National Mortgage Rates Today, July 20, 2022 | Courses are trending up
In 2022, after nearly two years of record-low interest rates, mortgage rates rose to near levels not seen since the pandemic.
Refinancing or buying your home doesn’t have to be put on hold. Although interest rates are higher than in 2021, 30-year fixed rates are still close to where they were a few years ago.
The fact is, a homebuyer’s decision involves much more than just an interest rate. It’s a lifestyle choice. Despite the interest rate market’s impact on mortgages, basing your decision on just a few basis points is not advisable. The most important thing is to set a realistic home buying budget and stick to it.
Let’s look at current mortgage rates, historical rates, and what it all means for borrowers.
If you look at today’s mortgage rates, a number of excellent rates have crept up. The average values increased for both 30-year and 15-year fixed-rate mortgages. At the same time, average rates for 5/1 adjustable rate mortgages (ARM) also increased.
The averages for 30-year fixed, 15-year fixed, and 5/1 ARMs are:
Mortgage Rate Forecast: What’s Driving Changes in Mortgage Rates?
Various economic factors have caused mortgage rates to rise this year. Persistently high inflation is a big reason, Jacob Channel, senior economic analyst at LendingTree, told us. Inflation recently hit 8.6%, the highest level in 40 years, according to the Bureau of Labor and Statistics’ May inflation report. The Federal Reserve raised its short-term interest rate by 50 basis points in May and 75 basis points in June as inflation remained higher than expected.
A rise in mortgage rates preceded the Fed’s announcement following the release of its Inflation Report. “I think what we’re seeing is that lenders were already expecting the Fed to hike the fed funds rate by 75 basis points and they started raising mortgage rates preemptively,” Jacob Channel told us, Senior Economist at LendingTree.
“We have a lot of factors like this that are pushing mortgage rates up,” says Channel. Financial markets are still reacting to the COVID lockdown in China and Russia’s invasion of Ukrainian territory. “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?
Despite the dramatic increase, mortgage rates remain at relatively normal levels and are still considered historically cheap mortgage rates.
Real estate prices are also rising, and if interest rates rise, this will also contribute to the rising cost of home ownership. Prices have risen significantly since before the pandemic, with a combination of a limited supply of homes, higher costs to build homes and massive demand from buyers leading to the rise.
It’s also important to remember that while mortgage rates are important and can mean the difference of a point or so much money over a 30-year mortgage, experts advise against timing the market to get the best mortgage rate . Focus on finding the right home and do so when the timing is right for your personal lifestyle and financial situation.
Get quotes from different lenders to make sure you’re getting the best deal, experts say. “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.”
Watch out for rental fees
Any time you take out a mortgage, you should consider the closing cost of the loan when making your decision. Closing costs can range from 3% to 6% of the loan amount, including processing fees, prepaid interest, and property taxes. It is possible to lower your out-of-pocket expenses by accepting a higher interest rate in exchange for credit from the lender. There’s a chance you’ll sell or refinance your home in five to eight years, so this strategy can save you money in the short term.
Current mortgage refinancing rates
Refinancing got a bit more expensive today as 30-year fixed and 15-year fixed refinance mortgages saw their median rates rise. If you’ve been considering a 10-year refinance loan, all you know is that average interest rates have also gone up.
Today’s refinancing rates are:
Current mortgage rates.
Mortgage interest for 30 years
The median interest rate on a standard 30-year mortgage is 5.81%, up 12 basis points from the previous week.
15 year fixed rate mortgage rates
The median interest rate on a 15-year fixed-rate mortgage is 4.98%, up 8 basis points from seven days ago.
The monthly payment on a 15-year fixed-rate mortgage is undoubtedly a much higher monthly payment than that on a 30-year mortgage at the same rate. However, 15-year loans have some significant benefits: You save thousands of dollars in interest and pay off your loan much sooner.
5/1 ARM Mortgage Rates
A 5/1 ARM has an average rate of 4.26%, up 4 basis points from a week ago.
An adjustable rate mortgage is ideal for people looking to refinance or sell before the interest rate changes. If they don’t, their interest rates could be significantly 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 how much the interest rate on your loan adjusts, your payment has the potential to increase by a large amount.
How we calculate mortgage rates
We use Bankrate’s daily mortgage rate data for our mortgage rate trends. These daily rates are based on a specific borrower profile, which includes only primary residence loans where the borrower has a FICO score of 740+. Bankrate is part of the same parent company as NextAdvisor.
This table contains current average rates based on information provided to Bankrate by lenders across the country:
Prices from July 20, 2022.
Mortgage Rate Frequently Asked Questions (FAQ):
How do I get the lowest mortgage rate?
There are two key things to getting the lowest mortgage rate: your loan-to-value (LTV) ratio and your credit rating.
With a credit score of 750 or more, you can secure the best price. But even a score of 700 or higher can give you a tangible rate reduction compared to a lower credit score. With a credit rating above 800, the mortgage interest discount is not meaningful.
Lenders give the largest mortgage discounts to borrowers who are considered less risky. A surefire way to signal that you’re more likely to make your monthly payments is to bring a larger down payment to the closing table. With a down payment of 20% or more, you’ll save twice as much: get a lower mortgage rate and avoid paying out Personal Mortgage Insurance (PMI).
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.
A rate lock only lasts for a set period of time, typically 30-60 days. If you hit a snag when closing and it seems like your rate lock is about to expire, you should talk to your lender. It may offer a ban extension, but you may have to pay a fee for the privilege.