Current Mortgage Interest Rates on July 25, 2022: Rates Retreat – CNET [CNET]

Today some notable mortgage rates decreased, though rates are generally expected to rise this year. The Fed’s interest rate hikes are increasing costs for prospective homebuyers.

A couple of closely followed mortgage rates slid downward today. Fifteen-year fixed and 30-year fixed mortgage rates both dropped off. We also saw a downward trend in the average rate of 5/1 adjustable-rate mortgages.

Mortgage rates have been rather consistently going up since the start of this year, and are expected to climb throughout 2022. Interest rates are dynamic and unpredictable — at least on a daily or weekly basis — as they respond to a wide variety of economic factors. At the moment, inflation and the federal funds rate are particularly influential. The Federal Reserve has increased interest rates three times this year and has signaled its intention to hike rates again to try to contain inflation. That will likely translate into higher mortgage rates and, for prospective borrowers, steeper monthly mortgage payments. As such, homebuyers may have better luck locking in a lower mortgage interest rate sooner than later. It’s always a good idea to interview multiple lenders to compare rates and fees to find the best mortgage for your specific situation.

30-year fixed-rate mortgages

For a 30-year, fixed-rate mortgage, the average rate you’ll pay is 5.65%, which is a decline of 10 basis points compared to one week ago. (A basis point is equivalent to 0.01%.) Thirty-year fixed mortgages are the most frequently used loan term. A 30-year fixed mortgage will usually have a greater 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 timeframe — 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 4.87%, which is a decrease of 6 basis points from the same time last week. Compared to a 30-year fixed mortgage, a 15-year fixed mortgage with the same loan value and interest rate will have a higher monthly payment. However, if you’re able to afford the monthly payments, there are several benefits to a 15-year loan. You’ll typically get a lower interest rate, and you’ll pay less interest in total because you’re paying off your mortgage much quicker.

5/1 adjustable-rate mortgages

A 5/1 adjustable-rate mortgage has an average rate of 4.20%, a downtick of 3 basis points from the same time last week. With an ARM mortgage, you’ll usually get a lower interest rate than a 30-year fixed mortgage for the first five years. But since the rate adjusts with the market rate, you could end up paying more after that time, as described in the terms of your loan. If you plan to sell or refinance your house before the rate changes, an ARM might make sense for you. If not, shifts in the market could significantly increase your interest rate.

Mortgage rate trends

Though mortgage rates were historically low at the beginning of 2022, they have been increasing somewhat steadily since then. The Federal Reserve recently raised interest rates by 0.75 percentage points — the highest rate increase since 1994 — in an attempt to curb record-high inflation. As a general rule, when inflation is low, mortgage rates tend to be lower. When inflation is high, rates tend to be higher.

Though the Fed does not directly set mortgage rates, the central bank’s policy actions influence how much you pay to finance your home loan. And the Fed has signaled it will continue to raise rates over the course of this year. So, if you’re looking to buy a house in 2022, expect mortgage rates to generally increase as the year goes on.

We use information collected by Bankrate, which is owned by the same parent company as CNET, to track rate changes over time. This table summarizes the average rates offered by lenders across the country:

Average mortgage interest rates

Product	Rate	Last week	Change
30-year fixed	5.65%	5.75%	-0.10
15-year fixed	4.87%	4.93%	-0.06
30-year jumbo mortgage rate	5.60%	5.72%	-0.12
30-year mortgage refinance rate	5.59%	5.69%	-0.10

Rates as of July 25, 2022.

How to find personalized mortgage rates

To find a personalized mortgage rate, meet with your local mortgage broker or use an online mortgage service. Make sure to consider your current finances and your goals when searching for a mortgage. Specific interest rates will vary based on factors including credit score, down payment, debt-to-income ratio and loan-to-value ratio. Generally, you want a good credit score, a larger down payment, a lower DTI and a lower LTV to get a lower interest rate.

The interest rate isn’t the only factor that affects the cost of your home. Be sure to also consider additional factors such as fees, closing costs, taxes and discount points. Make sure you speak with a variety of lenders — including local and national banks, credit unions and online lenders — and comparison-shop to find the best mortgage loan for you.

What is a good loan term?

When picking a mortgage, it’s important to consider the loan term, or payment schedule. The most common loan terms are 15 years and 30 years, although 10-, 20- and 40-year mortgages also exist. Mortgages are further divided into fixed- and adjustable-rate mortgages. The interest rates in a fixed-rate mortgage are set for the duration of the loan. Unlike a fixed-rate mortgage, the interest rates for an adjustable-rate mortgage are only fixed for a certain amount of time (usually five, seven or 10 years). After that, the rate changes annually based on the market rate.

When deciding between a fixed- and adjustable-rate mortgage, you should think about how long you plan to live in your home. Fixed-rate mortgages might be a better fit if you plan on staying in a home for quite some time. While adjustable-rate mortgages might offer lower interest rates upfront, fixed-rate mortgages are more stable over time. If you don’t have plans to keep your new home for more than three to 10 years, though, an adjustable-rate mortgage might give you a better deal. There is no best loan term as an overarching rule; it all depends on your goals and your current financial situation. It’s important to do your research and know your own priorities when choosing a mortgage.