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Mortgage rates have softened somewhat as investors speculate whether the Federal Reserve will ease up on the pace of its rate hikes soon. But rates are still significantly higher than they were a month ago.

Inflation and Fed policy have helped push mortgage rates up this year. The Fed has been raising the federal funds rates to slow economic growth and bring inflation down to its target annual rate of 2%. But prices have so far remained stubborn, slowing less than expected in August.

Fed Chair Jerome Powell has stated that the Fed is watching the latest economic data to determine the pace of future rate hikes, and that it’s cautious of slowing the pace too early. At its last three meetings, its raised the federal funds rate by 75 basis points.

But with a likely recession on the horizon, it’s possible the Fed could opt for a smaller increase at its next meeting in November. The CME FedWatch Tool currently has the likelihood of a 50-basis-point increase at 33.3%.

A smaller hike would likely be good news for mortgage rates. But if next week’s Consumer Price Index report shows that prices are still slow to come down, the central bank is likely to stick with its aggressive stance.

Mortgage rates today

Mortgage type Average rate today

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Mortgage refinance rates today

Mortgage type Average rate today

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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mortgage rates on Zillow

Mortgage calculator

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

Mortgage Calculator

$1,161
Your estimated monthly payment

  • Paying a 25% higher down payment would save you $8,916.08 on interest charges
  • Lowering the interest rate by 1% would save you $51,562.03
  • Paying an additional $500 each month would reduce the loan length by 146 months

By clicking on “More details,” you’ll also see how much you’ll pay over the entire length of your mortgage, including how much goes toward the principal vs. interest.

30-year fixed mortgage rates

The current average 30-year fixed mortgage rate is 6.7%, according to Freddie Mac. This is the highest this rate has been since 2007, and the sixth week in a row it’s increased.

The 30-year fixed-rate mortgage is the most common type of home loan. With this type of mortgage, you’ll pay back what you borrowed over 30 years, and your interest rate won’t change for the life of the loan.

The lengthy 30-year term allows you to spread out 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’ll have a higher rate than you would with shorter terms or adjustable rates. 

15-year fixed mortgage rates

The average 15-year fixed mortgage rate is 5.96%, an increase from the prior week, according to Freddie Mac data.

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

5/1 adjustable mortgage rates

The average 5/1 adjustable mortgage rate is 5.3%, an increase from the previous week.

Adjustable rate mortgages can look very attractive to borrowers when rates are high, because the rates on these mortgages are typically lower than fixed mortgage rates. A 5/1 ARM is a 30-year mortgage. For the first five years, you’ll have a fixed rate. After that, your rate will adjust once per year. If rates are higher when your rate adjusts, you’ll have a higher monthly payment than what you started with.

If you’re considering an ARM, make sure you understand how much your rate could go up each time it adjusts and how much it could ultimately increase over the life of the loan.

Will mortgage rates go up in 2022?

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

However, the Fed has begun to reduce the assets it holds and is expected to increase the federal funds rate two more times in 2022, following increases at its last five meetings.

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

Inflation remains elevated, but has started to slow, which is a good sign for mortgage rates and the broader economy. 

What is a fixed-rate mortgage vs. adjustable-rate mortgage?

Historically, adjustable mortgage rates tend to be lower than 30-year fixed rates. When mortgage rates go up, ARMs can start to look like the better deal — but it depends on your situation. 

Fixed-rate mortgages lock in your rate for the entire life of your loan. Adjustable-rate mortgages lock in your rate for the first few years, then your rate goes up or down periodically.

Because adjustable rates start low, they are worthwhile options if you plan on selling your home before the interest rate changes. For instance, if you get a 7/1 ARM and want to move before the seven year fixed-rate period is up, you won’t risk paying a higher rate later.

But if you want to buy a forever home, a fixed rate could still be a better fit, since you won’t chance your rate increasing in a few years.



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