Today’s best mortgage and refinance rates, October 28th, 2022: Most rates fall

National mortgage rates were mostly lower compared to a week ago, according to data compiled by Bankrate. Rates for 30-year fixed, 15-year fixed and jumbo loans declined, while rates for adjustable rate mortgages rose.

Mortgage rates have been on a wild ride as of late, with the 30-year fixed now past 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 September 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 October 28, 2022.

These rates are averages based on the assumptions shown here. Actual rates listed on-site may vary. This story has been reviewed by in-house editor Bill McGuire. All rate data accurate as of Friday, October 28th, 2022 at 7:30 a.m.

>>Check out historical mortgage rate movements

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 fixed-rate mortgage moves down, -0.22%

The average rate for the benchmark 30-year fixed mortgage is 7.10 percent, down 22 basis points from a week ago. A month ago, the average rate on a 30-year fixed mortgage was lower, at 7.06 percent.

At the current average rate, you’ll pay principal and interest of $672.03 for every $100,000 you borrow. That’s a decline of $14.90 from last week.

30-year mortgage vs. 15-year mortgage

Most mortgage lenders defer to the 30-year, fixed-rate mortgage as the go-to for most borrowers as it allows the borrower to disperse payments out over 30 years, keeping their monthly payment lower.

With a 15-year mortgage, however, borrowers are able to pay off their loan in half the time — if they’re able and willing to bump up the amount of their monthly loan payment. The primary difference between qualifying for a 15-year versus a 30-year mortgage is that you’ll need a higher income and lower debt-to-income (DTI) ratio to obtain a 15-year mortgage because the monthly mortgage payments are inflated.

15-year fixed mortgage rate moves down,-0.08%

The average rate for the benchmark 15-year fixed mortgage is 6.38 percent, down 8 basis points over the last seven days.

Monthly payments on a 15-year fixed mortgage at that rate will cost approximately $865 per $100k borrowed. The bigger payment may be a little harder to find room for in your monthly budget than a 30-year mortgage payment would, but it comes with some big advantages: You’ll come out several thousand dollars ahead over the life of the loan in total interest paid and build equity much faster.

5/1 ARM rate goes up, +0.07%

The average rate on a 5/1 adjustable rate mortgage is 5.53 percent, ticking up 7 basis points from a week ago.

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 those who expect to sell or refinance before the first or second adjustment. Rates could be substantially 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 5.53 percent would cost about $570 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 loan interest rate falls, -0.26%

The average rate for the benchmark jumbo mortgage is 7.07 percent, down 26 basis points over the last seven days. This time a month ago, the average rate for jumbo mortgages was below that, at 7.06 percent.

At today’s average rate, you’ll pay principal and interest of $670.01 for every $100,000 you borrow. Compared with last week, that’s $17.60 lower.

In summary: How mortgage rates have shifted over the past week

  • 30-year fixed mortgage rate: 7.10%, down from 7.32% last week, -0.22
  • 15-year fixed mortgage rate: 6.38%, down from 6.46% last week, -0.08
  • 5/1 ARM mortgage rate: 5.53%, up from 5.46% last week, +0.07
  • Jumbo mortgage rate: 7.07%, down from 7.33% last week, -0.26

Mortgage refinance rates

30-year fixed-rate refinance moves lower, –0.20%

The average 30-year fixed-refinance rate is 7.10 percent, down 20 basis points over the last seven days. A month ago, the average rate on a 30-year fixed refinance was lower, at 7.04 percent.

At the current average rate, you’ll pay $672.03 per month in principal and interest for every $100,000 you borrow. That’s down $13.54 from what it would have been last week.

Where mortgage 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 have so far risen beyond 6 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 McBride. “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.

6 steps to obtaining the best mortgage rate

  1. Improve your credit score
  2. Build a record of employment
  3. Save up for a down payment
  4. Go for a 15-year fixed-rate mortgage
  5. Shop among multiple lenders
  6. Lock in your rate

Learn more about how these 6 steps can secure you a lower rate.

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Featured lenders for today, October 28, 2022