A handful of closely followed mortgage rates climbed up today. The average 15-year fixed and 30-year fixed mortgage rates both increased. For variable rates, the 5/1 adjustable-rate mortgage also increased. Though mortgage rates have been rather consistently going up since the start of this year, what happens next depends on whether inflation continues to climb or begins to retreat. Interest rates are dynamic and unpredictable — at least on a daily or weekly basis — and they respond to a wide variety of economic factors. Right now, they’re particularly sensitive to inflation and the prospect of a US recession. With so much uncertainty in the market, if you’re looking to buy a home, trying to time the market may not play to your favor. If inflation rises and rates climb, this could translate to higher interest rates and steeper monthly mortgage payments. For this reason, you may have better luck locking in a lower mortgage interest rate sooner rather than later. No matter when you decide to shop for a home, it’s always a good idea to seek out 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 5.98%, which is an increase of 11 basis points from 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 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 5.20%, which is an increase of 12 basis points from seven days ago. 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 can 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 adjustable-rate mortgage has an average rate of 4.42%, an addition of 9 basis points from seven days ago. You’ll typically get a lower interest rate (compared to a 30-year fixed mortgage) with a 5/1 ARM in the first five years of the mortgage. However, shifts in the market might cause your interest rate to increase after that time, as detailed in the terms of your loan. Because of this, an adjustable-rate mortgage could be a good option if you plan to sell or refinance your house before the rate changes. 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 rising somewhat steadily since then. The Federal Reserve recently raised interest rates by another 0.75 percentage points in an attempt to curb record-high inflation. The Fed has raised rates a total of four times this year, but inflation still remains high. 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. If you’re looking to buy a house in 2022, keep in mind that the Fed has signaled it will continue to raise rates, and mortgage rates could increase as the year goes on. Whether rates follow their upward projection or begin to level out hinges on if inflation actually slows. We use information 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 country:
Average mortgage interest rates
| Product | Rate | Last week | Change |
|---|---|---|---|
| 30-year fixed | 5.98% | 5.87% | +0.11 |
| 15-year fixed | 5.20% | 5.08% | +0.12 |
| 30-year jumbo mortgage rate | 5.97% | 5.87% | +0.10 |
| 30-year mortgage refinance rate | 5.95% | 5.82% | +0.13 |
Rates as of Aug. 31, 2022.
How to shop for the best mortgage rate
To find a personalized mortgage rate, meet with your local mortgage broker or use an online mortgage service. Make sure to consider your current finances and your goals when looking 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 rate. 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. Beyond the mortgage interest rate, other factors including closing costs, fees, discount points and taxes might also impact the cost of your house. Be sure to shop around with multiple lenders — such as credit unions and online lenders in addition to local and national banks — in order to get a mortgage loan that’s the right fit for you.
How does the loan term impact my mortgage?
One important factor to consider when choosing a mortgage is 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. 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. For adjustable-rate mortgages, interest rates are set for a certain number of years (commonly five, seven or 10 years), then the rate adjusts annually based on the market rate. One factor to take into consideration when choosing between a fixed-rate and adjustable-rate mortgage is how long you plan on staying in your house. Fixed-rate mortgages might be a better fit for people who plan on living in a home for a while. Fixed-rate mortgages offer greater stability over time compared to adjustable-rate mortgages, but adjustable-rate mortgages may offer lower interest rates upfront. However you might get a better deal with an adjustable-rate mortgage if you only plan to keep your house 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. Be sure to do your research and know your own priorities when choosing a mortgage.
