mortgages offer greater stability over time in comparison to adjustable-rate mortgages, but adjustable-rate mortgages might offer lower interest rates upfront. If you don’t have plans to keep your new home for more than three to 10 years, though, an adjustable-rate mortgage might give you a better deal. The best loan term is entirely dependent on your own situation and goals, so be sure to think about what’s important to you when choosing a mortgage.