Current mortgage interest rates as of October 18, 2022: rates are rising

A number of closely watched mortgage rates rose today. Average 15-year fixed and 30-year fixed mortgage rates both increased. We also saw an increase in the average 5/1 adjustable rate mortgage rate.

Mortgage rates have been rising steadily since the start of 2022, following a series of interest hikes by the Federal Reserve. Interest rates are dynamic and unpredictable – at least on a daily or weekly basis – and they react to a wide variety of economic factors. But the Fed’s actions, designed to dampen the high rate of inflation, are having an unmistakable impact on mortgage rates.

If you’re looking to buy a home, trying to time the market may not work in your favor. If inflation continues to rise and rates continue to rise, this will likely translate into higher interest rates and higher monthly mortgage payments. As such, you may have a better chance of getting 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 research 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 7.18%, up 13 basis points from seven days ago. (One basis point equals 0.01%.) The most common loan term is a 30-year fixed mortgage. A 30 year fixed rate mortgage will generally have a smaller monthly payment than a 15 year mortgage, but generally a higher interest rate. You won’t be able to pay off your home as quickly and you’ll pay more interest over time, but a 30-year fixed rate 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 6.35%, an increase of 11 basis points compared to the same period last week. You will 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. But a 15-year loan will usually be the best deal, if you can afford the monthly payments. You will generally get a lower interest rate and pay less interest in total because you are paying off your mortgage much faster.

5/1 Adjustable Rate Mortgages

A 5/1 ARM has an average rate of 5.40%, up 6 basis points from a week ago. With an ARM mortgage, you’ll typically get a lower interest rate than a 30-year fixed mortgage for the first five years. However, as the rate adjusts to the market rate, you may end up paying more after this period, as described in your loan terms. For this reason, an adjustable rate mortgage could be a good option if you plan to sell or refinance your home before the rate changes. Otherwise, market fluctuations could significantly increase your interest rate.

Mortgage Rate Trends

Although mortgage rates were historically low at the start of 2022, they have been rising steadily ever since. The Federal Reserve recently raised interest rates an additional 0.75 percentage points in an effort to curb record inflation. The Fed has raised rates a total of five times this year, but inflation remains high. Generally, when inflation is low, mortgage rates tend to be lower. When inflation is high, rates tend to be higher.

Although the Fed does not set mortgage rates directly, central bank policy actions influence how much you pay to fund your home loan. If you’re looking to buy a home in 2022, keep in mind that the Fed has signaled it will continue to raise rates and mortgage rates may rise as the year progresses. Whether rates follow their upward projection or begin to stabilize depends on whether inflation actually slows.

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:

Today’s Mortgage Interest Rates

Rates exact as of October 18, 2022.

How to Find Custom Mortgage Rates

When you’re ready to apply for a loan, you can contact a local mortgage broker or search online. When researching mortgage rates, think about your goals and current financial situation.

Factors that affect the interest rate you might get on your mortgage include: your credit score, your down payment, your loan-to-value ratio, and your debt-to-income ratio. Having a higher credit score, higher down payment, low DTI, low LTV, or any combination of these factors can help you get a lower interest rate.

The interest rate isn’t the only factor that affects the cost of your home. Also, be sure to consider other factors such as fees, closing costs, taxes, and discount points. Be sure to speak with a variety of lenders – for example, local and national banks, credit unions and online lenders – and a comparison store to find the best loan for you.

How does the loan term affect my mortgage?

An important thing to consider when choosing a mortgage loan is the length of the loan or the payment schedule. The most commonly offered loan terms are 15 and 30 years, although you can also find 10, 20 and 40 year mortgages. Mortgages are further divided into fixed rate and variable rate mortgages. For fixed rate mortgages, the interest rates are fixed for the term of the loan. Unlike a fixed rate mortgage, the interest rates on an adjustable rate mortgage are only fixed for a certain period of time (most often five, seven or 10 years). After that, the rate changes every year depending on the market interest rate.

When deciding between a fixed rate mortgage and an adjustable rate mortgage, you need to think about how long you plan to live in your home. Fixed rate mortgages might be better suited if you plan to live in a house for a while. Fixed rate mortgages offer more 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 ten years, an adjustable rate mortgage may give you a better deal. There is no best loan term as a general rule; 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.

Comments are closed.