Some important mortgage rates increased over the last seven days. The average 15-year fixed and 30-year fixed mortgage rates both grew. For variable rates, the 5/1 adjustable-rate mortgage also increased.
Mortgage rates increased dramatically in 2022, as the Federal Reserve hiked interest rates repeatedly throughout the year. 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, had an unmistakable impact on mortgage rates.
The outlook for 2023 remains uncertain. Though higher rates are likely to here to stay, the biggest increases may be behind us. That noted, trying to time the market is tricky. If inflation persists, more interest rate hikes could follow. As such, you may have better luck locking in a lower mortgage interest rate now instead of waiting; after all, you can always refinance later on. 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 6.60%, which is a growth of 3 basis points from one week ago. (A basis point is equivalent to 0.01%.) Thirty-year fixed mortgages are the most common loan term. A 30-year fixed rate mortgage will usually have a smaller monthly payment than a 15-year one — but usually 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 5.97%, which is an increase of 4 basis points from seven days ago. 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 5.51%, an increase of 6 basis points from seven days ago. 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. But since the rate shifts with the market rate, you might end up paying more after that time, as described in the terms of your loan. If you plan to sell or refinance your house before the rate changes, an adjustable-rate mortgage may make sense for you. But if that’s not the case, you may be on the hook for a significantly higher interest rate if the market rates shift.
Mortgage rate trends
Mortgage rates were historically low at the beginning of 2022, but climbed steadily throughout the year. The Federal Reserve raised interest rates seven times 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. If you’re looking to buy a house, keep in mind that the Fed has signaled it will continue to raise rates in 2023, and that those increases may drive mortgage rates even higher.
We use information 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 nationwide:
Current average mortgage interest rates
| Loan type | Interest rate | A week ago | Change |
|---|---|---|---|
| 30-year fixed rate | 6.60% | 6.57% | +0.03 |
| 15-year fixed rate | 5.97% | 5.93% | +0.04 |
| 30-year jumbo mortgage rate | 6.55% | 6.55% | N/C |
| 30-year mortgage refinance rate | 6.66% | 6.69% | -0.03 |
Rates as of Jan. 4, 2023.
How to shop for the best mortgage rate
You can get a personalized mortgage rate by reaching out to your local mortgage broker or using an online calculator. In order to find the best home mortgage, you’ll need to take into account your goals and overall financial situation.
Specific interest rates will vary based on factors including credit score, down payment, debt-to-income ratio and loan-to-value ratio. Having a higher credit score, a higher 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 costs such as fees, closing costs, taxes and discount points. Make sure to comparison-shop with multiple lenders — like 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?
When picking a mortgage, you should consider the loan term, or payment schedule. The most common loan terms are 15 and 30 years, although 10-, 20- and 40-year mortgages also exist. Another important distinction is between fixed-rate and adjustable-rate mortgages. For fixed-rate mortgages, interest rates are fixed for the life 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 (typically five, seven or 10 years). After that, the rate fluctuates annually based on the market interest rate.
One important factor to think about when deciding between a fixed-rate and adjustable-rate mortgage is how long you plan on staying in your house. 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 compared to adjustable-rate mortgages, but adjustable-rate mortgages might offer lower interest rates upfront. If you aren’t planning to keep your new house for more than three to 10 years, though, an adjustable-rate mortgage may give you a better deal. The best loan term all depends on your specific situation and goals, so be sure to take into consideration what’s important to you when choosing a mortgage.
