Mortgage interest rates for September 1, 2022: rates are rising

Some major mortgage rates went up today. Both the average 15-year and 30-year fixed mortgage rates increased. For variable rates, the 5/1 variable rate mortgage also floated higher.

Although mortgage rates have risen fairly steadily since the start of this year, what happens next will depend on whether inflation continues to rise or begins to fall. Interest rates are dynamic and unpredictable – at least on a daily or weekly basis – and they react to a wide variety of economic factors. At the moment, they are particularly sensitive to inflation and the prospect of a US recession.

With so much uncertainty in the market, if you’re looking to buy a home, trying to time the market may not work in your favor. If inflation rises and rates rise, this could mean higher interest rates and higher monthly mortgage payments. Because of this, you may have a better chance of getting a lower mortgage interest rate sooner rather than later. No matter when you decide to shop for a home, it’s always a good idea to research multiple lenders to compare rates and fees to find the best mortgage for your specific situation.

30 Year Fixed Rate Mortgages

The average 30-year fixed mortgage interest rate is 5.95%, up 3 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 generally 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 5.19%, an increase of 11 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. These typically include the ability to get a lower interest rate, pay off your mortgage sooner, and pay less total interest over the long term.

5/1 Adjustable Rate Mortgages

A 5/1 ARM has an average rate of 4.42%, up 9 basis points from a week ago. For the first five years, you’ll typically get a lower interest rate with a 5/1 variable rate mortgage compared to a 30-year fixed mortgage. But you might end up paying more after that time, depending on the terms of your loan and how the rate adjusts to the market rate. If you plan to sell or refinance your home before the rate changes, an adjustable rate mortgage 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 an additional 0.75 percentage points in an effort to curb record inflation. The Fed has raised rates a total of four times this year, but inflation remains high. 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 set mortgage rates directly, central bank policy actions influence how much you pay to fund your home loan. If you’re looking to buy a home in 2022, keep in mind that the Fed has signaled it will continue to raise rates and mortgage rates may rise as the year progresses. Whether rates follow their upward projection or begin to stabilize depends on whether inflation actually slows.

We use data collected by Bankrate, which is owned by the same parent company as CNET, to track these daily rates. 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 To change
30-year fixed rate 5.95% 5.92% +0.03
Fixed rate over 15 years 5.19% 5.08% +0.11
30-year jumbo mortgage rate 5.94% 5.93% +0.01
30-year mortgage refinance rate 5.92% 5.85% +0.07

Updated September 1, 2022.

How to Find Custom Mortgage Rates

When you’re ready to apply for a loan, you can contact a local mortgage broker or search online. When researching mortgage rates, consider your goals and current financial situation. 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. Typically, you want a higher credit score, larger down payment, lower DTI, and lower LTV to get a lower interest rate.

Along with the mortgage rate, additional costs including closing costs, fees, discount points, and taxes can also affect the cost of your home. Be sure to shop around with multiple lenders — including credit unions and online lenders, in addition to local and national banks — to get a mortgage that’s right for you.

What is the best loan term?

An important thing to consider when choosing a mortgage loan is the length of the loan or the payment schedule. The most common mortgage 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 fixed for a certain period of time (usually five, seven or 10 years). After that, the rate adjusts annually based on the current market interest rate.

One thing to think about when deciding between a fixed rate and adjustable rate mortgage is how long you plan to stay in your home. Fixed rate mortgages might be more suitable if you plan to stay in a home for a while. Fixed rate mortgages offer more stability over time compared to adjustable rate mortgages, but adjustable rate mortgages may 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 depends entirely on your personal circumstances and goals, so be sure to think about what’s important to you when choosing a mortgage.

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