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In 2022, mortgage rates rose nearly to levels not seen since before the pandemic, after nearly two years of record-low rates.
The refinance or purchase of your home doesn’t have to be put on hold. Although rates are higher than they were last year, 30-year fixed rates are still close to rates from a few years ago.
The fact is, a homebuyer’s decision involves a lot more than just an interest rate. It’s a lifestyle decision. In spite of the impact of the interest rate market on mortgages, it is not wise to base your decision solely on a few basis points. What’s most important to consider is to set a realistic homebuying budget and stick to it.
Let’s look at current mortgage rates, previous rates, and what all this means for borrowers.
Looking at today’s mortgage rates a number of significant rates boasted increases. The averages for both 30-year fixed and 15-year fixed mortgages both crept higher. We also saw an increase in the average rate of 5/1 adjustable-rate mortgages (ARM).
Mortgage rates currently are:
Mortgage Rate Trends: Why Are Mortgage Rates Changing So Fast?
Mortgage rates have increased because of a variety of economic factors so far this year. Persistently high inflation is a big one, Jacob Channel, senior economic analyst at LendingTree told us. June’s inflation report showed 9.1% inflation, the highest level in 40 years. But July’s most recent CPI report has year-over-year inflation at 8.5% — a sign that inflation is starting to cool.
To combat this inflation, the Federal Reserve increased its benchmark short-term interest rate. Since inflation remained higher than expected, the Fed raised rates by 50 basis points in May, by 75 basis points in June, and by 75 basis point in July.
Following the inflation report, mortgage rates spiked ahead of the Fed’s announcement. “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 for vehicles will keep inflation …….