Mortgage Interest Rates for Aug. 12, 2022: Rates Increased – CNET [CNET]

Today a handful of important mortgage rates climbed higher. If you’re shopping for a home loan, see how your payments might be affected by inflation.

A few important mortgage rates inched up today. The average interest rates for both 15-year fixed and 30-year fixed mortgages both saw increases. For variable rates, the 5/1 adjustable-rate mortgage held steady.

Though mortgage rates have been rather consistently going up since the start of this year, what happens next depends on whether inflation continues to climb or begins to retreat. Interest rates are dynamic and unpredictable — at least on a daily or weekly basis — and they respond to a wide variety of economic factors. Right now, they’re particularly sensitive to inflation and the prospect of a US recession. With so much uncertainty in the market, if you’re looking to buy a home, trying to time the market may not play to your favor. If inflation rises and rates climb, this could translate to higher interest rates and steeper monthly mortgage payments. For this reason, you may have better luck locking in a lower mortgage interest rate sooner rather than later. 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 30-year fixed-mortgage rate average is 5.54%, which is an increase of 13 basis points from one week ago. (A basis point is equivalent to 0.01%.) The most common loan term is a 30-year fixed mortgage. A 30-year fixed rate mortgage will usually have a smaller monthly payment than a 15-year one — but usually a higher interest rate. 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 4.91%, which is an increase of 21 basis points compared to a week ago. 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. But a 15-year loan will usually be the better deal, as long as you’re able to afford the monthly payments. You’ll most likely 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 ARM has an average rate of 4.20%, the same rate compared to last week. With an adjustable-rate mortgage mortgage, you’ll usually get a lower interest rate than a 30-year fixed mortgage for the first five years. However, since the rate changes with the market rate, you could end up paying more after that time, as described in the terms of your loan. Because of this, an ARM might be a good option if you plan to sell or refinance your house before the rate changes. 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 rising somewhat steadily since then. The Federal Reserve recently raised interest rates by another 0.75 percentage points in an attempt to curb record-high inflation. The Fed has raised rates a total of four times this year, but inflation still remains high. 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 in 2022, keep in mind that the Fed has signaled it will continue to raise rates, and mortgage rates could increase as the year goes on. Whether rates follow their upward projection or begin to level out hinges on if inflation actually slows.

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 nationwide:

Current average mortgage interest rates

Loan type	Interest rate	A week ago	Change
30-year fixed rate	5.54%	5.41%	+0.13
15-year fixed rate	4.91%	4.70%	+0.21
30-year jumbo mortgage rate	5.53%	5.38%	+0.15
30-year mortgage refinance rate	5.52%	5.40%	+0.12

Updated on Aug. 12, 2022.

How to find personalized mortgage rates

You can get a personalized mortgage rate by connecting with your local mortgage broker or using an online calculator. In order to find the best home mortgage, you’ll need to take into account your goals and current finances. Things that affect what mortgage rate you might get include: your credit score, down payment, loan-to-value ratio and your debt-to-income ratio. Having a higher credit score, a higher down payment, a low DTI, a low LTV, or any combination of those factors can help you get a lower interest rate. Apart from the interest rate, other costs including closing costs, fees, discount points and taxes might also factor into the cost of your home. You should comparison shop with multiple lenders — like credit unions and online lenders in addition to local and national banks — in order to get a mortgage loan that’s the best fit for you.

How does the loan term impact my mortgage?

When picking a mortgage, it’s important to consider the loan term, or payment schedule. The loan terms most commonly offered are 15 years and 30 years, although you can also find 10-, 20- and 40-year mortgages. Another important distinction is between fixed-rate and adjustable-rate mortgages. The interest rates in a fixed-rate mortgage are stable for the duration of the loan. For adjustable-rate mortgages, interest rates are the same for a certain number of years (usually five, seven or 10 years), then the rate changes annually based on the market interest rate.

When choosing between a fixed-rate and adjustable-rate mortgage, you should take into consideration how long you plan to stay in your home. For those who plan on staying long-term in a new house, fixed-rate mortgages may be the better option. While adjustable-rate mortgages may offer lower interest rates upfront, fixed-rate mortgages are more stable over time. If you don’t plan to keep your new house for more than three to 10 years, though, an adjustable-rate mortgage could 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. Make sure to do your research and know your own priorities when choosing a mortgage.