Mortgage Rates Rose to 4.4% Last Week, a Dramatic Increase Ahead of the Fed’s Rate Hike. Here’s How to Offset Rising Rates

A photo to accompany a story about the latest mortgage rates Stefani Reynolds/AFP via Getty Images
A sold sign is posted in front of a house in Washington, DC, on February 26, 2022. Homebuyers across the U.S. are experiencing rising mortgage rates along with stiff competition and low home supply.
We want to help you make more informed decisions. Some links on this page — clearly marked — may take you to a partner website and may result in us earning a referral commission. For more information, see How We Make Money.
  • Mortgage rates continued their march upward in 2022, rising more than a quarter point last week to 4.4%.
  • Inflation has been a major factor behind the dramatic surge in interest rates since December. Rates are up more than a percentage point.
  • The Federal Reserve announced last week it plans to raise its benchmark short-term interest rate by a quarter point to address inflation, potentially pushing mortgage rates higher.
  • Russia’s invasion of Ukraine continues to inject uncertainty into financial markets, causing big swings like those seen the past three weeks.
  • Homebuyers should be aware of the volatility in rates and be ready to shop around.

Mortgage rates jumped dramatically higher last week, hitting 4.4% as inflation continues to push rates further from their recent historic lows

The average 30-year fixed mortgage rate was up more than a quarter point from last week and has now risen more than one percentage point since the start of the year, riding a wave of economic news led by persistently high inflation. Russia’s war in Ukraine has made markets more volatile, which we saw influence the mortgage rate market when rates dropped below 4% two weeks ago. 

These figures preceded the news that the Federal Reserve would increase its benchmark short-term interest rate by a quarter of a percentage point. Experts say the anticipation of the start of that process has contributed to the rise in rates this year.

If you’re shopping for a mortgage, be sure to get quotes from different lenders to make sure you’re getting the best deal, experts say. Homebuyers should focus on the lifestyle decision of buying a home and getting the best rate they can when they’re ready to buy, says Tendayi Kapfidze, chief economist at U.S. Bank. “For most people there’s not a lot of value in trying to figure out whether rates are good now versus some other point in the future,” he says.

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.

What’s Behind Changes In Mortgage Rates?

Rates are up about a full percentage point from the start of the year, and it’s because of a lot of coinciding economic factors. Inflation is a big one. It topped 7.9% year-over-year in February, the highest level in 40 years. The inflation rate has been around a 40-year high for the past few months, driven largely by increasing prices for energy and food. The recent rise in gas prices, spurred by Russia’s invasion of Ukraine, likely won’t help.

Mortgage rates have also gone up as lenders factored in expectations over the past few months that the Federal Reserve would start raising its benchmark short-term interest rate in a bid to slow inflation. The Fed moved to start raising that rate by a quarter of a percentage point, with further increases expected throughout the year. 

The economy’s recovery from the pandemic has also nudged rates up. Job gains have been strong the past few months, with the unemployment rate dropping to 3.8% in February.

What’s added uncertainty to the economic forecast and caused some ups and downs in rates is the war in Ukraine, which brought a lot of volatility to world financial markets. That contributed to a dip in rates a couple of weeks ago, countering a general upward trend.

Expert Forecast: What Will Happen to Mortgage Rates In March?  

Experts expect rates will keep going up in March and for the rest of the year. “We expect them to go even higher,” Nadia Evangelou, senior economist and director of forecasting for National Association of Realtors, told us.

The mortgage market’s reaction to the Fed’s news could be significant. When the Fed raises its benchmark short-term interest rate, it increases the costs for banks to borrow money from each other, raising the cost of offering loans for lenders. Experts say lenders have already factored in some of this year’s expected increases into rates so far this year. It’s hard to say exactly how the news will affect borrowers, however. “Too many variables can change the rates,” Linda McCoy, board president of the National Association of Mortgage Brokers, told us. “Too many things can happen.” 

Pro Tip

Rates are changing quickly, so be wary of trying to time the market to get a better rate. Lock a good rate before it disappears.

What Other Mortgage Industry Data Show 

An even bigger jump was seen in the weekly survey by Freddie Mac, which was up 31 basis points to 4.16%. It’s the first time that average has topped 4% since May 2019, with Freddie Mac noting that the Fed’s raising of short-term interest rates indicates mortgage rates will likely continue to rise through the year.

Freddie Mac is a government-sponsored entity that buys mortgages on the secondary market, and while its survey’s methodology and the time in which it collects data differ from others, such as the Bankrate survey referenced in this article. While the mortgage rate averages vary, they show similar trends over time.

Historical Mortgage Rates: Today’s Rates Are Still Favorable 

Here’s a visual look at how current mortgage rates compare to the last 22 years.

Rates around 4% are still fairly low compared to historical figures. Annual averages over the past two decades from the Freddie Mac survey, which follows similar trends to the Bankrate survey used in this article, show that rates remain quite favorable compared to what they were in fairly recent memory.

Rates have risen sharply this year but they still are favorable when compared to levels seen in the fairly recent past. Before the 2008 crash, “good” rates were still above 5%, and rates were well above 4% as recently as 2018 and 2019. 

What Can Homebuyers Do About Rising Mortgage Rates?   

Rates are moving, and they’re moving quickly. Don’t let that discourage you from buying a house if you want to make that choice, but keep it in mind as you’re going through the process. Remember above all that you aren’t buying a mortgage, you’re buying a home, and even if rates are above 4%, it’s still much more favorable debt than a credit card, and the equity you build from renting is zero.

With rates moving fast, there are some things you can do to ensure you’re still getting the best deal you can. Shop around at different lenders. Research from the Consumer Financial Protection Bureau (CFPB) determined that rates from different lenders can vary by as much as half of a percentage point for similarly qualified borrowers. Just getting a few quotes can save you hundreds or thousands of dollars in interest over 30 years.

Don’t try to time the market in the hopes that rates will drop. Rates are moving quickly these days, and waiting too long to lock in a good because you’re waiting for a great one might leave you with only less favorable rates to choose from. “If you think you’re going to like the rate, lock it,” Jennifer Beeston, senior vice president of mortgage lending at Guaranteed Rate, told us. “Because it’s probably going to change in 20 minutes.”

Most importantly, stay in touch with your lender as you’re going through the shopping process. Beeston recommends checking in at least every 10 days. With rates moving quickly, your expected monthly payment can change significantly, potentially jeopardizing the amount of money you were previously approved for.

What Can Existing Homeowners Do About Rising Mortgage Rates?

With rates reaching prepandemic levels, fewer homeowners are finding themselves in a position to refinance and save money just because they’re getting a better interest rate. That doesn’t mean you aren’t one of them. If your rate is above 5%, you might still be able to get a more favorable rate.

Another refinancing tool is a cash-out refinance, in which you get a new loan that also taps into the equity of your home to get money out. That makes the most sense if you’re doing it to pay for a major home improvement project, particularly one that will increase the value of your home, or to consolidate higher-interest debt. As rates creep higher above 4%, so will credit card rates and other consumer loan rates, meaning refinancing to a relatively low mortgage rate is still appealing. If you’re doing a cash-out refi to take a little bit of cash out, be sure to run the numbers yourself to see if it’s worth it, especially if you’re getting a higher rate.

Whether you are looking to refinance or purchase, you can compare lender offers here using this Home Loan Comparison Calculator. You can enter in the loan amount, rate, fees, and term for each offer and see a true side-by-side comparison. 

Home loan comparison calculator

Compare your payment options side-by-side to see which is right for you and your financial situation.

Find the mortgage that’s best for you by comparing the cost of multiple loans over time.