February 8, 2022: Mortgage interest rates continue to climb

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A number of mortgage rates jumped today to their highest levels since the start of 2020, including 15-year and 30-year fixed mortgage rates. We also saw a significant rise in the average 5/1 adjustable rate mortgage rate. Mortgage rates have been quite low over the past period, making it a good time for potential buyers to lock in a fixed rate. But rates are dynamic and should continue to rise. Before buying a home, remember to consider your personal needs and financial situation, and speak with several lenders to find the best one for you.

30 Year Fixed Rate Mortgages

The average 30-year fixed mortgage rate is 3.93%, up 15 basis points from seven days ago. (One basis point equals 0.01%.) The most commonly used loan term is a 30-year fixed mortgage. A 30 year fixed rate mortgage will usually have a lower monthly payment than a 15 year one, but usually a higher interest rate. You won’t be able to pay off your home as quickly and you’ll pay more interest over time, but a 30-year fixed rate mortgage is a good option if you’re looking to minimize your monthly payment.

15-year fixed rate mortgages

The average rate for a 15-year fixed mortgage is 3.28%, an increase of 10 basis points compared to 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. But a 15-year loan will usually be the best deal, if you can afford the monthly payments. You will most likely 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 ARM has an average rate of 3.95%, up 18 basis points from a week ago. You will typically get a lower interest rate (compared to a 30 year fixed mortgage) with a 5/1 variable rate mortgage in the first five years of the mortgage. However, changes in the market may cause your interest rate to increase after this period, as stated in the terms of your loan. If you plan to sell or refinance your home before the rate changes, an ARM might be right for you. Otherwise, market fluctuations mean that your interest rate may be significantly higher once the rate is adjusted.

Mortgage Rate Trends

While 2022 started off with low mortgage rates, they have recently seen a rise. There are two major factors at play here: rising inflation rates and a growing economy. That said, rates can always go up and down for a variety of reasons. The spread of the omicron, for example, kept rates relatively low throughout December and into the new year. Overall, rates are expected to rise in 2022, notably with the decision of the Federal Reserve to reduce its bond purchases and to increase interest rates.

We use data collected by Bankrate, which is owned by the same parent company as CNET, to track daily mortgage rate trends. This table summarizes the average rates offered by lenders nationwide:

Today’s Mortgage Interest Rates

Rates correct as of February 8, 2022.

How to Find Custom Mortgage Rates

You can get a personalized mortgage rate by contacting your local mortgage broker or using an online calculator. In order to find the best home loan, you will need to consider your current goals and finances. Specific mortgage interest rates will vary based on factors such as credit rating, down payment, debt-to-income ratio and loan-to-value ratio. Having a good credit score, a higher down payment, low DTI, low LTV, or any combination of these factors can help you 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 other factors such as fees, closing costs, taxes, and discount points. You should 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 the best loan term?

When choosing a mortgage, you need 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. For fixed rate mortgages, interest rates are fixed for the term of the loan. Unlike a fixed rate mortgage, an adjustable rate mortgage’s interest rates are only stable for a certain period of time (most often five, seven or 10 years). After that, the rate adjusts annually based on the market rate.

An important factor to consider when choosing between a fixed rate and variable rate mortgage is how long you plan to live in your home. For those planning on staying in a new home for the long term, fixed rate mortgages may be the best option. Fixed rate mortgages offer more stability over time than adjustable rate mortgages, but adjustable rate mortgages can sometimes offer lower interest rates upfront. If you don’t plan to keep your new home for more than three to ten years, an adjustable rate mortgage might get you a better deal. The best loan term is entirely up to your own circumstances and goals, so be sure to consider what’s important to you when choosing a mortgage.

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