A few notable mortgage rates fell significantly over the last week. The average interest rates for both 15-year fixed and 30-year fixed mortgages moved down. At the same time, average rates for 5/1 adjustable-rate mortgages ticked up.
Mortgage rates have been increasing consistently since the start of 2022, following in the wake of a series of interest rate hikes by the Federal Reserve. Interest rates are dynamic and unpredictable — at least on a daily or weekly basis — and they respond to a wide variety of economic factors. But the Fed’s actions, designed to mitigate the high rate of inflation, are having an unmistakable impact on mortgage rates.
If you’re looking to buy a home, trying to time the market may not play to your favor. If inflation continues to increase and rates continue to climb, it will likely translate to higher interest rates — and steeper monthly mortgage payments. As such, 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
For a 30-year, fixed-rate mortgage, the average rate you’ll pay is 6.79%, which is a decline of 9 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 mortgage will often have a greater 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 6.11%, which is a decrease of 11 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 higher monthly payment. But a 15-year loan will usually be the better deal, as long as you can afford the monthly payments. These include typically 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 5.50%, an increase of 2 basis points compared to a week ago. For the first five years, you’ll typically get a lower interest rate with a 5/1 ARM compared to a 30-year fixed mortgage. However, since the rate changes with the market rate, you might end up paying more after that time, as described in the terms of your loan. Because of this, an adjustable-rate mortgage may 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
Though mortgage rates were historically low at the beginning of 2022, they have been climbing steadily since. 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 six 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 data 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 country:
Current average mortgage interest rates
| Loan type | Interest rate | A week ago | Change |
|---|---|---|---|
| 30-year fixed rate | 6.79% | 6.88% | -0.09 |
| 15-year fixed rate | 6.11% | 6.22% | -0.11 |
| 30-year jumbo mortgage rate | 6.80% | 6.88% | -0.08 |
| 30-year mortgage refinance rate | 6.79% | 6.90% | -0.11 |
Rates as of Nov. 29, 2022.
How to shop for the best mortgage rate
You can get a personalized mortgage rate by connecting with your local mortgage broker or using an online calculator. Make sure to consider your current finances and your goals when looking for a mortgage.
Things that affect what the interest rate you might get on your mortgage include: your credit score, down payment, loan-to-value ratio and your debt-to-income ratio. 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 costs such as fees, closing costs, taxes and discount points. You should shop around with multiple lenders — for example, credit unions and online lenders in addition to local and national banks — in order to get a mortgage that’s the best fit for you.
What is a good loan term?
One important thing you should consider when choosing a mortgage is 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. Another important distinction is between 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 fixed for a certain number of years (most frequently five, seven or 10 years), then 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 live in your home. Fixed-rate mortgages might be a better fit for people who plan on staying in a home for a while. While adjustable-rate mortgages can sometimes offer lower interest rates upfront, fixed-rate mortgages are more stable over time. If you don’t have plans to keep your new house for more than three to 10 years, however, an adjustable-rate mortgage could give you a better deal. The best loan term all depends on your specific situation and goals, so be sure to think about what’s important to you when choosing a mortgage.
