The average 30-year fixed mortgage rate is over half a percentage point lower now than it was two weeks ago. Interest rates have been volatile in recent weeks but have generally eased as markets brace for a possible recession.
The Federal Reserve has been raising the federal funds rate to try to tame inflation, and many now fear it won’t be able to do so without slowing the economy too much.
Some have even speculated that we are already in a recession, pointing to the fact that the gross domestic product has fallen for two quarters in a row. But on Friday, the Bureau of Labor Statistics said the U.S. added 528,000 jobs in July, well above many economists’ expectations.
Mortgage rates may remain volatile as the effects of the Fed’s rate hikes continue to play out.
Current mortgage rates
Current refinancing rates
Use our free mortgage calculator to see how today’s mortgage rates would affect your monthly payments. By factoring in different interest rates and term lengths, you’ll also know how much you’ll pay over the life of your mortgage.
Your estimated monthly payment
- Payment of a 25% the higher down payment will save you $8,916.08 on interest
- Reduction of the interest rate with 1% will save you $51,562.03
- Surcharge 500 dollars each month will reduce the duration of the loan by 146 the month
Click More Details for tips on how to save money on your mortgage in the long run.
30-year fixed mortgage rates
The current average 30-year fixed mortgage rate is 4.99%, according to Freddie Mac. That’s down from last week’s 5.3%, the second week in a row that the pace has declined.
The 30-year fixed rate mortgage is the most common type of home loan. With this type of mortgage, you’ll pay back what you borrowed over 30 years, and your interest rate won’t change for the life of the loan.
The long 30-year term allows you to spread your payments over a long period of time, meaning you can keep your monthly payments lower and more manageable. The trade-off is that you’ll have a higher rate than you would with shorter terms or adjustable rates.
15-year fixed mortgage rates
The average 15-year fixed mortgage rate was 4.26 percent, down from the previous week, according to data from Freddie Mac. This is the second week in a row that this percentage has decreased.
If you want the predictability that comes with a fixed rate, but want to spend less on interest over the life of your loan, a 15-year fixed rate mortgage may be right for you. Because these terms are shorter and have lower rates than 30-year fixed-rate mortgages, you could potentially save tens of thousands of dollars in interest. However, you will have a higher monthly payment than with a longer term.
5/1 adjustable mortgage rates
The average 5/1 adjustable mortgage rate was 4.25%, down slightly from the previous week. This is the third week in a row that this percentage has fallen.
Adjustable rate mortgages can look very attractive to borrowers when interest rates are high because the interest rates on these mortgages are usually lower than fixed mortgage rates. A 5/1 ARM is a 30-year mortgage. For the first five years, you will have a fixed rate. After that, your rate will be adjusted once a year. If rates are higher when your rate adjusts, you’ll have a higher monthly payment than what you started with.
If you’re considering an ARM, make sure you understand how much your interest rate can go up each time it adjusts, and how much it could ultimately increase over the life of the loan.
Are mortgage rates rising?
Mortgage rates began to rise from their historic lows in the second half of 2021 and have increased significantly so far in 2022. Interest rates have been relatively volatile recently.
Over the past 12 months, the consumer price index has risen by 9.1%. The Federal Reserve is working to rein in inflation and plans to raise the target federal funds rate three more times this year, following hikes in March, May, June and July.
Although not directly tied to the federal funds rate, mortgage rates sometimes rise as a result of Fed rate hikes and investors’ expectations of how those hikes will affect the economy. If inflation remains high, mortgage rates may remain at current levels or even rise. But as a recession becomes more likely, mortgage rates could fall.
How do I find custom mortgage rates?
Some mortgage lenders allow you to customize your mortgage rate on their websites by entering your down payment amount, zip code and credit score. The resulting rate isn’t set in stone, but it can give you an idea of what you’ll pay.
If you’re ready to start home shopping, you can apply for a lender pre-approval. The lender does a hard credit pull and looks at the details of your finances to lock in a mortgage rate.
How do I compare mortgage rates between lenders?
You can apply for pre-qualification with multiple lenders. The lender takes an overview of your finances and gives you an estimate of the rate you will pay.
If you’re further along in the home buying process, you have the option to apply for pre-approval with multiple lenders, not just one company. By receiving letters from more than one lender, you can compare personalized rates.
Applying for pre-approval requires a hard credit pull. Try to apply to multiple lenders within a few weeks, as collecting all of your hard credit in the same period of time will do less damage to your credit score.