Current Mortgage Rates for Aug. 3, 2022: Rates Keep Decreasing – CNET
A handful of principal mortgage rates tailed off today. 15-year fixed and 30-year fixed mortgage rates both trailed off. At the same time, average rates for 5/1 adjustable-rate mortgages also moved down.
Though mortgage rates have been rather consistently going up since the start of this year, what happens next depends on whether inflation continues to climb or begins to retreat. Interest rates are dynamic and unpredictable — at least on a daily or weekly basis — and they respond to a wide variety of economic factors. Right now, they’re particularly sensitive to inflation and the prospect of a US recession.
With so much uncertainty in the market, if you’re looking to buy a home, trying to time the market may not play to your favor. If inflation rises and rates climb, this could translate to higher interest rates and steeper monthly mortgage payments. For this reason, you may have better luck locking in a lower mortgage interest rate sooner rather than later. 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 5.47%, which is a decline of 23 basis points compared to 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 mortgage will typically have a greater interest rate than a 15-year fixed rate mortgage — but also a lower monthly payment. You won’t be able to pay off your house as quickly and you’ll pay more interest over time, but a 30-year fixed mortgage is a good option if you’re looking to minimize your monthly payment.
15-year fixed-rate mortgages
The average rate for a 15-year, fixed mortgage is 4.71%, which is a decrease of 16 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 bigger monthly payment. However, as long as you’re able to afford the monthly payments, there are several benefits to a 15-year loan. You’ll most likely 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 adjustable-rate mortgage has an average rate of 4.16%, a decrease of 3 basis points from seven days ago.
For the first five years, you’ll usually get a lower interest rate with a 5/1 ARM compared to a 30-year fixed mortgage. But shifts in the market may cause your interest rate to increase after that time, as detailed in the terms of your loan.
Because of this, an adjustable-rate mortgage could be a good option if you plan to sell or refinance your house before the rate changes. But if that’s not the case, you could be on the hook for a significantly higher interest rate if the market rates shift.
Mortgage rate trends
Though mortgage rates were historically low at the beginning of 2022, they have been climbing somewhat steadily since then. The Federal Reserve recently raised interest rates by another 0.75 percentage points in an attempt to curb record-high inflation. The Fed has raised rates a total of four times this year, but inflation still remains high. 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 in 2022, keep in mind that the Fed has signaled it will continue to raise rates, and mortgage rates could increase as the year goes on. Whether rates follow their upward projection or begin to level out hinges on if inflation actually slows.
We use rates 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 across the country:
Today’s mortgage interest rates
|Loan term||Today’s Rate||Last week||Change|
|30-year mortgage rate||5.47%||5.70%||-0.23|
|15-year fixed rate||4.71%||4.87%||-0.16|
|30-year jumbo mortgage rate||5.45%||5.67%||-0.22|
|30-year mortgage refinance rate||5.45%||5.67%||-0.22|
Rates accurate as of Aug. 3, 2022.
How to shop for the best mortgage rate
When you are ready to apply for a loan, you can connect with a local mortgage broker or search online. Make sure to think about your current finances and your goals when trying to find a mortgage.
Things that affect what mortgage rate you might get include: your credit score, down payment, loan-to-value ratio and your debt-to-income ratio. Generally, you want a higher credit score, a higher down payment, a lower DTI and a lower LTV to 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 factors such as fees, closing costs, taxes and discount points. You should shop around with multiple lenders — such as credit unions and online lenders in addition to local and national banks — in order to get a loan that works best for you.
What’s the best loan term?
When picking a mortgage, remember to consider the loan term, or payment schedule.
The most common loan terms are 15 years and 30 years, although 10-, 20- and 40-year mortgages also exist. Mortgages are further divided into fixed-rate and adjustable-rate mortgages. The interest rates in a fixed-rate mortgage are fixed for the duration of the loan. Unlike a fixed-rate mortgage, the interest rates for an adjustable-rate mortgage are only the same for a certain amount of time (usually five, seven or 10 years). After that, the rate adjusts annually based on the market interest rate.
One thing to think about when deciding between a fixed-rate and adjustable-rate mortgage is the length of time you plan on living in your home. For those who plan on staying long-term in a new house, fixed-rate mortgages may be the better option. While adjustable-rate mortgages might offer lower interest rates upfront, fixed-rate mortgages are more stable over time. However you might get a better deal with an adjustable-rate mortgage if you only intend to keep your house for a couple years. 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 think about what’s most important to you when choosing a mortgage.
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August 3, 2022 at 07:02AM