Here are today’s mortgage rates, August 25, 2022 | Rates pushed up

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After nearly two years of record high mortgage rates, 2022 has started with rates nearing levels we haven’t seen since before the pandemic.

This doesn’t mean you have to cancel your home buying plans. Yes, rates are higher than they were last year, but it’s important to keep in mind that 30-year fixed rates are still close to where they were a few years ago. .

Plus, a home buying decision isn’t just about an interest rate. Buying a house is making a lifestyle choice. While the mortgage interest rate market can shape a decision, it’s wise not to base it on just a few basis points of a mortgage rate. The most important thing to consider is setting a realistic home buying budget and sticking to it.

Let’s take a look at current mortgage rates, where rates have been in the past, and what it all means for the borrower.

Looking at today’s mortgage rates, a few prominent rates have gone up. Growth in 30-year fixed mortgage rates is making headlines, but don’t forget 15-year fixed rates, which also made gains. The most common type of variable rate mortgage is the 5/1 Variable Rate Mortgage (ARM) which has also climbed higher.

Mortgage rates are currently:

Mortgage rate forecasting: why do mortgage rates change?

The surge in mortgage rates so far this year is attributable to a variety of economic factors. High and persistent inflation matters, Jacob Channel, senior economic analyst at LendingTree, told us. The July Inflation Report shows inflation at 8.5% year-over-year. This is less than June’s 9.1%, a sign that inflation is beginning to slow.

Although still high, in response the Federal Reserve raised its benchmark short-term interest rate to combat this inflation. The Fed raised rates by 50 basis points in May, 75 basis points in June and 75 basis points in July.

Recently, we have seen mortgage rates skyrocket after the inflation report and before the Fed announcement. “I think what we’re seeing is that lenders had already forecasted the Fed was going to raise the fed funds rate by 75 basis points and they started pushing mortgage rates up preemptively,” we said. says Jacob Channel, senior economist at LendingTree. .

Energy prices are half responsible for the increases, Dawit Kebede, senior economist at the Credit Union National Association, said in a statement. “There are signs that some of the main drivers of inflation are easing, such as the drop in oil and other commodity prices in July, slowing wage growth and easing pressures on the chain. However, price increases for services driven by housing and pent-up demand for vehicles will keep inflation elevated over the coming months.

Current Mortgage Rates: Is It a Good Time to Buy a Home Right Now?

Even with the recent dramatic increases, mortgage rates remain at normal levels and are still considered historically favorable.

But the overall cost of home ownership is now rising with rising rates. With a combination of limited supply of homes, prices have risen significantly from pre-pandemic levels. Massive buyer demand and rising home construction costs are also contributing to the surge.

A point or two difference can mean a lot of money on a 30-year mortgage. But experts advise against trying to time the market to get the best mortgage rate. It’s more important to focus on finding the right home and doing it when your personal lifestyle and financial situation indicate that it’s the right time.

Mortgage lender rates can vary widely. In order to get the best deal, shop around between a few different mortgage lenders. Be sure to get quotes from different lenders to ensure you get the best deal, experts say. “The rate has a big impact on your monthly affordability as long as you keep that house,” Skylar Olsen, senior economist at Tomo, a digital real estate and mortgage company, told us. “It’s actually a critical part of that decision, and it requires shopping around.”

Closing costs and loan costs

The umbrella term for what you pay to take out a mortgage is closing costs. Appraisal fees, title insurance and any lender origination fees are all part of your closing costs. These fees vary depending on the size of your loan, but typically range from 3% to 6% of your loan balance. Keeping track of your closing costs is crucial because a higher closing cost will translate into a higher APR.

Current Mortgage Refinance Rates

Refinancing has become a bit more expensive today as 30-year and 15-year fixed refinance mortgages have seen their average rates increase. If you’re considering a 10-year refinance loan, just know that average rates have also increased.

Take a look at today’s refinance rates:

Current mortgage rates.

30-year mortgage rates

For a 30-year fixed-rate mortgage, the average rate you’ll pay is 5.92%, up 32 basis points from seven days ago.

15-year fixed mortgage interest rate

The median rate for a 15-year fixed mortgage is 5.08%, an increase of 19 basis points from the same period last week.

The monthly payment for a 15-year fixed rate mortgage is larger and will take up more of your monthly budget than a 30-year mortgage. However, 15-year loans have significant benefits: you’ll pay thousands less in interest and pay off your loan much sooner.

5/1 ARM Mortgage Rates

A 5/1 ARM has an average rate of 4.33%, an increase of 11 basis points from seven days ago.

An ARM is ideal for borrowers who will sell or refinance before the rate changes. If not, their interest rates could end up being remarkably higher after a rate adjustment.

For the first five years, a 5/1 ARM will typically have a lower interest rate than a 30-year fixed mortgage. Keep in mind that depending on your loan rate adjustment, your payment may increase significantly.

How We Determine Mortgage Interest Rates

To get an idea of ​​current mortgage rate trends, we rely on information collected by Bankrate, which is owned by the same parent company as NextAdvisor. The Daily Rates survey focuses on mortgages where the borrower has a FICO score of 740 or higher, an LTV of 80% or lower, and lives in the home.

Average rates given below and based on the Bankrate Mortgage Rate Survey:

Rates as of August 25, 2022.

Frequently Asked Questions (FAQ) About Mortgage Rates:

How to benefit from the lowest mortgage rate?

There are two main factors in getting the lowest interest rate: the loan-to-value (LTV) ratio and your credit score.

To get the best interest rate, you’ll need a credit score between 700 and 800. Having a credit score above 800 is nice, but probably won’t have a major impact on your rate.

Lenders offer the biggest mortgage rate reductions to borrowers who are deemed less risky. A larger down payment is a signal to lenders that you have more skin in the game and are less likely to default on your loan. A down payment of 20% or more will save you money in two ways: with a lower mortgage rate, and you can avoid paying for private mortgage insurance (PMI).

Is it a good time to lock in my mortgage rate?

It is impossible to know which direction mortgage rates will go from one day to the next. That’s why a mortgage rate lock is such a useful tool, because it protects you if rates go up. And since interest rates are relatively low right now, you should lock in your rate as soon as possible.

When you lock your rate, ask your lender how long the lock is valid. A rate lock can be good for 30-60 days, which will usually give you plenty of time to close before the lock expires. If you want to extend the rate lock, find out about fees, as many lenders charge a fee to extend a rate lock.