Current Mortgage Rates, August 24, 2022 | Rates Ticked Up

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In 2022, mortgage rates rose nearly to levels not seen since before the pandemic, after nearly two years of record-low rates.

The refinance or purchase of your home doesn’t have to be put on hold. Although rates are higher than they were last year, 30-year fixed rates are still close to rates from a few years ago.

The fact is, a homebuyer’s decision involves a lot more than just an interest rate. It’s a lifestyle decision. In spite of the impact of the interest rate market on mortgages, it is not wise to base your decision solely on a few basis points. What’s most important to consider is to set a realistic homebuying budget and stick to it.

Let’s look at current mortgage rates, previous rates, and what all this means for borrowers.

A number of important mortgage rates all increased today. The amazing growth in borrowing costs for fixed-rate 30-year mortgages is notable, but 15-year fixed rates also crept up. We also saw a hike in the average rate of 5/1 adjustable-rate mortgages (ARM).

Mortgage rates currently are:

Mortgage Rate Trends: Why Are Mortgage Rates Changing So Fast?

Various economic factors have led to an increase in mortgage rates this year. Persistently high inflation is a big reason, Jacob Channel, senior economic analyst at LendingTree told us. According to the Bureau of Labor and Statistics July’s inflation report, year-over-year inflation reached 8.5%. There are signs inflation is starting to cool, since June’s 40-year-high 9.1%. Because inflation still remains higher than expected, the Federal Reserve increased its benchmark short-term rate by 50 basis points in May, then by 75 basis points in June, and again by 75 points in July.

A spike in mortgage rates preceded the Fed’s announcement after the inflation report was released. “I think what we’re seeing is that lenders had already anticipated that the Fed was going to raise the Fed funds rate by 75 basis points and they began to preemptively push mortgage rates up,” Jacob Channel, senior economist at LendingTree, told us.

“There are signs that some of the main drivers of inflation are easing, such as lower oil and other commodity prices in July, slower wage growth, and declining supply chain pressures. However, service price increases led by housing and pent-up demand for vehicles will keep inflation elevated in the coming months,” Dawit Kebede, senior economist for the Credit Union National Association, said in a statement. Energy prices are half responsible for these increases, he said.

What do Today’s Mortgage Rates Mean for Your Home Buying Plans?

Despite the dramatic increases, mortgage rates remain at relatively normal levels and are still considered historically favorable mortgage rates.

Home prices are also on the rise, and as rates increase, that will also contribute to the rising cost of home ownership. Prices are up significantly from before the pandemic, with a combination of limited supply of homes, higher costs to build homes and massive demand from buyers leading to the surge.

It’s also important to remember that while mortgage rates are important, and the difference of a point or so can mean a lot of money over a 30-year mortgage, experts advise against trying to time the market to get the best mortgage rate. Focus on finding the right house, and do it when your personal lifestyle and financial situation indicate it’s the right time.

Be sure to get quotes from different lenders to ensure you’re getting the best deal, experts say. “The rate highly impacts your monthly affordability for as long as you will hold this home,” Skylar Olsen, principal economist at Tomo, a digital real estate and mortgage company, told us. “It is actually a critical piece of this decision, and that takes shopping around.”

What to Know About Loans Fees

Anytime you take out a home loan, your decision should factor in the loan’s closing costs. These fees include loan origination fees, prepaid interest, and property taxes, and can range from 3 to 6% of the loan amount.. Choosing a higher interest rate in exchange for lender credit can reduce your upfront costs. The strategy can save you money in the short-term, so it’s worth considering if you plan to sell or refinance your home within five to eight years.

Current Mortgage Refinance Rates

Refinance rates grabbed headlines today. We saw an astonishing increase in rates for 30-year fixed loans. Interestingly, 15-year fixed-rate refinances moved in the opposite direction and went down. Shorter term, 10-year fixed-rate refinance mortgages also increased.

The refinance averages for 30-year, 15-year, and 10-year loans are:

Current Mortgage Rates.

30-Year Fixed Mortgage Interest Rates

For a 30-year fixed-rate mortgage, the average rate you’ll pay is 5.87%, which is a growth of 33 basis points from seven days ago.

15-Year Fixed Mortgage Rates

The median rate for a 15-year fixed mortgage is 5.08%, which is an increase of 19 basis points from the same time last week.

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 save thousands of dollars in interest and pay off your loan much earlier.

5/1 ARM Rates

A 5/1 ARM has an average rate of 4.33%, which is an addition of 12 basis points from seven days ago.

An adjustable-rate mortgage is ideal for borrowers who will refinance or sell before the rate changes. If that’s not the case, their interest rates could end up being markedly 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 payment could end up being hundreds of dollars higher after a rate adjustment, depending on the terms of your loan.

How We Calculate Our Mortgage Rates

NextAdvisor’s mortgage 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 owner occupied homes with 20% equity or more. Bankrate is part of the same parent company as NextAdvisor.

The current average rates listed below and based on the Bankrate mortgage rate survey:

Rates as of August 24, 2022.

Pro Tip

Use our mortgage calculator to see how your monthly payment changes based on considerations like your mortgage interest rate, loan term, and down payment.

Mortgage Rate Frequently Asked Questions (FAQ):

How Do I Qualify for the Lowest Mortgage Rate?

There are two main things to getting the best mortgage rate: Loan-to-value ratio (LTV), and your credit score.

Having a credit score over 750 will help you get the best rate. But, even a score 700 or higher can get you a decent rate reduction compared to a lower credit score. Once your score starts climbing above 800, the interest rate discount is negligible.

Lenders give the largest mortgage rate discounts to home buyers that are seen as less risky. A bigger down payment is a signal to lenders that you are more committed and are less likely to stop making payments. A down payment of 20% or more will save you money in two ways: with a more favorable mortgage rate, and you’ll be able to avoid paying for private mortgage insurance (PMI).

Is Now a Good Time to Lock in My Mortgage Rate?

It’s impossible to know what direction mortgage rates will go from day to day. That’s why a mortgage rate lock is such a useful tool because it protects you if rates go up. And with interest rates being relatively low right now, you should lock in your rate as soon as you can.

When you lock in your rate, ask your lender how long the lock will last. A rate lock can be good for anywhere from 30 to 60 days, which typically will give you enough time to close before the lock expires. If you want to extend the rate lock, ask about fees as many lenders charge a fee for extending a rate lock.