Today’s national mortgage & refinance rates, September 29, 2022: Rates rise

Mortgage interest rates moved higher for all loan terms 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 increased.

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 as of September 29, 2022.

These rates are marketplace averages based on the assumptions indicated here. Actual rates available within the site may vary. This story has been reviewed by Bill McGuire. All rate data accurate as of Thursday, September 29th, 2022 at 7:30 a.m.

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 interest rates

30-year mortgage rate rises, +0.39%

The average rate for a 30-year fixed mortgage is 6.82 percent, an increase of 39 basis points since the same time last week. Last month on the 29th, the average rate on a 30-year fixed mortgage was lower, at 5.95 percent.

At the current average rate, you’ll pay principal and interest of $646.61 for every $100,000 you borrow. That’s an extra $23.72 compared with last week.

The 30-year 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, more affordable 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. Because you have lower payments, you can qualify for a bigger loan and a more expensive house.
  • Flexibility. Lower monthly payments can free up some of your monthly budget for other goals, like building an emergency fund, contributing to retirement or college tuition, or saving for 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-rate mortgage with a smaller monthly payment can allow you to save more for retirement.

15-year mortgage rises,+0.31%

The average rate you’ll pay for a 15-year fixed mortgage is 5.97 percent, up 31 basis points since the same time last week.

Monthly payments on a 15-year fixed mortgage at that rate will cost $592 per $100k borrowed. The bigger payment may be a little tougher 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 faster.

5/1 adjustable rate mortgage goes up, +0.36%

The average rate on a 5/1 ARM is 5.20 percent, ticking up 36 basis points over the last week.

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 types of loans are best for people who expect to refinance or sell 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 5.20 percent would cost about $547 for each $100,000 borrowed over the initial five years, but could climb hundreds of dollars higher afterward, depending on the loan’s terms.

Jumbo mortgage moves upward, +0.40%

The average jumbo mortgage rate today is 6.82 percent, an increase of 40 basis points from a week ago. Last month on the 29th, the average rate for jumbo mortgages was below that, at 5.94 percent.

At today’s average jumbo rate, you’ll pay a combined $646.61 per month in principal and interest for every $100k you borrow. That’s an increase of $23.72 over what you would have paid last week.

In summary: How mortgage interest rates have shifted

  • 30-year fixed mortgage rate: 6.82%, up from 6.43% last week, +0.39
  • 15-year fixed mortgage rate: 5.97%, up from 5.66% last week, +0.31
  • 5/1 ARM mortgage rate: 5.20%, up from 4.84% last week, +0.36
  • Jumbo mortgage rate: 6.82%, up from 6.42% last week, +0.40

Refinance rates

Today’s 30-year mortgage refinance rate moves higher, +0.41%

The average 30-year fixed-refinance rate is 6.83 percent, up 41 basis points over the last week. A month ago, the average rate on a 30-year fixed refinance was lower, at 5.92 percent.

At the current average rate, you’ll pay $646.61 per month in principal and interest for every $100,000 you borrow. That’s up $23.72 from what it would have been 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 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 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.

Determining how much house you can afford

If you’re not sure how much of your income should go toward housing, follow the traditional 28/36 percent rule. A majority of financial advisers agree that people should spend no more than 28% of their gross income on housing (i.e., your mortgage payment or rent), and no more than 36% of their gross income on total debt, including mortgage payments, credit cards, student loans, medical bills and the like. Calculate how much house you can afford and determine your monthly payments.

What comes next:

Today’s featured lenders, September 29, 2022

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