Mortgage interest rates as of February 4, 2022: rates continue to rise
Major mortgage rates, including 15-year fixed and 30-year fixed mortgage rates, continue to climb to the highest levels since before the pandemic. The average rate of 5/1 adjustable rate mortgages also increased. With mortgage rates hitting historic lows over the past period, now was a good time for potential buyers to lock in a fixed rate. However, rates fluctuate and are expected to continue to rise. Before buying a home, consider your personal needs and financial situation, and remember to talk to several lenders to find the best one for you.
30 Year Fixed Rate Mortgages
The average 30-year fixed mortgage rate is 3.84%, up 6 basis points from a week ago. (One basis point equals 0.01%.) The most common loan term is a 30-year fixed mortgage. A 30 year fixed rate mortgage will generally have a smaller monthly payment than a 15 year mortgage, but often a higher interest rate. 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 3.23%, an increase of 5 basis points compared to the same period last week. You will definitely have a higher monthly payment with a 15-year fixed mortgage compared to a 30-year fixed mortgage, even if the interest rate and loan amount are the same. 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 3.84%, an increase of 6 basis points from last week. With a variable rate mortgage, you’ll generally get a lower interest rate than a 30-year fixed mortgage for the first five years. However, since the rate adjusts to the market rate, you may end up paying more after this period, as described in your loan terms. For borrowers who plan to sell or refinance their home before the rate changes, an ARM could be a good option. Otherwise, changes in the market could significantly increase your interest rate.
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 rates 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:
Current Average Mortgage Interest Rates
|Type of loan||Interest rate||A week ago||Change|
|30-year fixed rate||3.84%||3.78%||+0.06|
|Fixed rate over 15 years||3.23%||3.18%||+0.05|
|30-year jumbo mortgage rate||2.85%||2.82%||+0.03|
|30-year mortgage refinance rate||3.87%||3.75%||+0.12|
Updated February 4, 2022.
How to find the best mortgage rates
You can get a personalized mortgage rate by connecting with your local mortgage broker or using an online calculator. When looking at mortgage rates, consider your current goals and finances. A range of factors — including your down payment, credit score, loan-to-value ratio, and debt-to-income ratio — will all affect your mortgage interest rate. Generally, you want a good credit rating, a larger down payment, a lower DTI, and a lower LTV to get a lower interest rate. Besides the mortgage rate, other factors, including closing costs, fees, discount points and taxes, can also affect the cost of your home. 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 loan for you.
How does the loan term affect my mortgage?
One important thing to keep in mind when choosing a mortgage is the term of the loan or the payment schedule. The most commonly offered mortgage terms are 15 and 30 years, although you can also find 10, 20 and 40 year mortgages. Mortgages are further divided into fixed rate and variable rate mortgages. For fixed rate mortgages, interest rates are stable for the life of the loan. Unlike a fixed rate mortgage, an adjustable rate mortgage’s interest rates are only stable for a certain period of time (usually five, seven or 10 years). After that, the rate fluctuates annually depending on the market interest rate.
When deciding between a fixed rate and variable rate mortgage, you need to think about how long you plan to live in your home. Fixed rate mortgages may be more suitable for people who plan to live in a home for a while. While variable rate mortgages may offer lower interest rates initially, fixed rate mortgages are more stable over the long term. 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. Be sure to do your research and think about your own priorities when choosing a mortgage.