Current national mortgage and refinance rates, August 18, 2022 – Rates rise

Average mortgage rates increased for all types of loans compared to a week ago, according to data compiled by Bankrate. Rates for 30-year fixed, 15-year fixed, 5/1 ARMs and jumbo loans edged higher.

Mortgage rates have been on a wild ride as of late, with the 30-year fixed briefly reaching 6 percent as the Federal Reserve cracks down on inflation. The rate chart could continue to look choppy — the Fed’s rate-raising stance against inflation also could lead to a recession, and that could cause mortgage rates to retreat.

The central bank raised rates again at its July 27 meeting. The one-two punch of consecutive rate increases of three-quarters of a point are likely to cool the economy. “The cumulative effect of this sharp rise in rates has cooled the housing market and caused the economy to start slowing, but hasn’t done much to lower inflation,” says Greg McBride, CFA, Bankrate chief financial analyst.

Rates last updated on August 18, 2022.

The rates listed above are averages based on the assumptions indicated here. Actual rates listed across the site may vary. This story has been reviewed by in-house editor Bill McGuire. All rate data accurate as of Thursday, August 18th, 2022 at 7:30 a.m.

>>Check out historical mortgage interest rate trends, from the 70s to today

You can save thousands of dollars over the life of your mortgage by getting multiple offers.

“All too often, some homeowners take the path of least resistance when seeking a mortgage, in part because the process of buying a home can be stressful, complicated and time-consuming,” says Mark Hamrick, Bankrate senior economic analyst. “But when we’re talking about the potential of saving a lot of money, seeking the best deal on a mortgage has an excellent return on investment. Why leave that money on the table when all it takes is a bit more effort to shop around for the best rate, or lowest cost, on a mortgage?”

Mortgage rates

30-year mortgage goes up, +0.14%

The average rate for the benchmark 30-year fixed mortgage is 5.60 percent, an increase of 14 basis points over the last week. Last month on the 18th, the average rate on a 30-year fixed mortgage was higher, at 5.84 percent.

At the current average rate, you’ll pay a combined $569.04 per month in principal and interest for every $100k you borrow. Compared to last week, that’s $7.51 higher.

15-year mortgage rate trends upward,+0.03%

The average rate for the benchmark 15-year fixed mortgage is 4.89 percent, up 3 basis points since the same time last week.

Monthly payments on a 15-year fixed mortgage at that rate will cost roughly $525 per $100k borrowed. That’s obviously much higher than the monthly payment would be on a 30-year mortgage at that rate, but it comes with some big advantages: You’ll save thousands of dollars over the life of the loan in total interest paid and build equity much more rapidly.

5/1 ARM goes up, +0.03%

The average rate on a 5/1 adjustable rate mortgage is 4.22 percent, rising 3 basis points over the last 7 days.

Adjustable-rate mortgages, or ARMs, are mortgage loans that come with a floating interest rate. To put it another way, the interest rate can change periodically throughout the life of the loan, unlike fixed-rate mortgages. These loan types are best for people who expect to sell or refinance before the first or second adjustment. Rates could be much higher when the loan first adjusts, and thereafter.

While borrowers shunned ARMs during the pandemic days of super-low rates, this type of loan has made a comeback as mortgage rates have risen.

Monthly payments on a 5/1 ARM at 4.22 percent would cost about $489 for each $100,000 borrowed over the initial five years, but could increase by hundreds of dollars afterward, depending on the loan’s terms.

Jumbo mortgage rate goes up, +0.17%

The average jumbo mortgage rate is 5.60 percent, up 17 basis points since the same time last week. A month ago, jumbo mortgages’ average rate was higher, at 5.81 percent.

At the average rate today for a jumbo loan, you’ll pay a combined $569.04 per month in principal and interest for every $100,000 you borrow. That’s $7.51 higher compared with last week.

In summary: How mortgage interest rates have shifted

  • 30-year fixed mortgage rate: 5.60%, up from 5.46% last week, +0.14
  • 15-year fixed mortgage rate: 4.89%, up from 4.86% last week, +0.03
  • 5/1 ARM mortgage rate: 4.22%, up from 4.19% last week, +0.03
  • Jumbo mortgage rate: 5.60%, up from 5.43% last week, +0.17

Refinance rates

Current 30 year mortgage refinance rate increases, +0.18%

The average 30-year fixed-refinance rate is 5.59 percent, up 18 basis points compared with a week ago. A month ago, the average rate on a 30-year fixed refinance was higher, at 5.79 percent.

At the current average rate, you’ll pay $569.04 per month in principal and interest for every $100,000 you borrow. That’s $7.51 higher compared with last week.

Mortgage rate trends: Where rates are headed

Mortgage rates plunged early in the pandemic and scraped record lows — below 3 percent — at the start of 2021. The days of sub-3 percent mortgage interest on the 30-year fixed are behind us, and rates rose past 5 percent in 2022.

“Low interest rates were the medicine for economic recovery following the financial crisis, but it was a slow recovery so rates never went up very far,” says Greg McBride, CFA, Bankrate chief financial analyst. “The rebound in the economy, and especially inflation, in the late pandemic stages has been very pronounced, and we now have a backdrop of mortgage rates rising at the fastest pace in decades.”

Comparing different mortgage terms

The 30-year fixed-rate mortgage is the most popular loan for homeowners. This mortgage has a number of advantages. Among them:

  • Lower monthly payment: Compared to a shorter term, such as 15 years, the 30-year mortgage offers lower payments spread over time.
  • Stability: With a 30-year mortgage, you lock in a consistent principal and interest payment. Because of the predictability, you can plan your housing expenses for the long term. Remember: Your monthly housing payment can change if your homeowners insurance and property taxes go up or, less likely, down.
  • Buying power: With lower payments, you can qualify for a larger loan amount and a more expensive home.
  • Flexibility: Lower monthly payments can free up some of your monthly budget for other goals, like saving for emergencies, retirement, college tuition or home repairs and maintenance.
  • Strategic use of debt: Some argue that Americans focus too much on paying down their mortgages rather than adding to their retirement accounts. A 30-year fixed mortgage with a smaller monthly payment can allow you to save more for retirement.

That said, shorter term loans have gained popularity as rates have been historically low. Although they have higher monthly payments compared to 30-year mortgages, there are some big benefits if you can afford the upfront costs. Shorter-term loans can help you achieve:

  • Greatly reduced interest costs: Because you pay off the loan faster, you’ll be able to pay less interest overall.
  • Lower interest rate: On top of less time for that interest to compound, most lenders price shorter-term mortgages with lower rates.
  • Build equity faster: The faster you pay off your mortgage, the faster you’ll own value in your home outright. That’s especially handy if you want to borrow against your property to fund other spending.
  • Debt-free sooner: A shorter-term mortgage means you’ll own your house free and clear sooner than you would with a longer-term loan.

Should you lock a mortgage rate?

A rate lock guarantees your mortgage interest rate for a specified period of time. It’s common for lenders to offer 30-day rate locks for a fee or to include the price of the rate lock into your loan. Some mortgage lenders will lock rates for longer periods of time, even exceeding 60 days, but those locks can be costly. In today’s unstable market, some lenders will lock an interest rate for just two weeks because they don’t want to take on unnecessary risk.

The benefit of a rate lock is that if interest rates rise, you’re locked into the guaranteed rate. Some lenders have a floating-rate lock option, which allows you to get a lower rate if interest rates fall before you close your loan. In a falling rate environment, a float-down lock could be worth the cost. Because mortgage rates are not predictable, there’s no guarantee that rates will stay where they are from week to week or even day to day. So, if you can lock in a low rate, then you should do so rather than gamble on interest rates falling even lower.

It’s important to keep in mind: During the pandemic, all aspects of real estate and mortgage closings are taking much longer than usual. Expect the closing on a new mortgage to take at least 60 days, and expect refinancing to take at least a month.

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