Here are today’s mortgage rates, July 18, 2022 | Benchmark rates varied
After almost two years of record-low mortgage rates, 2022 began with interest rates rising to almost levels not seen since the pandemic.
That doesn’t mean you have to cancel your home buying plans. Yes, rates are higher than they were in 2021, but it’s important to remember that 30-year fixed rates are still close to where they were a few years ago.
In addition, there is much more to the decision to buy a home than just the interest rate. Buying a home is all about making a lifestyle choice. While the mortgage rate market can influence a decision, it’s wise not to base it on just a few basis points of a mortgage rate. The most important thing is to set a realistic home buying budget and stick to it.
Let’s take a look at current mortgage rates, where rates have historically been, and what it all means for the borrower.
Looking at today’s mortgage rates, they didn’t have a specific trajectory. The average interest rate on a 30-year fixed-rate mortgage remained flat, while the average 15-year fixed-rate mortgage fell. The most common type of adjustable rate mortgage is the 5/1 adjustable rate mortgage (ARM), which has slipped.
Mortgage rates are currently:
Mortgage Rate Forecast: Why Are Mortgage Rates Changing?
The increase in mortgage rates this year is due to a variety of economic factors. Persistently high inflation is a big deal, Jacob Channel, senior economic analyst at LendingTree, told us. The May inflation report shows inflation at 8.6%, the highest in 40 years. In response, the Federal Reserve raised its short-term benchmark interest rate to combat this inflation. The Fed hiked rates by 50 basis points in May and 75 basis points in June as inflation remained higher than expected.
Recently we saw mortgage rates rise after the inflation report and before the Fed’s announcement. “I think what we’re seeing is that lenders were already expecting the Fed to hike interest rates by 75 basis points and they started raising mortgage rates preemptively,” Jacob Channel, Senior Economist, told us at LendingTree.
Financial markets are still reacting to other global factors that may affect the economy, namely China’s COVID lockdown and Russia’s invasion of Ukraine. “We have a lot of factors like this that are pushing mortgage rates up,” says Channel. “Volatility has gone through the roof,” Shashank Shekhar, founder and CEO of InstaMortgage, told us. “The market has adjusted to a new news cycle practically every day.”
Current Mortgage Rates: Are They Good for Buying a Home Now?
The year 2022 started with dramatic rate increases. From a historical perspective, however, mortgage rates remain at relatively normal levels.
Due to a combination of limited housing supply and strong demand, house prices have risen significantly from before the pandemic. The higher cost of building homes and massive demand from buyers are also contributing to the rise. This and higher mortgage interest rates make the overall cost of home ownership more expensive for the borrower.
The difference of about half a point can add up to a lot of money on a 30-year mortgage. But it’s best not to try to time the market to get the best mortgage rate. Instead, experts advise focusing on finding the right home and taking action when your personal lifestyle and financial situation indicate the right time.
Interest rates between mortgage lenders can vary significantly. Make sure you shop around between a few different mortgage lenders to make sure you’re getting the best current deal. “The interest rate has a big impact on your monthly affordability as long as you own this house,” Skylar Olsen, chief economist at Tomo, a digital real estate and mortgage company, told us. “It’s actually a critical part of that decision, and to do that, you have to look around.”
Closing Costs & Loan Fees
The collective term for the fees you pay to get a mortgage is closing costs. This includes lender fees and escrow fees, such as taxes and insurance. Generally, closing costs are 3% to 6% of your loan amount. The larger your mortgage, the more you pay in total dollars. It’s important to be mindful of the closing costs you’re paying because the higher your closing costs, the higher your Annual Percentage Rate (APR) will be.
Current mortgage refinancing rates
There’s good news if you’ve been considering refinancing, as average interest rates on 15-year and 30-year fixed refinance loans have plummeted. Short-term 10-year fixed-rate refinancing mortgages also collapsed.
Take a look at today’s refinancing rates:
Current mortgage rates.
Mortgage interest for 30 years
For a 30-year fixed-rate mortgage, the average interest rate you pay is 5.75%, which is unchanged from last week.
Interest rates for 15-year fixed-rate mortgages
The median interest rate for a 15-year fixed-rate mortgage is 4.93%, down 1 basis point from the previous week.
The monthly payment of a 15-year fixed-rate mortgage is higher and puts more strain on your monthly budget than a 30-year mortgage. But 15-year loans have some significant advantages: You save thousands of dollars in interest and pay off your loan much faster.
5/1 adjustable rate mortgage rates
A 5/1 ARM has an average rate of 4.23%, down 2 basis points from last week.
An adjustable rate mortgage is ideal for people looking to sell or refinance ahead of interest rate changes. If they don’t, their interest rates could end up being noticeably higher after an interest rate reset.
For the first five years, a 5/1 ARM typically has a lower interest rate than a 30-year fixed-rate mortgage. Keep in mind that depending on the terms of your loan, your payment could be hundreds of dollars higher after an interest rate adjustment.
This is how we calculate our mortgage interest rates
We use Bankrate’s daily mortgage rate data for our mortgage rate trends. These overnight rates are based on a specific personal profile that includes only single-family home loans with a loan-to-value ratio of 80% or better. Bankrate is part of the same parent company as NextAdvisor.
The current average rates are listed below and are based on Bankrate’s Mortgage Rate Survey:
Prices from July 18, 2022.
pro tip
Use our mortgage calculator to see how your monthly payments will change based on factors like your mortgage rate, down payment, and home insurance.
Mortgage Rate Frequently Asked Questions (FAQ):
How do I qualify for the lowest mortgage rate?
Looking for a mortgage is a great way to qualify for the lowest mortgage rate.
Your mortgage rate depends on a variety of factors that lenders consider when assessing the risk of giving you a mortgage. Your credit rating factors into the decision. And the value of the property compared to the amount of your mortgage is also important. So increasing your down payment can lower your interest rate.
But banks will assess your situation differently. You can provide three different banks with the same documents and receive offers with three different mortgage interest rates and different fees.
When should I freeze my mortgage rate?
It is impossible to know in which direction mortgage rates will move from one day to the next. This is why a mortgage interest rate freeze is such a useful tool, as it protects you when interest rates rise. And since interest rates are currently relatively low, you should secure your interest rate as soon as possible.
If you lock your interest rate, ask your lender how long the lock will last. A rate lock can last anywhere from 30 to 60 days, which usually gives you enough time to close it before the lock expires. If you want to extend the rate lock, ask about fees, as many lenders charge a rate lock extension fee.