Mortgage interest rates today for July 6, 2022: rates have fallen

A few major mortgage rates fell today. There was a significant drop in 30-year fixed mortgage rates and 15-year fixed rates. Average 5/1 adjustable rate mortgage rates also fell.

Mortgage rates have risen fairly steadily since the start of this year and are expected to continue to climb throughout 2022. Of course, interest rates are dynamic and unpredictable, at least on a daily or weekly basis, as they react to a wide variety of economic factors. Currently, two of these factors – inflation and the federal funds rate – are particularly influential. The Federal Reserve has already raised interest rates three times this year and has signaled its intention to raise them again to contain inflation. This will almost certainly 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

The average 30-year fixed mortgage rate is 5.57%, down 34 basis points from a week 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 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 4.84%, down 30 basis points from 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 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 4.26%, down 2 basis points from the same time last week. 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. However, you might end up paying more after this time, depending on the terms of your loan and how the rate moves with 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 reason: The Federal Reserve raised interest rates 0.75 percentage points this month alone — the biggest rate hike since 1994 — in a bid to rein in 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 rise as the year progresses.

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:

Average Mortgage Interest Rates

Product Assess Last week To change
30 years fixed 5.57% 5.91% -0.34
15 years fixed 4.84% 5.14% -0.30
30-year jumbo mortgage rate 5.50% 5.89% -0.39
30-year mortgage refinance rate 5.52% 5.89% -0.37

Rates as of July 6, 2022.

How to Find Custom Mortgage Rates

You can get a personalized mortgage rate by connecting with 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. Things that affect the mortgage interest rate you might get include: your credit score, your down payment, your loan-to-value ratio, and your debt-to-income ratio. Typically, you want a good credit score, higher down payment, lower DTI, and lower LTV to get a lower interest rate. Along with the mortgage interest rate, other factors including closing costs, fees, discount points, and taxes may also factor into the cost of your home. Be sure to speak with a variety of lenders — like 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?

When choosing a mortgage, remember to consider the length 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. The interest rates for a fixed rate mortgage are the same throughout the life of the loan. For adjustable rate mortgages, interest rates are fixed for a number of years (usually five, seven or 10 years), then the rate adjusts annually based on the market interest rate.

When choosing between a fixed rate and variable 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. Fixed rate mortgages offer more stability over time compared to adjustable rate mortgages, but adjustable rate mortgages may offer lower interest rates initially. However, you might 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. It’s important to do your research and know your own priorities when choosing a mortgage.

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