Interest rates

Current mortgage interest rates as of June 17, 2022: rates tend to rise

A number of mortgage rates shot up today. There was a sharp increase in the interest rate for 30-year fixed rate mortgages and 15-year fixed rates. The average rate of the most common type of variable rate mortgage, the 5/1 variable rate mortgage, also increased.

Mortgage rates have been rising steadily since the start of this year and are expected to continue to rise throughout 2022. In general, interest rates are dynamic – they rise and fall daily based on economic factors, including inflation and federal politics. funds rate, which the Federal Reserve has already raised three times this year. Given that the Fed plans to continue raising interest rates to contain inflation, potential home buyers will likely be able to lock in a lower rate now rather than later this year. Interviewing several lenders to compare rates and fees will help you find the best option for your financial situation.

Keep in mind that house prices don’t just depend on interest rates, but on various factors. While we cannot predict the long-term impact of Fed policies on the housing market, higher rates mean homebuyers will face higher monthly payments in the short term.

30 Year Fixed Rate Mortgages

The average interest rate on a standard 30-year fixed mortgage is 5.94%, up 36 basis points from seven days 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 5.19%, an increase of 46 basis points from seven days 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 usually be the best deal, if you can afford the monthly payments. These typically include the ability to get a lower interest rate, pay off your mortgage sooner, and pay less total interest over the long term.

5/1 Adjustable Rate Mortgages

A 5/1 ARM has an average rate of 4.09%, up 15 basis points from last week. You’ll typically get a lower interest rate (compared to a 30-year fixed mortgage) with a 5/1 variable rate mortgage in the first five years of the mortgage. But you might end up paying more after that time, depending on the terms of your loan and how the rate adjusts to the market rate. For this reason, an ARM can be a good option if you plan to sell or refinance your home before the rate changes. Otherwise, market fluctuations mean your interest rate could be much higher once the rate is adjusted.

Mortgage Rate Trends

While 2022 started off with low mortgage rates, rates have been rising in recent months, breaking historic lows from the start of the pandemic. Rates are rising in response to record inflation and recent action by the Federal Reserve, which raised interest rates by 0.75 percentage points this month – the biggest rate increase since 1994. 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 set mortgage rates directly, central bank policy actions influence how much you will end up paying for your home loan. 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 continue to rise.

We use rates 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 To change
30-year fixed rate 5.94% 5.58% +0.36
Fixed rate over 15 years 5.19% 4.73% +0.46
30-year jumbo mortgage rate 5.89% 5.57% +0.32
30-year mortgage refinance rate 5.94% 5.58% +0.36

Updated June 17, 2022.

How to Shop for 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 at mortgage rates, consider your goals and current financial situation. Factors that affect the interest rate you might get on your mortgage include: your credit score, your down payment, your loan-to-value ratio, and your debt-to-income ratio. Having a higher credit score, higher down payment, low DTI, low LTV, or any combination of these factors can help you get a lower interest rate. Along with the mortgage interest rate, additional costs including closing costs, fees, discount points, and taxes can also affect the cost of your home. Be sure to shop around with multiple lenders — including credit unions and online lenders in addition to local and national banks — to get a loan that’s right 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 common mortgage terms are 15 and 30 years, although there are also 10, 20 and 40 year mortgages. Mortgages are further divided into fixed rate and variable 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 stable for a number of years (usually five, seven or 10 years), then the rate fluctuates annually depending on the market rate.

One thing to think about when deciding between a fixed rate and adjustable rate mortgage is how long you plan to stay in your home. If you plan to stay in a new home for the long term, fixed rate mortgages may be the best option. While variable rate mortgages may have lower interest rates initially, fixed rate mortgages are more stable over time. However, if you don’t plan to keep your new home for more than three to ten years, an adjustable rate mortgage may give you a better deal. The best loan term is entirely up to your own circumstances and goals, so be sure to think about what’s important to you when choosing a mortgage.