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Nearly two years have gone by with record-low mortgage rates. Now, 2022 has started off with rates rising higher than pre-pandemic levels.
Don’t cancel your home purchase plans just yet. Even though rates are higher than they were last year they are still considered “normal” from a historical perspective. It was only a few short years ago where the 30-year fixed rates were in the high 5%’s.
Homebuying decisions take a lot more consideration outside of the interest rate anyway. Buying a home is about making a lifestyle choice. What’s going on in the interest rate market can influence a decision, it’s wise to not base it solely on a few basis points on a mortgage rate. Setting and sticking to a realistic homebuying budget is way more important than what rate you get.
Let’s take a look at current mortgage rates, where rates have been in the past, and what it all means for the borrower.
Looking at today’s mortgage rates a variety of preeminent rates inched up. The averages for both 30-year fixed and 15-year fixed mortgages both increased. For variable rates, the 5/1 adjustable-rate mortgage (ARM) also climbed.
Mortgage rates currently are:
Mortgage Rate Forecast: Why Do Mortgage Rates Change?
Various economic factors have led to an increase in mortgage rates this year. Persistently high inflation is a big reason, Jacob Channel, senior economic analyst at LendingTree told us. According to the Bureau of Labor and Statistics July’s inflation report, year-over-year inflation reached 8.5%. There are signs inflation is starting to cool, since June’s 40-year-high 9.1%. Because inflation still remains higher than expected, the Federal Reserve increased its benchmark short-term rate by 50 basis points in May, then by 75 basis points in June, and again by 75 points in July.
A spike in mortgage rates preceded the Fed’s announcement after the inflation report was released. “I think what we’re seeing is that lenders had already anticipated that the Fed was going to raise the Fed funds rate by 75 basis points and they began to preemptively push mortgage rates up,” Jacob Channel, senior economist at LendingTree, told us.
“There are signs that some of the main drivers of inflation are easing, such as lower oil and other commodity prices in July, slower wage growth, and declining supply chain pressures. However, service price increases led by housing and pent-up demand …….