Mortgage Rates on Apr. 5, 2022: Rates Slip – CNET [CNET]

Some principal mortgage rates shrank today. 15-year fixed and 30-year fixed mortgage rates both dwindled. For variable rates, the 5/1 adjustable-rate mortgage also moved down. 

Mortgage rates have been slowly rising since the start of this year, and are expected to increase throughout 2022. While rates are above their historic records set earlier in the pandemic, they’re still relatively low. Interest rates are dynamic — they rise and fall on a daily basis due to numerous economic factors. In general, now is a good time for prospective homebuyers to lock in a lower rate rather than later this year. Speaking with multiple lenders will help you find the best rate available for your financial situation.

30-year fixed-rate mortgages

For a 30-year, fixed-rate mortgage, the average rate you’ll pay is 4.85%, which is a decline of 1 basis point as seven days 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 higher 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 4.05%, which is a decrease of 4 basis points from seven days ago. You’ll 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. However, as long as 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 4.83%, a decrease of 7 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, since the rate changes with the market rate, you might 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. But if that’s not the case, you might be on the hook for a significantly higher interest rate if the market rates shift.

Mortgage rate trends

Though 2022 began with low mortgage rates, there has been an uptick recently, and rates are expected to continue climbing throughout 2022. Home loan rates are influenced by multiple economic factors. A major one is government policy set by the Federal Reserve, which raised rates in March for the first time since 2018 in response to record-high inflation. The Fed anticipates raising interest rates six more times this year. However, with the ongoing war in Ukraine, we’ve seen some fluctuations in mortgage rates, as global instability generally causes interest rates to drop. While you can expect rates to go up and down for these reasons, in general, if you’re looking to buy a house in 2022, you should be prepared for interest rates to keep rising. 

 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

Updated on Apr. 5, 2022.

How to shop for the best mortgage rate

You can get a personalized mortgage rate by reaching out to your local mortgage broker or using an online calculator. Make sure to take into account your current finances and your goals when looking for a mortgage. Specific mortgage 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 higher credit score, a larger down payment, a lower DTI and a lower LTV to get a lower interest rate. Besides the interest rate, other factors including closing costs, fees, discount points and taxes might also factor into the cost of your home. Make sure to comparison shop with multiple lenders — such as credit unions and online lenders in addition to local and national banks — in order to get a loan that’s the best fit for you.

What’s the best loan term?

One important thing to keep in mind when choosing a mortgage is 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. Mortgages are further divided into fixed-rate and adjustable-rate mortgages. The interest rates in a fixed-rate mortgage are fixed for the duration of the loan. For adjustable-rate mortgages, interest rates are set for a certain number of years (most frequently five, seven or 10 years), then the rate fluctuates annually based on the market rate.

When choosing between a fixed-rate and adjustable-rate mortgage, you should take into consideration how long you plan to live in your home. If you plan on staying long-term in a new house, fixed-rate mortgages may be the better option. Fixed-rate mortgages offer greater stability over time compared to adjustable-rate mortgages, but adjustable-rate mortgages might offer lower interest rates upfront. However you might get a better deal with an adjustable-rate mortgage if you only intend to keep your home for a few years. 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.