The most closely followed mortgage rates all increased today. Both 30-year fixed and 15-year fixed mortgage rates were higher. For variable rates, the 5/1 adjustable-rate mortgage (ARM) also increased.
We may have reached a peak according to the latest inflation data for April, which shows a slight drop in the annual inflation rate to 8.3%.. The problem is that a number of geopolitical events pose a threat to global supply chains and shortages could push inflation higher.
Inflation is expected to drive up mortgage rates as long as it remains high. A major reason for this is that the Federal Reserve raises short-term interest rates to fight inflation. In turn, that pushes up mortgage rates.
Rising rates only further decrease affordability for homebuyers facing inventory shortages. In spite of this, now may still be a good time for you to become a homeowner if you have the right amount of patience and a firm grasp on your budget.
Let’s check out the current rate trends and learn more about navigating today’s market.
Take a look at today’s rates:
- Today’s average 30-year fixed mortgage rate is 5.57%
- Today’s 20-year fixed mortgage rate is 5.54%
- The average 15-year fixed-rate mortgage currently sits at 4.81%
- 10-year fixed mortgage rates are averaging 4.78%
- The average 5/1 adjustable mortgage currently sits at 3.85%
Mortgage Rate Trends: What’s Behind the Recent Rate Movement?
The pandemic initially drove rates down when it caused economic activity to drop. As a result of the pandemic, disruptions to the global supply chain caused shortages, which increased inflation and interest rates.
We are currently facing a situation similar to this one, where the very issues behind the high inflation could slow economic growth in the future. Sagging economies tend to be accompanied by lower mortgage rates.
What will actually happen with mortgage rates is anyones guess, but at the moment most experts believe rates won’t drop. Russia’s invasion of Ukraine and China’s COVID lockdowns are expected to push inflation higher as they impact supply chains.
Until inflation declines, it is unlikely that we will return to the days of low mortgage rates. “Until inflation is under control, the risk is certainly that rates move higher,” Danielle Hale, chief economist at Realtor.com told NextAdvisor.
What do Today’s Mortgage Rates Mean for Your Home Buying Plans?
Homebuyers face rising prices and rising interest rates, a combination that reduces purchasing power rapidly.
That doesn’t mean that this is the wrong time to buy a house, just be sure you’re not panic buying. Beware of rushing into a home purchase if you fear that rates or prices will continuously rise. You should instead take the time to find the right home for you at an affordable price if now is a good time for you to buy.
The best time to buy a home is when you plan to live there for a long time. This way you can weather the inevitable ups and downs of the market. Be sure to stick to your homebuying budget and only purchase a home you can comfortably afford. According to experts, you shouldn’t spend more than 28% of your pretax income on housing.
History of the 30-Year Fixed Mortgage Rate
It wasn’t that long ago that a “good” rate was around 5%, which is about where rates are today. Even if you can only qualify for a rate north of 5%, that doesn’t mean you’re getting a bad deal.
The information shown on this chart is from Freddie Mac, not Bankrate. However, it still shows the same general trends while providing historical context to mortgage rate movement.
What to Know About Loans Fees
The umbrella term for what you pay to take out a mortgage loan is closing costs. Everything from the prepaid property taxes to your appraisal fees fall into this category. These fees vary depending on the size of your loan, but are usually 3% to 6% of your loan balance. Keeping track of your closing costs is crucial because a higher closing cost will result in a higher APR.
Today’s Mortgage Refinance Rates
Refinancing became a bit more expensive today as 30-year fixed and 15-year fixed refinance mortgages saw their mean rates go up. If you’ve been considering a 10-year refinance loan, just know average rates sank.
Take a look at today’s refinance rates:
- 30 Year Fixed Refinance Rates: 5.53%
- 20-year refinance rate: 5.52%
- 15-year fixed refinance rate: 4.83%
- 10-year refinance rate: 4.79%
30-Year Fixed Mortgage Interest Rates
The 30-year fixed-mortgage rate average is 5.57%, which is a growth of 9 basis points from seven days ago.
15-Year Fixed Mortgage Rates
The median rate for a 15-year fixed mortgage is 4.81%, which is an increase of 8 basis points from the same time last week.
A 15-year, fixed-rate mortgage’s monthly payment is larger and will put more stress on your monthly budget than a 30-year mortgage would. However, 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 Mortgage Rates
A 5/1 ARM has an average rate of 3.85%, which is an uptick of 7 basis points from the same time last week.
An ARM is ideal for households who will sell or refinance before the rate changes. If that’s not the case, their interest rates could end up being remarkably 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 depending on how much your loan’s rate adjusts, your payment has the potential to increase by a large amount.
How Our Mortgage Rates Are Calculated
To see where mortgage rates are going, we rely on information collected by Bankrate, which is owned by the same parent company as NextAdvisor. The daily rates survey focuses on mortgages where the borrower has a FICO score of 740 or more, a LTV of 80% or lower, and lives in the home.
The table below compares today’s average rates to what they were a week ago, and is based on information provided to Bankrate by lenders nationwide:
|30-year jumbo mortgage rate||5.55%||5.45%||+0.10|
|30-year mortgage refinance rate||5.53%||5.45%||+0.08|
Rates as of May 12, 2022.
Mortgage Rate Frequently Asked Questions (FAQ):
How Do I Get the Lowest Mortgage Rate?
Your credit score, and loan-to-value ratio (LTV), and are the most important factors lenders use to determine your mortgage rate.
Having a credit score over 750 will help you get the lowest rate. But, even a score of over 700 can get you a worthwhile rate reduction compared to a lower credit score. For a credit score over 800, the mortgage rate discount won’t be meaningful.
Banks offer the largest mortgage rate discounts to borrowers that are seen as less risky. A large down payment is a sign to lenders that you have more skin in the game 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 It a Good Idea to Lock in My Mortgage Rate Right Now?
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.
A rate lock will only last for a set amount of time, typically 30-60 days. If you hit a snag during closing and it looks like your rate lock will expire you should talk with your lender. It may be able to extend the rate lock, however, you might have to pay a fee for that privilege.