Current Mortgage Rates for Jan. 16, 2023: Rates Slip – CNET [CNET]

Today some major mortgage rates declined, though rates are high compared to a year ago. See how your payments might be affected by inflation.

A few important mortgage rates went down today. The average interest rates for both 15-year fixed and 30-year fixed mortgages slid. For variable rates, the 5/1 adjustable-rate mortgage also ticked downward.

Mortgage rates increased dramatically in 2022, as the Federal Reserve hiked interest rates repeatedly throughout the year. Interest rates are dynamic and unpredictable — at least on a daily or weekly basis — and they respond to a wide variety of economic factors. But the Fed’s actions, designed to mitigate the high rate of inflation, had an unmistakable impact on mortgage rates.

The outlook for 2023 remains uncertain. Though higher rates are likely here to stay, the biggest increases may be behind us. That noted, trying to time the market is tricky. If inflation persists, more interest rate hikes could follow. As such, you may have better luck locking in a lower mortgage interest rate now instead of waiting; after all, you can always refinance later on. No matter when you decide to shop for a home, it’s always a good idea to seek out multiple lenders to compare rates and fees to find the best mortgage for your specific situation.

30-year fixed-rate mortgages

The average 30-year fixed mortgage interest rate is 6.40%, which is a decrease of 7 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 often have a greater interest rate than a 15-year fixed rate mortgage — but also a lower monthly payment. You won’t be able to pay off your house as quickly and you’ll pay more interest over time, but a 30-year fixed mortgage is a good option if you’re looking to minimize your monthly payment.

15-year fixed-rate mortgages

The average rate for a 15-year, fixed mortgage is 5.73%, which is a decrease of 26 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 larger monthly payment. However, as long as you can afford the monthly payments, there are several benefits to a 15-year loan. These include usually being able to get a lower interest rate, paying off your mortgage sooner and paying less total interest in the long run.

5/1 adjustable-rate mortgages

A 5/1 adjustable-rate mortgage has an average rate of 5.46%, a downtick of 5 basis points compared to last week. For the first five years, you’ll usually get a lower interest rate with a 5/1 adjustable-rate mortgage compared to a 30-year fixed mortgage. However, you could end up paying more after that time, depending on the terms of your loan and how the rate shifts with the market rate. Because of this, an adjustable-rate mortgage could be a good option if you plan to sell or refinance your house before the rate changes. But if that’s not the case, you could be on the hook for a significantly higher interest rate if the market rates change.

Mortgage rate trends

Mortgage rates were historically low at the beginning of 2022 but increased steadily throughout the year. The Federal Reserve raised interest rates seven times 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. If you’re looking to buy a house, keep in mind that the Fed has signaled it will continue to raise rates in 2023 and that those increases may drive mortgage rates even higher.

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 nationwide:

Current average mortgage interest rates

Loan type	Interest rate	A week ago	Change
30-year fixed rate	6.40%	6.47%	-0.07
15-year fixed rate	5.73%	5.99%	-0.26
30-year jumbo mortgage rate	6.39%	6.43%	-0.04
30-year mortgage refinance rate	6.46%	6.48%	-0.02

Updated on Jan. 16, 2023.

How to find the best mortgage rates

You can get a personalized mortgage rate by connecting with your local mortgage broker or using an online calculator. Make sure to take into account 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. Having a good credit score, a larger down payment, a low DTI, a low LTV, or any combination of those factors can help you get a lower interest rate.

Besides the mortgage interest rate, factors including closing costs, fees, discount points and taxes might also affect the cost of your home. Make sure to comparison shop with multiple lenders — including credit unions and online lenders in addition to local and national banks — in order to get a mortgage that’s right for you.

How does the loan term impact my mortgage?

One important consideration when choosing a mortgage is 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-rate and adjustable-rate mortgages. The interest rates in a fixed-rate mortgage are the same 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 (commonly five, seven or 10 years). After that, the rate adjusts annually based on the current interest rate in the market.

One thing to consider when deciding between a fixed-rate and adjustable-rate mortgage is how long you plan on staying in your house. Fixed-rate mortgages might be a better fit for those who plan on living in a home for quite some time. Fixed-rate mortgages offer greater stability over time compared to adjustable-rate mortgages, but adjustable-rate mortgages may offer lower interest rates upfront. If you don’t plan to keep your new home for more than three to 10 years, though, an adjustable-rate mortgage may give you a better deal. There is no best loan term as a rule of thumb; it all depends on your goals and your current financial situation. Be sure to do your research and understand what’s most important to you when choosing a mortgage.