Current mortgage interest rates as of July 25, 2022: lower rates
A few closely watched mortgage rates fell today. Both 15-year and 30-year fixed mortgage rates have fallen. We also saw a downward trend in the average 5/1 adjustable rate mortgage rate.
Mortgage rates have risen fairly steadily since the start of this year and are expected to climb throughout 2022. Interest rates are dynamic and unpredictable – at least on a daily or weekly basis – as they react to a wide variety of economic factors. Right now, inflation and the federal funds rate are particularly influential. The Federal Reserve has raised interest rates three times this year and has signaled its intention to raise them again in an attempt to contain inflation. This will likely mean higher mortgage rates and, for potential borrowers, higher monthly mortgage payments. As such, homebuyers may have a better chance of securing a lower mortgage interest rate sooner rather than later. It’s always a good idea to interview several lenders to compare rates and fees to find the best mortgage for your particular situation.
30 Year Fixed Rate Mortgages
For a 30-year fixed-rate mortgage, the average rate you’ll pay is 5.65%, down 10 basis points from a week ago. (One basis point equals 0.01%.) Thirty-year fixed mortgages are the most commonly used loan term. A 30-year fixed rate mortgage will generally have a higher interest rate than a 15-year fixed rate mortgage, but also a lower monthly payment. Although you’ll pay more interest over time – you’re paying off your loan over a longer period – if you’re looking for a lower monthly payment, a 30-year fixed mortgage may be a good option.
15-year fixed rate mortgages
The average rate for a 15-year fixed mortgage is 4.87%, down 6 basis points from the same period last week. Compared to a 30-year fixed mortgage, a 15-year fixed mortgage with the same loan value and interest rate will have a higher monthly payment. However, if you can afford the monthly payments, a 15-year loan has several advantages. You will generally get a lower interest rate and pay less interest in total because you are paying off your mortgage much faster.
5/1 Adjustable Rate Mortgages
A 5/1 variable rate mortgage has an average rate of 4.20%, down 3 basis points from the same time last week. With an ARM mortgage, you’ll typically get a lower interest rate than a 30-year fixed mortgage for the first five years. But because the rate adjusts to the market rate, you might end up paying more after that time, as described in your loan terms. If you plan to sell or refinance your home before the rate changes, an ARM might be right for you. Otherwise, market fluctuations could significantly increase your interest rate.
Mortgage Rate Trends
Although mortgage rates were historically low at the start of 2022, they have been rising fairly steadily since then. The Federal Reserve recently raised interest rates by 0.75 percentage points – the biggest rate increase since 1994 – in a bid to curb record inflation. Generally, when inflation is low, mortgage rates tend to be lower. When inflation is high, rates tend to be higher.
Although the Fed does not directly set mortgage rates, central bank policy actions influence how much you pay to fund your home loan. And the Fed has signaled that it will continue to raise rates this year. So if you’re looking to buy a home in 2022, expect mortgage rates to generally increase as the year progresses.
We use information collected by Bankrate, which is owned by the same parent company as CNET, to track rate changes over time. This table summarizes the average rates offered by lenders across the country:
Average Mortgage Interest Rates
|Product||Assess||Last week||To change|
|30 years fixed||5.65%||5.75%||-0.10|
|15 years fixed||4.87%||4.93%||-0.06|
|30-year jumbo mortgage rate||5.60%||5.72%||-0.12|
|30-year mortgage refinance rate||5.59%||5.69%||-0.10|
Rates as of July 25, 2022.
How to Find Custom Mortgage Rates
To find a personalized mortgage rate, meet with your local mortgage broker or use an online mortgage service. Be sure to consider your current finances and goals when looking for a mortgage. Specific interest rates will vary based on factors such as credit rating, down payment, debt to income ratio and loan to value ratio. Generally, you want a good credit rating, a larger down payment, a lower DTI, and a lower LTV to get a lower interest rate.
The interest rate isn’t the only factor that affects the cost of your home. Also, be sure to consider additional factors such as fees, closing costs, taxes, and discount points. Be sure to speak with a variety of lenders – including local and national banks, credit unions and online lenders – and a comparison store to find the best mortgage for you.
What is a good loan term?
When choosing a mortgage, it is important to consider the length of the loan or the payment schedule. The most common loan terms are 15 and 30 years, although there are also 10, 20 and 40 year mortgages. Mortgages are further divided into fixed rate and variable rate mortgages. Interest rates on a fixed rate mortgage are fixed for the term of the loan. Unlike a fixed rate mortgage, an adjustable rate mortgage’s interest rates are only fixed for a certain amount of time (usually five, seven or 10 years). After that, the rate changes every year according to the market rate.
When deciding between a fixed rate mortgage and an adjustable rate mortgage, you need to think about how long you plan to live in your home. Fixed rate mortgages might be more suitable if you plan to stay in a home for a while. While variable rate mortgages may offer lower interest rates initially, fixed rate mortgages are more stable over time. If you don’t plan to keep your new home for more than three to ten years, an adjustable rate mortgage might give you a better deal. There is no best loan term as a general rule; it all depends on your goals and your current financial situation. It’s important to do your research and know your own priorities when choosing a mortgage.