Current Mortgage Rates for Jan. 5, 2023: Major Rate Recedes

Mortgage rates followed a split path over the past seven days, but an important rate dropped off. Average 15-year fixed mortgage rates inched up, while average 30-year fixed mortgage rates slumped. At the same time, average rates for 5/1 adjustable-rate mortgages increased slightly.

Mortgage rates increased dramatically in 2022, as the Federal Reserve hiked interest rates repeatedly throughout the year. Interest rates are dynamic and unpredictable — at least on a daily or weekly basis — and they respond to a wide variety of economic factors. But the Fed’s actions, designed to mitigate the high rate of inflation, had an unmistakable impact on mortgage rates.

The outlook for 2023 remains uncertain. Though higher rates are likely here to stay, the biggest increases may be behind us. That noted, trying to time the market is tricky. If inflation persists, more interest rate hikes could follow. As such, you may have better luck locking in a lower mortgage interest rate now instead of waiting; after all, you can always refinance later on. 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 average 30-year fixed mortgage interest rate is 6.52%, which is a decline of 7 basis points compared to seven days ago. (A basis point is equivalent to 0.01%.) The most common loan term is a 30-year fixed mortgage. A 30-year fixed mortgage will often have a higher 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 6.06%, which is an increase of 11 basis points from seven days ago. You’ll definitely have a bigger monthly payment with a 15-year fixed mortgage compared to a 30-year fixed mortgage, even if the interest rate and loan amount are the same. But a 15-year loan will usually be the better deal, as long as you can afford the monthly payments. You’ll usually 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 5.50%, a rise of 5 basis points compared to a week ago. For the first five years, you’ll usually get a lower interest rate with a 5/1 adjustable-rate mortgage compared to a 30-year fixed mortgage. But since the rate adjusts with the market rate, you may end up paying more after that time, as described in the terms of your loan. For borrowers who plan to sell or refinance their house before the rate changes, an ARM might be a good option. 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

Mortgage rates were historically low at the beginning of 2022 but increased steadily throughout the year. The Federal Reserve raised interest rates seven times in an attempt to curb record-high inflation. 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, keep in mind that the Fed has signaled it will continue to raise rates in 2023, and that those increases may drive mortgage rates even higher.

We use information collected by Bankrate, which is owned by the same parent company as CNET, to track daily mortgage rate trends. This table summarizes the average rates offered by lenders across the country:

Today’s mortgage interest rates

Rates as of Jan. 5, 2023.

How to find personalized mortgage rates

When you are ready to apply for a loan, you can reach out to a local mortgage broker or search online. Make sure to consider your current financial situation and your goals when trying to find a mortgage.

Specific interest rates will vary based on factors including credit score, down payment, debt-to-income ratio and loan-to-value ratio. Having a good credit score, a higher down payment, a low DTI, a low LTV or any combination of those factors can help you get a lower interest rate.

Beyond the mortgage rate, factors including closing costs, fees, discount points and taxes might also factor into the cost of your house. Be sure to speak with several different lenders — such as local and national banks, credit unions and online lenders — and comparison-shop to find the best mortgage for you.

What is a good loan term?

One important consideration when choosing a mortgage is 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. Another important distinction is between fixed-rate and adjustable-rate mortgages. The interest rates in a fixed-rate mortgage are stable for the duration of the loan. Unlike a fixed-rate mortgage, the interest rates for an adjustable-rate mortgage are only stable for a certain amount of time (typically five, seven or 10 years). After that, the rate changes annually based on the market interest rate.

One important factor to take into consideration when choosing between a fixed-rate and adjustable-rate mortgage is how long you plan on staying in your home. For people who 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. However you could get a better deal with an adjustable-rate mortgage if you only intend to keep your house for a few years. There is no best loan term as an overarching rule; it all depends on your goals and your current financial situation. Be sure to do your research and understand your own priorities when choosing a mortgage.

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