This week, the average 30-year fixed mortgage rate rose to 5.78%, a significant jump from 5.23% last week. According to Freddie Mac, this is the largest one-week rate increase since 1987. Average 15-year fixed rates and 5/1 adjustable rates also saw significant increases.
Although the weekly average is up, mortgage rates are back down a bit today after rising earlier this week.
met this week and voted to enact an increase of 75 basis points, or 0.75%, to the fed funds rate. Mortgage rates are not directly influenced by the fed funds rate, but expectations around Federal Reserve policy and how it might affect the broader economy can drive rates up or down. After the release of last week’s Consumer Price Index report, which showed inflation worsening, markets began to price in the likelihood of the central bank voting for a larger-than-expected rate hike. This pushed up mortgage rates.
“With the Fed announcing a 75 basis point hike, the largest since 1994, we should expect a continuation
in the coming days and weeks as the market continues to price and try to settle into these rate levels,” says Robert Heck, vice president of mortgages at Morty.
mortgage rates today
Mortgage Refinance Rates Today
Use our free mortgage calculator to see how current mortgage rates will affect your monthly and long-term payments.
Your estimated monthly payment
- paying a 25% a higher down payment would save you $8,916.08 on interest charges
- Reduce the interest rate on 1% I would save you $51,562.03
- Paying an additional $500 each month would reduce the length of the loan by 146 months
By entering different terms and interest rates, you’ll see how your monthly payment might change.
Are mortgage rates going up?
Mortgage rates began to rise from record lows in the second half of 2021 and may continue to rise through 2022. This is due in part to high levels of inflation and the political response to rising prices.
In the last 12 months, the Consumer Price Index increased by 8.6%. The Federal Reserve has been working to control inflation and plans to raise the target federal funds rate four more times this year, following hikes in March, May and June.
Although not directly tied to the fed funds rate, mortgage rates often rise as a result of Federal Reserve rate increases. As the central bank continues to tighten monetary policy to reduce inflation, mortgage rates are likely to remain elevated.
What do high rates mean for the real estate market?
When mortgage rates rise, homebuyers’ purchasing power declines, as more of their anticipated housing budget has to go toward interest payments. If rates go high enough, buyers can be pushed out of the market altogether, cooling demand and putting downward pressure on home price growth.
However, that doesn’t mean home prices are going to fall; in fact, they’re expected to rise even higher this year, just at a slower pace than we’ve seen in the past two years.
Even with fewer buyers in the market, those who can afford to buy will continue to compete for historically low inventory. When there are more buyers than houses available, house prices go up. So while conditions may ease a bit due to high rates, we’re not likely to see a significant drop in prices.
What is a good mortgage rate?
It can be hard to know if a lender is offering you a good rate, which is why it’s so important to get pre-approved with multiple
and compare each offer. Get pre-approved with at least two or three lenders.
Your rate is not the only thing that matters. Be sure to compare both what your monthly costs would be and your initial costs, including lender fees.
Although mortgage rates are heavily influenced by economic factors beyond your control, there are a few things you can do to ensure you get a good rate:
- Consider fixed rates versus adjustable rates. You may be able to get a lower introductory rate with an adjustable-rate mortgage, which can be a good thing if you plan to move before the introductory period ends. But a fixed rate might be better if you’re buying a forever home because you won’t risk your rate going up later. Look at the rates your lender offers and weigh your options.
- Look at your finances. The stronger your financial situation, the lower your mortgage rate should be. Look for ways to raise your credit score or lower your debt-to-income ratio, if necessary. Saving for a higher down payment also helps.
- Choose the right lender. Each lender charges different mortgage rates. Choosing the right one for your financial situation will help you get a good rate.