Mortgage rates have seen dramatic changes this year.
The average rate for a 30-year fixed rate has doubled since sitting around 3% this time a year ago. High inflation is the principal cause of the surge in rates, along with the Federal Reserve’s increases to its own interest rate in a bid to quell that inflation.
High mortgage rates have turned the housing market upside down, with a previously hot market cooling significantly. While prices are falling in some areas, that may not make up for the increased costs homebuyers face in higher mortgage rates. Be sure to calculate your monthly payment – and give yourself wiggle room in your budget – to decide if you can actually afford a home.
Here are today’s average interest rates and what they mean for borrowers.
A variety of benchmark mortgage rates sunk lower today. The averages for both 30-year fixed and 15-year fixed mortgages fell down. At the same time, average rates for 5/1 adjustable-rate mortgages (ARM) also slid downhill.
Take a look at today’s rates:
Mortgage Rate Trends: What’s Behind the Recent Rate Movement?
Inflation has been high this year, with the consumer price index at 7.7% year-over-year in October. That was lower than expected, offering hope that the Federal Reserve’s efforts to raise rates to slow down consumer demand are starting to work. The Fed has raised its key interest rate several times this year, with the latest by 0.75 percentage points in November, but Chairman Jerome Powell indicated the central bank may start to slow down the pace of those increases.
Those factors have both pushed mortgage rates higher this year, from around 3.3% in January to more than 7% at the end of October.
“Inflation is absolutely in the driver’s seat, particularly as it pertains to mortgage rates. Until we get some sustained evidence that inflation is beginning to recede, the upward pressure on mortgage rates will remain,” says Odeta Kushi, deputy chief economist at First American Financial Corporation.
Current Mortgage Rates: Is It a Good Time to Buy a House Right Now?
This year’s dramatic surge in mortgage rates has complicated the math for homebuyers. Mortgage costs are significantly higher than they were just a few months ago, wiping out any savings that would be seen from dropping home prices.
Home prices remain near their all-time highs and are still higher than they were at the same point last year, despite some drops from their peaks earlier in the summer.
The most important thing is to calculate your expected monthly payment and see if it fits your budget. The softening demand for homes could also mean you’re more likely to be able to find a deal or get a seller to agree to concessions, such as paying mortgage points to get you a lower interest rate.
“What I would ask myself is: Can I afford this home and is it the right home that meets me and my family’s needs for at least the next few years, ideally the next several years?” says Jeff Tucker, a senior economist at Zillow.
Closing Costs & Loan Fees
The catchall term for the fees you pay to get a mortgage is closing costs. Everything from the prepaid property taxes to your appraisal fees fall into this category. In general, closing costs are 3% to 6% of your loan amount, so the larger your mortgage the more you’ll pay as a total dollar amount. Your closing costs play a crucial role in determining your annual percentage rate (APR). In other words, the higher your closing costs, the higher your APR will be..
Current Mortgage Refinance Rates
Checking in on refinance mortgage rates, today the average rate for a 30-year fixed refinance declined, while 15-year fixed Refinance rates increased. Shorter term, 10-year fixed-rate refinance mortgages trailed off.
The refinance averages for 30-year, 15-year, and 10-year loans are:
Compare nationwide mortgage rates from various lenders .
30-Year Fixed-Rate Mortgage Rates
The median interest rate for a standard, 30-year, fixed mortgage is 6.81%, which is a decrease of 3 basis points from seven days ago.
15-Year Fixed Mortgage Rates
The median rate for a 15-year fixed mortgage is 6.16%, which is a decrease of 6 basis points compared to a week ago.
A 15-year, fixed-rate mortgage’s monthly payment is, undeniably, a much bigger monthly payment than what you’d get with a 30-year mortgage offering the same interest rate. But, 15-year loans have some considerable benefits: You’ll pay thousands less in interest and pay off your loan much earlier.
5/1 Adjustable-Rate Mortgage Rates
A 5/1 ARM has an average rate of 5.51%, a decrease of 3 basis points from the same time last week.
An adjustable-rate mortgage is ideal for individuals who will sell or refinance before the rate changes. If that’s not the case, their interest rates could end up being noticeably higher after a rate adjusts.
For the first five years, a 5/1 ARM will typically have a lower interest rate compared to a 30-year fixed mortgage. Keep in mind that your rate could climb higher and your payment might grow by hundreds of dollars a month.
How We Determine Mortgage Interest Rates
NextAdvisor’s mortgage interest rate averages are pulled from Bankrate’s daily rate data.. These overnight rates are based on a specific borrower profile, which only includes loans for single-family homes with a loan-to-value ratio of 80% or better. Bankrate is part of the same parent company as NextAdvisor.
This table has current average rates based on information provided to Bankrate by lenders nationwide:
Updated on November 24, 2022.
Use NextAdvisor’s mortgage calculator to see how your monthly mortgage payment changes based on considerations like your mortgage rate, property taxes, or down payment.
Mortgage Rate Frequently Asked Questions (FAQ):
How Do I Get the Lowest Mortgage Rate?
Shopping around for a home loan is one of the best ways to qualify for the lowest interest rate.
The mortgage rate you’ll qualify for depends on a variety of factors lenders consider when assessing how risky it is to give you a mortgage. Your credit score factors into the decision. And even the value of the property compared to your loan balance is important. So increasing your down payment can reduce your interest rate.
But banks will consider your circumstances differently. So you can give the same documentation to three different mortgage providers, and get offers with three different mortgage rates and fees that vary just as much.
Is Now a Good Time to Lock in My Mortgage Rate?
Mortgage rates move up and down on a daily basis, and it’s impossible to time the market. So locking in your interest rate right now is a good idea because overall, rates are historically favorable.
A rate lock will only last for a set amount of time, typically 30-60 days. If you hit a snag during closing and it looks like your rate lock will expire you should contact your lender. It may offer an extension of the lock, however, you might have to pay a fee for that privilege.