A variety of important mortgage rates went higher today. The average interest rates for both 15-year fixed and 30-year fixed mortgages both trended upward. For variable rates, the 5/1 adjustable-rate mortgage also trended upward.
Mortgage rates have been slowly rising since the start of this year, and are expected to increase throughout 2022. Rates are now closer to 2018 levels than the historic lows seen during the height of the COVID-19 pandemic. Interest rates are dynamic: They rise and fall on a daily basis depending on economic factors. In general, now is a good time for prospective homebuyers to lock in a lower rate rather than later this year. Speaking with multiple lenders will help you find the best rate available for your financial situation.
30-year fixed-rate mortgages
The average 30-year fixed mortgage interest rate is 5.48%, which is a growth of 6 basis points as seven days ago. (A basis point is equivalent to 0.01%.) Thirty-year fixed mortgages are the most frequently used loan term. A 30-year fixed rate mortgage will usually have a smaller monthly payment than a 15-year one… but often a higher interest rate. Although you’ll pay more interest over time because you’re paying off your loan over a longer period of time, a 30-year fixed mortgage may be a good option if you’re looking for a lower monthly payment.
15-year fixed-rate mortgages
The average rate for a 15-year, fixed mortgage is 4.73%, which is an increase of 8 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’re able to afford the higher 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 5.45%, a climb of 7 basis points from the same time last week. You’ll usually get a lower interest rate (compared to a 30-year fixed mortgage) with a 5/1 adjustable-rate mortgage in the first five years of the mortgage. But you may end up paying more after that time, depending on the terms of your loan and how the rate changes with the market rate. If you plan to sell or refinance your house before the rate changes, an ARM may make sense for you. Otherwise, changes in the market means your interest rate could be much higher once the rate adjusts.
Mortgage rate trends
Though 2022 began with low mortgage rates, there has been a steady rise in recent months, and rates are expected to continue increasing throughout 2022. Home loan rates are influenced by various economic factors. A major one is government policy set by the Federal Reserve, which raised rates in March for the first time since 2018 in response to record-high inflation. The Fed anticipates raising interest rates six more times this year, so if you’re looking to buy a house in 2022, you should be prepared for interest rates to keep ticking up.
We use rates 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 US:
Today’s mortgage interest rates
Rates accurate as of May 5, 2022.
How to find the best mortgage rates
You can get a personalized mortgage rate by reaching out to your local mortgage broker or using an online calculator. Make sure to think about your current finances and your goals when looking for a mortgage. A range of factors — including your down payment, credit score, loan-to-value ratio and debt-to-income ratio — will all affect your mortgage rate. Having a higher credit score, a larger 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 shop around 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 right for you.
How does the loan term impact my mortgage?
One important thing to consider when choosing a mortgage is the loan term, or payment schedule. The loan 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. 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 set for a certain amount of time (most frequently five, seven or 10 years). After that, the rate adjusts annually based on the market interest rate.
One important factor to consider when deciding between a fixed-rate and adjustable-rate mortgage is the length of time you plan on staying in your house. If you plan on living long-term in a new house, fixed-rate mortgages may be the better option. While adjustable-rate mortgages may offer lower interest rates upfront, fixed-rate mortgages are more stable in the long term. If you don’t plan to keep your new home for more than three to 10 years, however, an adjustable-rate mortgage could give you a better deal. There is no best loan term as an overarching rule; it all depends on your goals and your current financial situation. Make sure to do your research and know what’s most important to you when choosing a mortgage.