Mortgage interest rates on February 18, 2022: rates increase
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 interest rate on a standard 30-year fixed mortgage is 4.19%, up 20 basis points from a week ago. (One basis point equals 0.01%.) Thirty-year fixed-rate mortgages are the most common loan term. A 30-year fixed rate mortgage will generally have a lower monthly payment than a 15-year one, but often 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 3.48%, up 15 basis points from a week ago. 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 generally be the best deal, if you can afford the monthly payments. 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 ARM has an average rate of 4.20%, up 20 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 since the rate changes with the market rate, you might end up paying more after that time, as described in your loan terms. For this reason, an adjustable rate mortgage could be a good option if you plan to sell or refinance your home before the rate changes. Otherwise, market fluctuations 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 information 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 in the United States:
Current Average Mortgage Interest Rates
|Type of loan||Interest rate||A week ago||Change|
|30-year fixed rate||4.19%||3.99%||+0.20|
|Fixed rate over 15 years||3.48%||3.33%||+0.15|
|30-year jumbo mortgage rate||2.93%||2.86%||+0.07|
|30-year mortgage refinance rate||4.20%||4.02%||+0.18|
Updated February 18, 2022.
How to Shop for the Best Mortgage Rate
To find a personalized mortgage rate, talk to your local mortgage broker or use an online mortgage service. In order to find the best home loan, you will need to consider your current goals and finances. Things that affect the mortgage rate you might get include: your credit score, your down payment, your loan-to-value ratio, and your debt-to-income ratio. Generally, you want a higher credit score, higher down payment, lower DTI, and lower LTV to get a lower interest rate. Along with the mortgage interest rate, additional costs including closing costs, fees, discount points, and taxes may also factor into the cost of your home. Be sure to talk to several different lenders, such as local and national banks, credit unions, and online lenders, and a comparison store to find the best mortgage for you.
How does the loan term affect my mortgage?
When choosing a mortgage, you need to consider 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. Another important distinction is between fixed rate and adjustable rate mortgages. Interest rates on a fixed rate mortgage are fixed for the term of the loan. For adjustable rate mortgages, the interest rates are the same for a number of years (usually five, seven or 10 years), then the rate changes annually based on the market interest rate.
When choosing between a fixed rate mortgage and an adjustable rate mortgage, you need to think about how long you plan to stay in your home. For people planning to stay in a new home for the long term, fixed rate mortgages may be the best option. While variable rate mortgages may offer lower interest rates initially, fixed rate mortgages are more stable over time. However, you may get a better deal with an adjustable rate mortgage if you only plan to keep your home for a few years. 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 know your own priorities when choosing a mortgage.