Some major mortgage rates are up today. Average interest rates for both 15-year fixed-rate mortgages and 30-year fixed-rate mortgages increased. At the same time, average interest rates for 5/1 adjustable rate mortgages also increased.
Mortgage rates have been rising slowly since the beginning of this year and are expected to rise throughout 2022. Interest rates are now closer to 2018 levels than to historic lows at the height of the pandemic. Interest rates are dynamic – they rise and fall daily depending on economic factors. In general, now is a good time for prospective homebuyers to lock in a lower interest rate, rather than later this year. Talking to multiple lenders can help you find the best interest rate available for your financial situation.
30-year fixed-rate mortgages
For a 30-year fixed-rate mortgage, you’re paying an average of 5.41%, up 12 basis points from a week ago. (One basis point equals 0.01%.) The most commonly used loan term is a 30-year fixed-rate mortgage. A 30-year fixed-rate mortgage often has a higher interest rate than a 15-year fixed-rate mortgage — but also a lower monthly rate. You won’t be able to pay off your house as quickly and will pay more interest over time, but a 30-year fixed-rate mortgage is a good option if you want to minimize your monthly payments.
15-year fixed-rate mortgages
The average interest rate on a 15-year fixed-rate mortgage is 4.65%, up 17 basis points from seven days ago. Compared to a 30-year fixed-rate mortgage, a 15-year fixed-rate mortgage has a higher monthly rate with the same lending value and interest rate. However, as long as you can afford the monthly payments, a 15-year loan offers several benefits. You typically get a lower interest rate and pay less interest overall because you pay off your mortgage much faster.
5/1 variable rate mortgages
A 5/1 ARM has an average rate of 5.39%, up 16 basis points from a week ago. For the first five years of the mortgage, you typically get a lower interest rate (compared to a 30-year fixed-rate mortgage) with a 5/1 adjustable-rate mortgage. However, market changes may cause your interest rate to increase after that time, as detailed in the terms of your loan. For borrowers planning to sell or refinance their home ahead of the interest rate change, an adjustable rate mortgage can be a good option. If not, market shifts can increase your interest rate significantly.
Mortgage Rate Trends
Although 2022 started with low mortgage rates, there has been a spike in recent months and rates are expected to continue rising throughout 2022. Home loan interest rates are influenced by various economic factors. A key factor is government policy set by the Federal Reserve, which in March raised interest rates for the first time since 2018 in response to record-high inflation. The Fed expects interest rates to be raised six more times this year. So if you’re looking to buy a home in 2022, be prepared for interest rates to keep rising.
We use rates collected by Bankrate, owned by the same parent company as CNET, to track changes in these daily rates. This table summarizes the average interest rates offered by lenders in the US:
Current average mortgage rates
|type of loan||interest rate||A week ago||To change|
|30 years fixed rate||5.41%||5.29%||+0.12|
|15 years fixed rate||4.65%||4.48%||+0.17|
|Jumbo mortgage rate for 30 years||3.67%||3.64%||+0.03|
|Refinancing rate for 30-year mortgages||5.42%||5.26%||+0.16|
Updated May 2, 2022.
How to find the best mortgage rate
When you’re ready to apply for a loan, you can contact a local mortgage broker or search online. When looking for a mortgage, consider your current financial situation and goals. A number of factors — including your down payment, credit history, loan-to-value ratio, and debt-to-income ratio — all affect your mortgage interest rate. Generally you want higher credit, higher down payment, lower DTI and lower LTV to get a lower interest rate. In addition to the mortgage rate, other factors such as closing costs, fees, rebate points, and taxes can also affect the cost of your home. Be sure to look at multiple lenders — such as credit unions and online lenders in addition to local and national banks — to get a loan that’s best for you.
How does the loan term affect my mortgage?
An important factor to consider when choosing a mortgage is the repayment term or payment schedule. The most common mortgage terms are 15 years and 30 years, although 10, 20 and 40 year mortgages also exist. Mortgages are further divided into fixed rate and adjustable rate mortgages. The interest rates on a fixed-rate mortgage are fixed for the term of the loan. Unlike a fixed-rate mortgage, interest rates on an adjustable-rate mortgage are only stable for a certain amount of time (usually five, seven, or 10 years). Thereafter, the interest rate changes annually based on the market interest rate.
When choosing between a fixed-rate mortgage and an adjustable-rate mortgage, you should think about how long you plan to live in your home. If you’re looking to live in a new home long-term, a fixed-rate mortgage may be a better option. While adjustable rate mortgages can sometimes offer lower upfront interest rates, fixed rate mortgages are more stable over time. However, you can get a better deal with an adjustable rate mortgage if you only plan to keep your home for a few years. The best loan term depends entirely on a person’s situation and goals. Therefore, when choosing a mortgage, consider what is important to you.