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Today's Mortgage Rates for Aug. 22, 2022: Rates Move Up
A few notable mortgage rates moved up today. The average interest rates for both 15-year fixed and 30-year fixed mortgages both saw increases. At the same time, average rates for 5/1 adjustable-rate mortgages also increased.
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 average interest rate for a standard 30-year fixed mortgage is 5.78%, which is an increase of 25 basis points from one week ago. (A basis point is equivalent to 0.01%.) The most frequently used loan term is a 30-year fixed mortgage. A 30-year fixed rate mortgage will usually have a smaller monthly payment than a 15-year one -- but usually a higher interest rate. 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 4.95%, which is an increase of 4 basis points from seven days ago. 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, if 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 4.30%, a climb of 8 basis points compared to last week. With an ARM mortgage, you'll typically get a lower interest rate than a 30-year fixed mortgage for the first five years. 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. Because of this, an ARM 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 change.
Mortgage rate trends
Though mortgage rates were historically low at the beginning of 2022, they have been rising 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 information 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 nationwide:
Average mortgage interest rates
| Product | Rate | Last week | Change |
|---|---|---|---|
| 30-year fixed | 5.78% | 5.53% | +0.25 |
| 15-year fixed | 4.95% | 4.91% | +0.04 |
| 30-year jumbo mortgage rate | 5.80% | 5.52% | +0.28 |
| 30-year mortgage refinance rate | 5.76% | 5.51% | +0.25 |
Rates as of Aug. 22, 2022.
How to shop for the best mortgage rate
When you are ready to apply for a loan, you can reach out to a local mortgage broker or search online. When looking into home mortgage rates, think about your goals and current finances. A range of factors -- including your down payment, credit score, loan-to-value ratio and debt-to-income ratio -- will all affect your mortgage interest rate. 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. 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. Be sure to shop around with multiple lenders -- including credit unions and online lenders in addition to local and national banks -- in order to get a mortgage that's the right fit for you.
How does the loan term impact my mortgage?
When picking a mortgage, remember to consider the loan term, or payment schedule. The most common mortgage 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 fixed for the duration of the loan. Unlike a fixed-rate mortgage, the interest rates for an adjustable-rate mortgage are only fixed for a certain amount of time (commonly five, seven or 10 years). After that, the rate fluctuates annually based on the market interest rate.
One factor to consider when choosing between a fixed-rate and adjustable-rate mortgage is how long you plan on staying in your home. Fixed-rate mortgages might be a better fit for those who plan on living in a home for a while. Fixed-rate mortgages offer more stability over time compared to adjustable-rate mortgages, but adjustable-rate mortgages might offer lower interest rates upfront. If you don't plan to keep your new home for more than three to 10 years, though, an adjustable-rate mortgage might give you a better deal. The best loan term all depends on your situation and goals, so make sure to think about what's important to you when choosing a mortgage.
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