Current mortgage interest rates, July 5, 2022 | Price reduction

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Almost two years have passed with record mortgage rates. Now 2022 has started with rates up from pre-pandemic levels.

Don’t cancel your home buying plans just yet. Even though the rates are higher than they were in 2021, they are still considered “normal” from a historical perspective. Only a few years ago, 30-year fixed rates were in the top 5%.

Either way, home buying decisions take a lot more into consideration besides the interest rate. Buying a house is making a lifestyle choice. What happens in the interest rate market can influence a decision, it is wise not to base it on just a few basis points of a mortgage rate. Setting and sticking to a realistic home buying budget is far more important than the rate you get.

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

A few notable mortgage rates fell today. The averages for 30-year and 15-year fixed mortgages declined. The most common type of variable rate mortgage is the 5/1 Variable Rate Mortgage (ARM) which has also declined.

Mortgage rates are currently:

Mortgage Rate Trends: Why Are Mortgage Rates Changing So Quickly?

Various economic factors have caused mortgage rates to rise this year. Persistently high inflation is a big reason, Jacob Channel, senior economic analyst at LendingTree, told us. According to the Bureau of Labor and Statistics’ May inflation report, inflation recently hit 8.6%, its highest level in 40 years. The Federal Reserve raised its short-term policy rate by 50 basis points in May and 75 basis points in June as inflation remained higher than expected.

A spike in mortgage rates preceded the Fed’s announcement after the release of the inflation report. “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. .

“​We have a lot of factors like that putting upward pressure on mortgage rates,” Channel says. Financial markets are still reacting to China’s COVID lockdown and Russia’s invasion of Ukrainian territory. “Volatility has gone through the roof,” Shashank Shekhar, Founder and CEO of InstaMortgage, told us. “The market has adapted to a new round of news virtually every day.”

Is it a good time to buy a house with prices where they are?

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 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.”

What to know about loan fees

The industry term for the upfront fee you pay when you get a home loan is closing costs. This includes lender fees and escrow fees, such as taxes and insurance. Typically, closing costs range from 3% to 6% of your loan amount. So the higher your mortgage, the more money you will pay. Your closing costs play a crucial role in determining your annual percentage rate (APR). In other words, the higher your closing costs, the higher your APR will be.

Today’s Mortgage Refinance Rates

There’s good news if you’re considering a refinance, as the average 15-year and 30-year fixed refinance loan rates have come down. If you’re considering a 10-year refinance loan, just know that average rates have also fallen.

Take a look at today’s refinance rates:

Check out the mortgage rates that meet your specific needs.

30-year mortgage rates

The median interest rate for a standard 30-year fixed mortgage is 5.62%, down 28 basis points from last week.

15-year fixed mortgage rates

The median rate for a 15-year fixed mortgage is 4.86%, down 28 basis points from the same time last week.

The monthly payment on a 15-year fixed rate mortgage is higher than what you would pay on a 30-year mortgage. However, 15-year loans have significant advantages: you’ll save thousands of dollars in interest and pay off your loan much sooner.

5/1 ARM interest rate

A 5/1 ARM has an average rate of 4.27%, down 3 basis points from last week.

An ARM is ideal for borrowers who will refinance or sell before the rate changes. If not, their interest rates could end up being significantly 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 your payment could end up being several hundred dollars higher after a rate adjustment, depending on the terms of your loan.

How we calculate our 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 high credit score (740+), a loan-to-value (LTV) ratio of 80% or greater, and the home is a primary residence.

Current average rates shown below and based on the Bankrate Mortgage Rate Survey:

Updated July 5, 2022.

Pro tip

Use our mortgage calculator to see how your mortgage payment changes based on things like your mortgage interest rate, down payment, and home insurance.

Frequently Asked Questions (FAQ) About Mortgage Rates:

How to get the lowest mortgage rate?

Your credit score and loan-to-value (LTV) ratio are the most important factors lenders use to determine your mortgage rate.

These days, a credit score of at least 750 will help you get the best rate. However, even a score above 700 can get you an attractive rate reduction compared to a lower credit score. However, once you get a credit score above 800, the mortgage rate reduction will no longer be significant.

Lenders offer the biggest mortgage rate reductions to borrowers who are considered less risky. A surefire way to show that you’re more likely to make your monthly payments is to have a larger down payment. 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).

When should I lock in my mortgage rate?

Mortgage rates go up and down daily, and it’s impossible to time the market. It is therefore wise to lock in your interest rate now, because overall rates are historically favorable.

A rate lock will only last for a certain amount of time, usually 30 to 60 days. If you have a problem with closing and it looks like your foreclosure rate is expiring, you should contact your lender. They may be able to extend the rate lock, however, you may need to pay a fee for this privilege.

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