A handful of important mortgage rates moved up today. 15-year fixed and 30-year fixed mortgage rates both moved higher. The average rate of the most common type of variable-rate mortgage, the 5/1 adjustable-rate mortgage, also increased. 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 this year. 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 4.27%, which is an increase of 2 basis points compared to 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 rate mortgage will usually have a smaller monthly payment than a 15-year one — but typically 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 3.50%, which is an increase of 4 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 bigger monthly payment. But a 15-year loan will usually be the better deal, if you can afford the monthly payments. You’ll typically 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 4.29%, an increase of 4 basis points from seven days ago. With an ARM mortgage, you’ll typically get a lower interest rate than a 30-year fixed mortgage for the first five years. However, since the rate changes 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 change.
Mortgage rate trends
Though 2022 began with low mortgage rates, there has been a steady rise recently. There are two major factors at play here: increasing inflation rates and a growing economy. That said, rates can always vary 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 increase interest rates.
We use data collected by Bankrate, which is owned by the same parent company as CNET, to track daily mortgage rate trends. This table summarizes the average rates offered by lenders nationwide:
Today’s mortgage interest rates
Rates accurate as of Mar. 3, 2022.
How to find personalized 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 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 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 other factors such as fees, closing costs, taxes and discount points. Be sure to shop around with multiple lenders — for example, credit unions and online lenders in addition to local and national banks — in order to get a loan that works best for you.
What is a good loan term?
When picking a mortgage, remember to consider 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. 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 (commonly five, seven or 10 years). After that, the rate fluctuates annually based on the current interest rate in the market.
One thing to take into consideration when choosing between a fixed-rate and adjustable-rate mortgage is how long you plan on living in your home. Fixed-rate mortgages might be a better fit if you plan on living in a home for quite some time. While adjustable-rate mortgages might offer lower interest rates upfront, fixed-rate mortgages are more stable over time. However you could get a better deal with an adjustable-rate mortgage if you only plan to keep your home for a couple years. There is no best loan term as an overarching rule; it all depends on your goals and your current financial situation. It’s important to do your research and think about what’s most important to you when choosing a mortgage.