Mortgage rates rose again this week. The average 30-year fixed rate, now at 5.89%, is closer to 6% than it has been in more than a decade, according to Freddie Mac. Rates previously peaked in June and trended lower, but the likelihood of more aggressive Federal Reserve policy pushed them back up.
The Fed raised the federal funds rate to control inflation. In July, prices rose at an annual rate of 8.5%, a slower pace than the previous month but still well above the central bank’s 2% target.
The Fed wants to prevent consumers from starting to see such a high level of inflation as normal. During a question-and-answer session at the Cato Institute’s 40th annual monetary conference on Thursday, Fed Chairman Jerome Powell said that was what had made it so difficult to reduce the high inflation seen throughout throughout the 1970s and into the 1980s, which only slowed when then-President Paul Volcker raised rates sharply and plunged the economy into two recessions.
“It’s really our view, and my view, that we need to act now, frankly, strongly, as we have done and we need to continue until the job is done to avoid this,” Powell said. “We think we can avoid the very high social costs that Paul Volcker and the Fed had to put in place to bring down inflation and prepare us for a long period of price stability.”
Given that the Fed has signaled that it will continue to act aggressively to bring inflation down, mortgage rates are likely to remain high throughout 2022. But if we enter a recession, rates could start to lower.
Mortgage rates today
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Mortgage refinance rates today
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Use our free mortgage calculator to see the impact of today’s mortgage rates on your monthly payments. By plugging in different rates and terms, you’ll also understand how much you’ll pay over the life of your mortgage.
Your estimated monthly payment
- pay one 25% a higher down payment would save you $8,916.08 on interest charges
- Lower the interest rate by 1% would save you $51,562.03
- Pay an extra fee $500 each month would reduce the term of the loan by 146 month
Click “More Details” for tips on how to save money on your long-term mortgage.
30-year fixed mortgage rates
The current average 30-year fixed mortgage rate is 5.89%, according to Freddie Mac. This is an increase from last week, when it was 5.66%.
The 30-year fixed rate mortgage is the most common type of mortgage. With this type of mortgage, you’ll pay back what you borrowed over 30 years and your interest rate won’t change for the life of the loan.
The 30-year long term allows you to spread your payments out over a long period, which means you can keep your monthly payments lower and more manageable. The tradeoff is that you’ll get a higher rate than with shorter terms or adjustable rates.
15-year fixed mortgage rates
The average 15-year fixed mortgage rate is 5.16%, an increase from the previous week, according to data from Freddie Mac. This is the first time that this rate has exceeded 5% since 2009.
If you’re looking for the predictability that comes with a fixed rate, but are looking to spend less on interest over the life of your loan, a 15-year fixed rate mortgage might be right for you. Since these terms are shorter and have lower rates than 30-year fixed rate mortgages, you could potentially save tens of thousands of dollars in interest. However, you will have a higher monthly payment than you would with a longer term.
5/1 Adjustable Mortgage Rates
The average 5/1 adjustable mortgage rate is 4.64%, an increase from the previous week.
Variable rate mortgages can seem very attractive to borrowers when rates are high, as rates on these mortgages are generally lower than fixed mortgage rates. A 5/1 ARM is a 30 year mortgage. For the first five years, you will have a fixed rate. After that, your rate will adjust once a year. If rates are higher when your rate adjusts, you’ll have a higher monthly payment than you started with.
If you’re considering an ARM, make sure you understand how much your rate might increase each time it adjusts and how much it might ultimately increase over the life of the loan.
Are mortgage rates increasing?
Mortgage rates started to recover from historic lows in the second half of 2021 and have risen significantly so far in 2022. More recently, rates have been relatively volatile.
Over the past 12 months, the consumer price index has increased by 8.5%. The Federal Reserve has been struggling to keep inflation under control and plans to raise the target federal funds rate three more times this year, following increases in March, May, June and July.
Although not directly tied to the fed funds rate, mortgage rates are sometimes pushed higher due to Fed rate hikes and investors’ expectations of the impact of those hikes on the economy. .
Inflation remains high, but has started to slow, which is a good sign for mortgage rates and the economy in general.
How can I find personalized mortgage rates?
Some mortgage lenders allow you to customize your mortgage rate on their websites by entering your down payment amount, zip code and credit score. The resulting rate is not fixed, but it can give you an idea of what you will pay.
If you’re ready to start buying homes, you can get pre-approved from a lender. The lender makes a firm credit application and reviews your financial details to lock in a mortgage rate.