Mortgage Interest Rates Today for Jul. 6, 2022: Rates Decreased – CNET

A few major mortgage rates receded today. There was a significant decline in 30-year fixed mortgage rates and 15-year fixed rates. The average rates for 5/1 adjustable-rate mortgages also ticked down.

Mortgage rates have been rather consistently going up since the start of this year, and are expected to keep climbing throughout 2022. Of course, interest rates are dynamic and unpredictable — at least on a daily or weekly basis — as they respond to a wide variety of economic factors. At the moment, two of those factors — inflation and the federal funds rate — are particularly influential. The Federal Reserve has already increased interest rates three times this year and has signaled its intention to hike rates again to contain inflation. That will almost certainly translate into higher mortgage rates and, for prospective borrowers, steeper monthly mortgage payments. As such, homebuyers may have better luck locking in a lower mortgage interest rate sooner than later. It’s always a good idea to interview multiple lenders to compare rates and fees to find the best mortgage for your specific situation.

30-year fixed-rate mortgages

The 30-year fixed-mortgage rate average is 5.57%, which is a decrease of 34 basis points compared to one week 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 mortgage will usually have a higher interest rate than a 15-year fixed rate mortgage — but also a lower monthly payment. 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 4.84%, which is a decrease of 30 basis points from the same time last week. 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, 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 4.26%, a downtick of 2 basis points from the same time last week. For the first five years, you’ll usually get a lower interest rate with a 5/1 adjustable-rate mortgage compared to a 30-year fixed mortgage. However, you could end up paying more after that time, depending on the terms of your loan and how the rate shifts with the market rate. If you plan to sell or refinance your house before the rate changes, an adjustable-rate mortgage might make sense for you. If not, shifts in the market could significantly increase your interest rate.

Mortgage rate trends

Though mortgage rates were historically low at the beginning of 2022, they have been increasing somewhat steadily since then. The reason: The Federal Reserve has raised interest rates by 0.75 percentage points just this month — the highest rate increase since 1994 — in an attempt to curb record-high inflation. As a general rule, when inflation is low, mortgage rates tend to be lower. When inflation is high, rates tend to be higher.

Though the Fed does not directly set mortgage rates, the central bank’s policy actions influence how much you pay to finance your home loan. And the Fed has signaled it will continue to raise rates over the course of this year. So, if you’re looking to buy a house in 2022, expect mortgage rates to increase as the year goes on.

We use data 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 across the country:

Average mortgage interest rates

Product Rate Last week Change
30-year fixed 5.57% 5.91% -0.34
15-year fixed 4.84% 5.14% -0.30
30-year jumbo mortgage rate 5.50% 5.89% -0.39
30-year mortgage refinance rate 5.52% 5.89% -0.37

Rates as of July 6, 2022.

How to find personalized mortgage rates

You can get a personalized mortgage rate by connecting with your local mortgage broker or using an online calculator. In order to find the best home mortgage, you’ll need to consider your goals and current finances. 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. Generally, you want a good credit score, a higher down payment, a lower DTI and a lower LTV to get a lower interest rate. Aside from the mortgage interest rate, other factors including closing costs, fees, discount points and taxes might also factor into the cost of your home. Make sure you speak with a variety of lenders — like 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?

When picking a mortgage, remember to consider 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. The interest rates in a fixed-rate mortgage are the same for the duration of the loan. For adjustable-rate mortgages, interest rates are set for a certain number of years (usually five, seven or 10 years), then the rate adjusts annually based on the market interest rate.

When choosing between a fixed-rate and adjustable-rate mortgage, you should think about the length of time you plan to stay in your house. For people who plan on staying long-term in a new house, fixed-rate mortgages may be the better option. Fixed-rate mortgages offer greater stability over time in comparison to adjustable-rate mortgages, but adjustable-rate mortgages might offer lower interest rates upfront. However you could get a better deal with an adjustable-rate mortgage if you only have plans to keep your home for a couple years. 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 your own priorities when choosing a mortgage.

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