The average mortgage interest rates increased for all loan types week over week — 30-year fixed rates went up (5.10% to 5.27%), as did 15-year fixed rates (4.40% to 4.52%) and 5/1 ARM rates (3.78% to 3.96%).Weekly Rate Recap
Mortgage Rates Today
The number of mortgage applications increased 2.5% as reported by Mortgage Bankers Association. “Treasury yields eased slightly last week but remained close to 2018 highs, as financial markets await the news from the Federal Reserve on its latest plans for rate hikes and reducing its balance sheet holdings. The 30-year fixed rate was 5.36 percent, up over two percentage points from a year ago. The 127-basis-point jump in rates over the past two months has triggered a 49 percent drop in refinance activity,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting. “Purchase applications increased for conventional, FHA, and VA loans and were up 4 percent overall. This is potentially a good sign for the spring home buying season, which has seen a slow start thus far. The purchase market remains challenged by low levels of housing inventory and rapid home-price gains, as well as the affordability hit from higher mortgage rates that are forcing prospective buyers to factor in higher monthly payments. The ARM share remained unchanged at around 9 percent, which is well below the 30 percent mark observed in the mid-2000s.”
The interest rates reported below are from a weekly survey of 100+ lenders by Freddie Mac PMMS. These average rates are intended to give you a snapshot of overall market trends and may not reflect specific rates available for you.Shop and compare your personalized rates from multiple lenders. (May 16th, 2022)
|Weekly Rate Trends||30-Year Fixed||15-Year Fixed||5/1 ARM|
|5/5/22||5.27% ↑||4.52% ↑||3.96% ↑|
Copyright 2022 Freddie Mac. Averages are based on conforming mortgages with 20% down.
How do I get the best mortgage rate?
To get the best mortgage interest rate for your situation, it’s best to shop around with multiple lenders. According to research from the Consumer Financial Protection Bureau (CFPB), almost half of consumers do not compare quotes when shopping for a home loan, which means losing out on substantial savings. Interest rates help determine your monthly mortgage payment as well as the total amount of interest you’ll pay over the life of the loan. While it may not seem like much, even a half of a percentage point decrease can amount to a significant amount of money.
Comparing quotes from three to four lenders ensures that you’re getting the most competitive mortgage rate for you. And, if lenders know you’re shopping around, they may even be more willing to waive certain fees or offer better terms for some buyers. Either way, you reap the benefits.
What determines my mortgage interest rate?
There are seven things that lenders consider when determining mortgage interest rates. Any change to one of these things can directly impact the specific interest rate you’ll qualify for.
Your credit score has one of the biggest impacts on your mortgage rate as it’s a measure of how likely you’ll repay the loan on time. The higher your score, the lower your rates. If you haven’t pulled your credit score and addressed any issues, then start there before reaching out to lenders.
In general, the higher your down payment the lower your interest rate, because you’re viewed as a less risky borrower than someone who finances the entire purchase. If you’re unable to put at least 20 percent down, then most lenders require Private Mortgage Insurance (PMI), which will be added to the cost of your overall monthly mortgage payment.
There are different types of mortgage loans on the market with different eligibility requirements. Not all lenders offer all loan types, and rates can vary significantly depending on the loan type you choose. Some common mortgage loan products are conventional, FHA, USDA, and VA loans.
Your loan term indicates how long you have to repay the loan. Shorter term loans tend to have lower interest rates, but higher monthly payments. Exactly how much lower your interest rate and how much higher the monthly payment will depend a lot on the specific loan term and interest rate type you choose.
Interest Rate Type
There are two basic types of interest rates: fixed and adjustable. Fixed interest rates stay the same for the entire loan term. Adjustable rates have an initial fixed period (five or seven years is common), but will fluctuate after that period based on the current market rates for the remainder of the loan.
Your loan amount is not just the price of the home, but the total amount you’ll need to borrow. This amount is calculated by the home price plus closing costs minus your down payment. If you roll the closing costs and other borrowing fees into your loan, you may pay a higher interest rate than someone who pays those fees upfront. Loans that are smaller or larger than the limits for conforming loans may pay higher interest rates too.
Interest rates vary slightly depending on the state you live as well as whether you’re looking to purchase in a rural versus urban area. Some loan products like USDA loans offer generally lower rates than conventional mortgage options for eligible borrowers.
Why does my mortgage interest rate matter?
Your mortgage interest rate impacts the amount you’ll pay monthly as well as the total interest costs you’ll pay over the life of your loan. While it may not seem like a lot, a lower interest rate even by half of a percent can add up to significant savings for you.
For example, a borrower with a good credit score and a 20 percent down payment who takes out a 30-year fixed-rate loan for $200,000 with an interest rate of 4.25% instead of 4.75% translates to almost $60 per month in savings — in the first five years, that’s a savings of $3,500. Just as important is looking at the total interest costs too. In the same scenario, a half percent decrease in interest rate means a savings of almost $21,400 in total interest owed over the life of the loan.
The Cost Savings of Different Interest Rates for a $200K 30-Year Fixed Loan
|Interest Rate*||Monthly Mortgage Payment**||Total Interest Costs|
*Interest rates assume a good credit rating and 20% down payment.
**Amount doesn’t include property taxes, homeowners insurance, or HOA dues (if applicable).
Current Mortgage Interest Rates
Freddie Mac’s weekly report covers mortgage rates from the previous week, but interest rates change daily — mortgage rates today may be different than reported. To find out what rates are currently available, compare quotes from multiple lenders.Shop and compare your personalized rates from multiple lenders. (May 16th, 2022)