- The average 30-year fixed mortgage rate rose to 3.76% last week after a small drop last week.
- It’s the highest mortgage rates have been since March 2020, but they are still near historic lows and below pre-pandemic levels.
- The recent surge in mortgage rates has stemmed from high inflation and expectations that the Federal Reserve will raise interest rates multiple times last year.
- The 30-year rate is up from around 3.3% at the beginning of 2022.
- Increasing interest rates might encourage homebuyers to move more quickly. Those looking to refinance can still find good deals if their current rates are well above 4%.
After big rate increases to start the year, some prospective homebuyers are getting more aggressive about making offers, says Kimber White, a partner at RE Financial Services, a Florida mortgage broker.
The rising rates have “gotten fence-sitters off the fence,” he says.
Despite the recent increase, rates remain below what they were before the pandemic and near historic lows.
Experts have attributed the recent upward trend in mortgage rates largely to the highest inflation in 40 years, and expectations that the Federal Reserve will ease up on pandemic-associated monetary policies such as raising short-term interest rates above zero. The Omicron variant of COVID has also injected uncertainty into the markets.
Interest rates are likely to move up more when the Fed raises its rates, a process expected to begin in March, says White.
The current increase in rates, up less than half a percentage point from the start of the year, is not huge, he says. If they keep going up, it could really start to affect what borrowers can afford to buy and who can qualify for loans.
About the Latest Mortgage Rates
Except where otherwise noted, mortgage rate data in this story is based on mortgage rate information provided by national lenders to Bankrate.com, which like NextAdvisor is owned by Red Ventures.
February 2022 Mortgage Rates and the Housing Market: What to Expect
Mortgage rates will likely see some up and down movement in the near future but experts told us they expect them to stay fairly close to where they are now. The sudden increase seen in the first few weeks of January was “not a speed that can continue for a long time,” Tendayi Kapfidze, head of economic analysis at U.S. Bank, told us.
Mortgage rates are expected to keep increasing throughout the year, but on a week-to-week basis they could be more volatile, according to Ali Wolf, chief economist at Zonda, a California housing data and consultancy firm.
The Highs and Lows of the Average 30-Year Fixed Mortgage Rate
Here’s a look at how current mortgage rates compare to where they’ve been over the last few years, along with inflation rate and national home price for each year.
|2019||2020||2021||2022 (through Feb. 3)|
|Highest 30-year Fixed Mortgage Rate||4.05%||3.88%||3.34%||3.76%|
|Lowest 30-year Fixed Mortgage Rate||3.74%||2.95%||2.93%||3.4%|
|National Average Home Price||$271,900||$296,700||$353,900*||N/A|
Look at today’s 30-year fixed mortgage rates in a broader context than just the last two years. Last week’s new average rate of 3.76% seems high compared to the 2.93% we saw last year. But 3.76% is still on par with the lowest average rate recorded in 2019.
What Other Mortgage Industry Data Is Showing
There was no week-to-week change in a similar survey by Freddie Mac, which saw the average 30-year fixed rate hold steady at 3.55%. That’s down just a single basis point from a peak two weeks ago at 3.56%, the highest since March 2020.
Freddie Mac is a government-sponsored organization that buys home loans on the secondary market. Its survey methodology and the time period in which it collects data each week differ from others, such as the Bankrate survey referenced throughout this article. While different mortgage rate averages will show slight variation, they do show similar trends over time.
What the Latest Mortgage Rates Mean for Existing Homeowners
Here is what last week’s mortgage rate changes mean for existing homeowners.
Despite rates being a bit higher than they were a month ago, it still might make sense to refinance your loan if you’re in certain situations. It was only a few years ago that rates were close to or above 4%. Refinancing makes the most sense if you can snag a new interest rate close to 0.75% below your current one.
Now might be the time to go forward with a refinance if you’re on the fence about it. Experts anticipate rates will generally keep moving up, so consider crunching the numbers with a few lenders to see if you can benefit. You might be one of the nearly 6 million homeowners who could save money by refinancing, according to data from mortgage technology and data provider Black Knight. Those homeowners, who could see their interest rate drop by 0.75% or more, could save an average of $276 a month.
You might want to look into a rate and term refinance as a way to reduce your monthly payments and the amount of interest paid over the life of the loan. You could also take advantage of the increased equity in your home because of rising home values by doing a cash-out refinance, which can help pay off high-interest debt, pay for college expenses, or fund a home improvement project. “Look at how the home can work for you,” White says. “If you’ve got a low rate then no, but if you can get at least three quarters of a point lower, you’re worth refinancing.”
What the Latest Mortgage Rates Mean for New Homebuyers
You might need a larger down payment to stay within an affordable range because of rising home prices the past few years. Remember your mortgage rate is just one part of the home affordability calculation, with a lower rate perhaps only partially offsetting increased purchase prices.
Most importantly: Make a home purchase when the time is right for you. Don’t try to wait out the market in the hopes that home prices will come down and save you more than you’ll pay in rising interest rates, White suggests. Home buyers shouldn’t be worried about the current interest rates but should start looking and making offers. “If you’re serious about buying, don’t sit on the fence. Don’t think the market’s going to come down,” he says.
Plan Ahead by:
- Knowing what you can afford
- Don’t rush a home purchase
- Sticking to a homebuying budget
- Finding a real estate agent you’re comfortable with
Try your estimated figures in NextAdvisor’s mortgage calculator to see what your monthly payment may look like.