Today’s Interest Rates For Mortgages
Mortgage rates are expected to fluctuate throughout the year, depending on a range of economic factors. In May, inflation reached 8.6%, contributing to several rate increases this year. As a result, the Federal Reserve announced its second half-point increase to its benchmark short-term interest rate. Further increases are likely throughout the year. In addition to these fluctuations, the Federal Reserve is expected to announce more rate increases, based on economic indicators.
Average rate on 30-year fixed-rate mortgage rose to 5.23%
Mortgage rates rose on Tuesday as Freddie Mac released the data for the 30-year fixed-rate mortgage. The average rate increased by 0.9 percentage points, which translates to a slight increase in interest rates. The rate on 30-year fixed-rate mortgages averaged 5.09 percent last week and 2.96 percent a year ago. In addition to the interest rate, borrowers pay a point to the lender.
Mortgage rates rose in the past week, soaring over five percent. According to Freddie Mac, the average rate on a 30-year fixed-rate mortgage rose to 5.23% on June 9, up nearly half a percentage point from the week prior. Rates on other loan categories have also increased. Rates on 15-year fixed-rate mortgages increased by 4%. But, the rate on 5/1 adjustable-rate mortgages rose by one basis point this week.
As a result of the rise in mortgage rates, some Americans may be priced out of the housing market. If the average rate on a 30-year fixed-rate mortgage rose to 5.23%, that would mean an additional $103 per month in extra payments. That would add up to more than $1,236 a year, or $3780 over the course of the loan. If rates continue to rise, this may be a signal that home prices will start falling in the near future.
Average rate on 5-year adjustable-rate mortgage fell 11 basis points to 4.336%
Mortgage rates increased last week, but the demand for refinances fell. The higher rates have caused prospective homebuyers to apply for riskier loan products. Last week, the number of applications for mortgages fell 8.3 percent compared with the previous week. Overall, the amount of mortgage applications is half what it was a year ago. The decline in applications is particularly troubling given that spring housing season is in full swing.
Mortgage rates rose slightly this week, but not as much as they had last week. 30-year fixed-rate mortgage rates rose by 2 basis points to 5.670%. Fifteen-year fixed-rate mortgages grew by 6 basis points to 4.875%. Meanwhile, the average rate on 5-year ARMs dropped 11 basis points to 4.336%. This was the largest increase since the beginning of February, but mortgage rates are expected to rise throughout the year.
After a five-month home search, Jeff and Kim Noviello were outbid in their first two offers. Two other buyers had higher offers. But they eventually made an offer and closed on their new home the following week. While mortgage rates continued to rise during their five-month search, they settled on a 10-year adjustable-rate mortgage at a 4% rate. This will mean a payment of $4,535 per month on their mortgage.
Average rate on 15-year fixed-rate mortgage rose to 4.827%
The average rate on 15-year fixed-rate mortgage increased to 4.827% in May. Mortgage rates are expected to increase and fall throughout the year, based on a variety of economic factors. High inflation contributed to the increases in rates so far this year. To combat inflation, the Federal Reserve raised the benchmark short-term interest rate in May, and more increases are expected throughout the year.
Despite rising mortgage rates, the average 15-year fixed-rate mortgage remains below the rates of other mortgage options. A 15-year mortgage requires only 180 payments, compared to 360 payments on a 30-year mortgage. This means that the mortgage payments will be lower in total, and the loan will be paid off much sooner. The benefits of 15-year mortgages include lower monthly payments and a shorter payback period.
While mortgage rates remain near record lows, they have increased in recent months as expected changes in the economy force mortgage rates to rise. In May, the Federal Reserve increased rates by half a percentage point, as a response to record-high inflation. The rate hike is expected to be followed by several more throughout 2022. So, now is the time to lock in a lower rate and avoid paying more for a home loan. As always, speaking with multiple lenders is important to get the best rate.