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After nearly two years of record-low mortgage rates, 2022 started off with rates nearly rising to levels we haven’t seen since before the pandemic.
That doesn’t mean you need to cancel your home purchase plans. Yes, rates are higher than they were in 2021, but it’s important to keep in mind 30-year fixed rates are still close to where they were a few short years ago.
Besides, there’s a lot more that goes into a homebuying decision than just an interest rate. Buying a home is about making a lifestyle choice. While the interest rate market for mortgages can shape a decision, it’s wise to not base it solely on a few basis points on a mortgage rate. What’s most important to consider is to set a realistic homebuying budget and stick to it.
Let’s take a look at current mortgage rates, where rates have been in the past, and what it all means for the borrower.
A few key mortgage rates receded today. The averages for both 30-year fixed and 15-year fixed mortgages had a downswing. The most common type of variable-rate mortgage is the 5/1 adjustable-rate mortgage (ARM) climbed.
Mortgage rates currently are:
Mortgage Rate Trends: What’s Behind the Recent Rate Movement?
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 May inflation report, inflation recently reached 8.6%, its highest level in 40 years. The Federal Reserve increased its benchmark short-term rate by 50 basis points in May and by 75 basis points in June because inflation remained higher than expected.
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.
“We have a lot of factors like that that are putting upward pressure on mortgage rates,” Channel says. Financial markets are still reacting to the COVID lockdown in China and the invasion of Ukrainian territory by Russia. “The volatility has been through the roof,” Shashank Shekhar, founder and CEO of InstaMortgage, told us. “The market …….