A few notable mortgage rates climbed higher today. The swift climb in 30-year fixed mortgage rates is making headlines, but don’t forget about fixed 15-year rates, which inched up as well. We also saw a hike 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 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
For a 30-year, fixed-rate mortgage, the average rate you’ll pay is 4.46%, which is a growth of 35 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 typically a higher interest rate. 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 3.66%, which is an increase of 29 basis points from seven days ago. You’ll definitely have a larger 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, as long as you can afford the monthly payments. 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 adjustable-rate mortgage has an average rate of 4.48%, an addition of 39 basis points compared to a week ago. With an ARM mortgage, you’ll usually get a lower interest rate than a 30-year fixed mortgage for the first five years. However, since the rate shifts with the market rate, you may end up paying more after that time, as described in the terms of your loan. Because of this, an adjustable-rate mortgage might be a good option if you plan to sell or refinance your house before the rate changes. If not, shifts in the market might significantly increase your interest rate.
Mortgage rate trends
While 2022 began with low mortgage rates, there has been an uptick recently. There are two major factors at play here: increasing inflation rates and a growing economy. That said, rates can always fluctuate 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 rates 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 across the US:
Today’s mortgage interest rates
Rates accurate as of Mar. 16, 2022.
How to find personalized mortgage rates
To find a personalized mortgage rate, speak to your local mortgage broker or use an online mortgage service. Make sure to consider your current financial situation and your goals when searching for a mortgage. A range of factors — including your down payment, credit score, loan-to-value ratio and debt-to-income ratio — will all affect your mortgage interest rate. Generally, you want a higher credit score, a larger down payment, a lower DTI and a lower LTV to 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. You should talk to multiple lenders — like local and national banks, credit unions and online lenders — and comparison shop to find the best mortgage for you.
What is a good loan term?
One important factor 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. Another important distinction is between fixed-rate and adjustable-rate mortgages. The interest rates in a fixed-rate mortgage are fixed for the duration of the loan. Unlike a fixed-rate mortgage, the interest rates for an adjustable-rate mortgage are only fixed for a certain amount of time (commonly five, seven or 10 years). After that, the rate fluctuates annually based on the market interest rate.
When choosing between a fixed-rate and adjustable-rate mortgage, you should take into consideration the length of time you plan to stay in your home. For those who plan on staying long-term in a new house, fixed-rate mortgages may be the better option. Fixed-rate mortgages offer more stability over time in comparison to adjustable-rate mortgages, but adjustable-rate mortgages can sometimes offer lower interest rates upfront. If you aren’t planning to keep your new home for more than three to 10 years, though, an adjustable-rate mortgage might give you a better deal. 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 what’s most important to you when choosing a mortgage.
