Today’s Mortgage, Refinance Rates: Sept. 18, 2022

Insider’s experts select the best products and services to help you make wise decisions with your money (here’s how). In some cases we receive a commission from our partners, but our opinion is our own. The conditions apply to the offers listed on this page.

Mortgage rates have risen a full percentage point in just six weeks and are now expected to exceed levels expected by many forecasts.

In its most recent real estate forecast, released in August, Fannie Mae predicted that 30-year fixed-rate mortgage rates would average 5.1% in the third quarter of 2022 — but with just two weeks left in the quarter, that rate is already at one Quarterly average of 5.46%, according to data from Freddie Mac. Fannie Mae also forecast an average rate of 4.8% for the fourth quarter of this year, but with rates already up past 6% and showing no signs of easing, they’re also likely to miss that forecast.

Freddie Mac’s Q3 forecast of 5.5% is more in line with current expectations, but rates are likely to beat Q4 forecast of 5.4%. The Mortgage Bankers Association forecast a Q3 average of 5.3% and a Q4 average of 5.2%.

Prior to this latest surge, mortgage rates had fallen, hitting a low of 4.99% in early August. However, with economic data continuing to show strong jobs and inflation still running hotter than expected, the Federal Reserve has taken a more aggressive stance, pledging to raise the Federal Funds Rate until inflation shows sustained signs of slowing. This caused mortgage interest rates to rise.

Mortgage rates today

Mortgage refinancing rates today

type of mortgage average rate today
This information was provided by Zillow. Visit Zillow for more mortgage rates

mortgage calculator

Use our free mortgage calculator to see how today’s interest rates will affect your monthly payments.

mortgage calculator

Your estimated monthly payment

  • Pay a 25% you would save yourself a higher down payment $8,916.08 on interest charges
  • interest rate reduction 1% would save you $51,562.03
  • pay surcharge $500 each month would shorten the loan term by 146 Months

If you click More Details, you can also see how much you will pay over the life of your mortgage, including the amount of principal versus interest.

30 year fixed mortgage rates

According to Freddie Mac, the current average interest rate for 30-year fixed-rate mortgages is 6.02%. This is the highest rate since 2008, and it’s been up for the fourth straight week.

The 30-year fixed-rate mortgage is the most common form of home loan. With this type of mortgage, you pay back what you borrowed over 30 years, and your interest rate does not change over the life of the loan.

The long term of 30 years allows you to spread your payments over a long period of time, meaning you can keep your monthly payments lower and more manageable. The trade-off is that you have a higher rate than with shorter terms or adjustable rates.

Also Read :  The 40 Best Sam's Club Deals for Halloween

15 year fixed mortgage rates

The average 15-year fixed-rate mortgage rate is 5.21%, up from the previous week, according to data from Freddie Mac. The last time this rate was over 5% was in 2009.

If you want the predictability of a fixed interest rate but want to spend less interest over the life of your loan, a 15-year fixed-rate mortgage may be right for you. Because these terms are shorter and have lower interest rates than 30-year fixed-rate mortgages, you could potentially save tens of thousands of dollars in interest. However, you have a higher monthly payment than with a longer term.

5/1 Adjustable Mortgage Rates

The average 5/1 mortgage rate is 4.93%, up from the previous week.

Adjustable rate mortgages can be very attractive to borrowers when interest rates are high because interest rates on these mortgages are typically lower than interest rates on fixed-rate mortgages. A 5/1 ARM is a 30-year mortgage. You receive a fixed price for the first five years. After that, your tariff will be adjusted once a year. If the rates are higher when you adjust your rate, you’ll have a higher monthly payment than when you started.

If you’re considering an ARM, make sure you understand how much your interest rate could increase with each adjustment, and how much it could ultimately increase over the life of the loan.

Will mortgage rates rise in 2022?

To help the US economy during the COVID-19 pandemic, the Federal Reserve aggressively bought assets, including mortgage-backed securities. This helped keep mortgage rates at historic lows.

Also Read :  Four Ways to Save Money on Car Insurance as Rates Rise

However, the Fed has begun to reduce the assets it holds and is expected to raise the federal funds rate three more times in 2022 after raising it in March, May, June and July.

While not directly tied to the federal funds rate, mortgage rates are sometimes pushed higher as a result of Fed rate hikes and investor expectations of how those increases will affect the economy.

Inflation remains high but has gradually slowed, which bodes well for mortgage rates and the broader economy.

What is a Fixed Rate Mortgage Compared to an Adjustable Rate Mortgage?

Historically, variable mortgage rates have tended to be lower than 30-year fixed rates. As mortgage rates rise, ARMs can start to look like the better deal — but that depends on your situation.

Fixed-rate mortgages secure your interest rate for the entire term of your loan. Adjustable rate mortgages fix your interest rate for the first few years, then your interest rate rises or falls periodically.

Because variable interest rates start out low, they’re viable options if you’re planning to sell your home before interest rates change. For example, if you get a 7/1 ARM and want to move before the end of the seven-year fixed rate period, you don’t risk paying a higher rate later.

But if you’re looking to buy a forever home, a fixed rate might still be a better fit since you don’t risk your interest rate going up in a few years.

Source link