Average mortgage rates fell this week, according to Freddie Mac. The average 30-year fixed mortgage rate recently peaked at 5.81%, its highest level since 2008. But over the past few weeks, this rate has fallen.
Rates have risen significantly this year and are now more than two percentage points higher than they were at the beginning of 2022. Increased rates combined with high house prices have reduced affordability for many home buyers, causing some to fall out of the market. This has started to have a cooling effect on home buying demand.
Today’s mortgage rates
Today’s refinancing rates
Use our free mortgage calculator to see how today’s mortgage rates will affect your monthly and long term payments.
Your estimated monthly payment
- Pay a 25% higher installment will save you $ 8,916.08 on interest costs
- Lowering the interest rate by 1% would save you $ 51,562.03
- Pay an additional $ 500 each month, the loan length with 146 months
By including different term lengths and interest rates, you will see how your monthly payment can change.
Will mortgage rates rise?
Mortgage rates began to rise from historical lows in the second half of 2021, and may continue to rise throughout 2022.
Over the past 12 months, the Consumer Price Index has risen by 8.6%. The
worked to bring inflation under control, and plans to raise the federal funds target rate four more times this year, following increases in March, May and June.
Although not directly linked to the federal fund rate, mortgage rates are often pushed up due to Fed rate hikes. As the central bank continues to tighten monetary policy to lower inflation, it is likely that mortgage rates will continue to rise.
What do high rates mean for the housing market?
When mortgage rates rise, homebuyers’ purchasing power decreases as more of their expected housing budget has to go to paying interest. If rates get high enough, buyers can be completely priced out of the market, which cools demand and puts downward pressure on house price growth.
However, this does not mean that house prices will fall – in fact, they are expected to rise even more this year, only at a slower pace than we have seen in recent years.
What is a good mortgage rate?
It can be difficult to know if a lender is offering you a good rate, which is why it is so important to get pre-approved with several
and compare each offer. Apply for pre-authorization from at least two or three lenders.
Your rate is not the only thing that matters. Make sure you compare both what your monthly expenses would be, as well as your upfront expenses, including any lender fees.
Even if mortgage rates are strongly influenced by economic factors beyond your control, there are a few things you can do to ensure you get a good rate:
- Consider fixed vs. adjustable rates. You may be able to get a lower introductory rate with an adjustable-rate bond, which can be good if you plan to move before the intro period ends. But a fixed rate may be better if you buy a perpetual home, because you will not run the risk of your rate rising later. Look at the rates your lender offers and weigh your options.
- Look at your finances. The stronger your financial situation, the lower your mortgage rate should be. Look for ways to improve your credit score or lower your debt-to-income ratio, if necessary. Saving for a higher down payment also helps.
- Choose the right lender. Each borrower charges different mortgage rates. Choosing the right one for your financial situation will help you get a good rate.