Current mortgage rates as of July 4, 2022: lower rates

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A few notable mortgage rates fell today. Average interest rates for 15-year and 30-year fixed mortgages have declined. For variable rates, the 5/1 adjustable rate mortgage also declined.

Mortgage rates have been rising steadily since the start of this year and are expected to continue to rise throughout 2022. Of course, interest rates are dynamic and unpredictable – at least on a daily or weekly basis – because they react to a wide variety of economic factors. Currently, two of these factors – inflation and the federal funds rate – are particularly influential. The Federal Reserve has already raised interest rates three times this year and has signaled its intention to raise them again to contain inflation. This will almost certainly mean higher mortgage rates and, for potential borrowers, higher monthly mortgage payments. As such, homebuyers may have a better chance of securing a lower mortgage interest rate sooner rather than later. It’s always a good idea to interview several lenders to compare rates and fees to find the best mortgage for your particular situation.

30 Year Fixed Rate Mortgages

The average 30-year fixed mortgage interest rate is 5.61%, down 22 basis points from seven days ago. (One basis point equals 0.01%.) Thirty-year fixed mortgages are the most commonly used loan term. A 30-year fixed rate mortgage will generally have a higher interest rate than a 15-year fixed rate mortgage, but also a lower monthly payment. Although you’ll pay more interest over time – you’re paying off your loan over a longer period – 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 4.87%, down 21 basis points from 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. However, if you can afford the monthly payments, a 15-year loan has several advantages. These typically include the ability to get a lower interest rate, pay off your mortgage sooner, and pay less total interest over the long term.

5/1 Adjustable Rate Mortgages

A 5/1 adjustable rate home loan has an average rate of 4.27%, down 2 basis points from last week. For the first five years, you’ll typically get a lower interest rate with a 5/1 variable rate mortgage compared to a 30-year fixed mortgage. However, since 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 ARM can be a good option if you plan to sell or refinance your home before the rate changes. But if not, you may have to pay a much higher interest rate if market rates change.

Mortgage Rate Trends

Although mortgage rates were historically low at the start of 2022, they have been rising steadily since then. The reason: The Federal Reserve raised interest rates 0.75 percentage points this month alone — the biggest rate hike since 1994 — in a bid to rein in record inflation. 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. And the Fed has signaled that it will continue to raise rates this year. So if you’re looking to buy a home in 2022, expect mortgage rates to rise as the year progresses.

We use data 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:

Today’s Mortgage Interest Rates

term of the loan Daily rate Last week To change
30-year mortgage rate 5.61% 5.83% -0.22
Fixed rate over 15 years 4.87% 5.08% -0.21
30-year jumbo mortgage rate 5.53% 5.79% -0.26
30-year mortgage refinance rate 5.58% 5.80% -0.22

Rates exact as of July 4, 2022.

How to find the best mortgage rates

When you’re ready to apply for a loan, you can connect with a local mortgage broker or search online. In order to find the best home loan, you will need to consider your current goals and finances. Specific interest rates will vary based on factors such as credit rating, down payment, debt to income ratio and loan to value ratio. Typically, you want a higher credit score, larger down payment, lower DTI, and lower LTV to 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 shop around with multiple lenders, such as credit unions and online lenders, in addition to local and national banks, to get a mortgage that’s right for you.

What is a good loan term?

One important thing to consider when choosing a mortgage loan is the term of the loan or the payment schedule. The most common mortgage terms are 15 and 30 years, although there are also 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. For adjustable rate mortgages, the interest rates are fixed for a number of years (usually five, seven or 10 years), then the rate fluctuates annually depending on the market rate.

One thing to think about when deciding between a fixed rate and adjustable rate mortgage is how long you plan to stay in your home. For those planning on staying in a new home for the long term, fixed rate mortgages may be the best option. 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. The best loan term depends on your own circumstances and goals, so be sure to think about what’s important to you when choosing a mortgage.

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