Today’s mortgage and refinance rates, February 4th, 2022

National mortgage rates edged higher 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 moved higher.

Rates last updated on February 4, 2022.

The rates listed here are marketplace averages based on the assumptions here. Actual rates available across the site may vary. This story has been reviewed by Bill McGuire. All rate data accurate as of Friday, February 4th, 2022 at 7:30am.

You can save thousands of dollars over the life of your mortgage by getting multiple offers. “It is so important to shop around,” says Greg McBride, CFA, Bankrate chief financial analyst. “Not everyone offers the same price, and some lenders may have motivation to be very competitive on price.”

Mortgage interest rates

30-year fixed-rate mortgage moves upward, +0.06%

The average rate you’ll pay for a 30-year fixed mortgage is 3.84 percent, an increase of 6 basis points over the last week. This time a month ago, the average rate on a 30-year fixed mortgage was lower, at 3.43 percent.

At the current average rate, you’ll pay a combined $468.24 per month in principal and interest for every $100,000 you borrow. Compared to last week, that’s $6.83 higher.

While the 30-year rate is the most popular mortgage term, as with any financial product, the 30-year fixed-rate mortgage also has some downsides:

  • More total interest paid. Stretching out repayment to a 30-year term means you pay more overall in interest than you would with a shorter-term loan.
  • Higher mortgage rates. Compared to 15-year loans, lenders charge higher interest rates for 30-year loans because they’re taking on the risk of not being repaid for a longer time span.
  • Slower equity growth. The amortization table for a 30-year mortgage reveals a harsh reality: In the early years, almost all of your payments go to interest rather than principal. A 15-year loan brings a higher monthly payment but much faster payoff of the loan amount.
  • Buying a more expensive house than you should. Just because you might be able to afford more house with a 30-year loan doesn’t mean you should stretch your budget to the breaking point. Give yourself some breathing room for other financial goals and unexpected expenses. Use Bankrate’s home affordability calculator to determine how much house you can afford.
  • 15-year fixed mortgage rate rises,+0.05%

    The average rate for the benchmark 15-year fixed mortgage is 3.23 percent, up 5 basis points from a week ago.

    Monthly payments on a 15-year fixed mortgage at that rate will cost $428 per $100,000 borrowed. The bigger payment may be a little more difficult to find room for in your monthly budget than a 30-year mortgage payment would, 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 adjustable rate mortgage trends upward, +0.03%

    The average rate on a 5/1 adjustable rate mortgageis 2.85 percent, climbing 3 basis points over the last 7 days.

    Adjustable-rate mortgages, or ARMs, are mortgage terms that come with a floating interest rate. In other words, the interest rate can change from time to time throughout the life of the loan, unlike fixed-rate loans. These loan types are best for those who expect to refinance or sell before the first or second adjustment. Rates could be materially higher when the loan first adjusts, and thereafter.

    Monthly payments on a 5/1 ARM at 2.85 percent would cost about $409 for each $100,000 borrowed over the initial five years, but could ratchet higher by hundreds of dollars afterward, depending on the loan’s terms.

    Jumbo mortgage trends upward, +0.06%

    The average jumbo mortgage rate today is 3.84 percent, an increase of 6 basis points over the last seven days. A month ago, jumbo mortgages’ average rate was lesser, at 3.45 percent.

    At today’s average jumbo rate, you’ll pay $461.41 per month in principal and interest for every $100,000 you borrow.

    Summary: How interest rates have changed

    • 30-year fixed mortgage rate: 3.84%, up from 3.78% last week, +0.06
    • 15-year fixed mortgage rate: 3.23%, up from 3.18% last week, +0.05
    • 5/1 ARM mortgage rate: 2.85%, up from 2.82% last week, +0.03
    • Jumbo mortgage rate: 3.84%, up from 3.78% last week, +0.06

    Interested in refinancing? See mortgage refinance rates

    30-year fixed-rate refinance rises, +0.12%

    The average 30-year fixed-refinance rate is 3.87 percent, up 12 basis points since the same time last week. A month ago, the average rate on a 30-year fixed refinance was lower, at 3.44 percent.

    At the current average rate, you’ll pay $468.24 per month in principal and interest for every $100,000 you borrow. That’s $6.83 higher compared with last week.

    Where are mortgage rates headed?

    Mortgage rates plunged early in the pandemic and scraped record lows — below 3 percent — at the start of 2021. The new year, however, has been characterized by rising rates. The days of sub-3 percent mortgage interest on the 30-year fixed are behind us, and many experts think the average rate on this loan will be 3.5 to 4 percent by the end of 2022. That’s still great by historical standards though. The ultra-low rates of 2020 and 2021 were an anomaly, but even 4 percent is a deal in the scheme of things.

    “Mortgage rates continue to surge, as they have since the beginning of the year, as the outlook takes shape for Fed rate hikes that are sooner and faster than previously expected,” McBride says. “Mortgage rates are still well below 4 percent but in an environment of already sky-high home prices, more would-be homebuyers are priced out with each move higher in mortgage rates.”

    Comparing mortgage terms

    The 30-year fixed-rate mortgage is the most popular option for homeowners, and this type of loan has a number of advantages, including:

    • 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.

    Why mortgage rates change

    Mortgage rates are influenced by a range of economic factors, from inflation to unemployment numbers. Typically, higher inflation means higher interest rates and vice versa. As inflation rises, the dollar loses value, which in turn drives off investors for mortgage-backed securities, causing the prices to fall and yields to climb. When yields climb, rates get more expensive for borrowers.

    A strong economy usually means more people buying homes, which drives demand for mortgages. This increased demand can push rates higher. The opposite is also true; less demand can trigger a drop in rates.

    Learn more:

    Today’s featured lenders, February 4, 2022

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