A variety of notable mortgage rates have risen over the past seven days. The average interest rates for 15-year and 30-year fixed mortgages both showed an upward trend. For variable rates, the 5/1 variable rate mortgage also increased.
Mortgage rates rose dramatically in 2022 as the Federal Reserve raised interest rates several times throughout the year, and did so again in 0.25% on Monday. Interest rates are dynamic and unpredictable – at least on a daily or weekly basis – and they react to a wide variety of economic factors. But the actions of the Fed, designed to dampen the high rate of inflation, had an unmistakable impact on mortgage rates.
The outlook for 2023 remains uncertain. Although higher rates are likely to remain, the biggest increases may be behind us. That said, trying to time the market is tricky. If inflation persists, further interest rate hikes could follow. As such, you may have better luck locking in a lower mortgage interest rate now instead of waiting; after all, you can always refinance later. No matter when you decide to shop for a home, it’s always a good idea to research multiple lenders to compare rates and fees to find the best mortgage for your particular situation.
30 Year Fixed Rate Mortgages
The average 30-year fixed mortgage interest rate is 6.53%, up 15 basis points from a week ago. (One basis point equals 0.01%.) Thirty-year fixed mortgages are the most commonly used loan term. A 30 year fixed rate mortgage will generally have a smaller monthly payment than a 15 year mortgage, but often a higher interest rate. You won’t be able to pay off your home as quickly and you’ll pay more interest over time, but a 30-year fixed rate mortgage is a good option if you’re looking to minimize your monthly payment.
15-year fixed rate mortgages
The average rate for a 15-year fixed mortgage is 5.85%, up 15 basis points from seven days ago. You will definitely have a higher monthly payment with a 15-year fixed mortgage compared to a 30-year fixed mortgage, even if the interest rate and loan amount are the same. However, if you can afford the monthly payments, a 15-year loan has several advantages. You will generally get a lower interest rate and pay less interest in total because you are paying off your mortgage much faster.
5/1 Adjustable Rate Mortgages
A 5/1 ARM has an average rate of 5.46%, up 3 basis points from last week. You’ll typically get a lower interest rate (compared to a 30-year fixed mortgage) with an ARM of 5/1 in the first five years of the mortgage. However, since the rate changes with the market rate, you might end up paying more after this period, as described in your loan terms. If you plan to sell or refinance your home before the rate changes, an ARM might be right for you. If not, market fluctuations could significantly increase your interest rate.
Mortgage Rate Trends
Mortgage rates were historically low at the start of 2022, but rose steadily throughout the year. The Federal Reserve raised interest rates seven times in an attempt to curb record inflation. Generally, when inflation is low, mortgage rates tend to be lower. When inflation is high, rates tend to be higher.
Although the Fed does not set mortgage rates directly, central bank policy actions influence how much you pay to fund your home loan. If you’re looking to buy a home, keep in mind that the Fed has signaled that it will continue to raise rates in 2023, and those increases could drive mortgage rates even higher.
We use information collected by Bankrate, which is owned by the same parent company as CNET, to track rate changes over time. This table summarizes the average rates offered by lenders in the United States:
Current Average Mortgage Interest Rates
| Type of loan | Interest rate | A week ago | Change |
|---|---|---|---|
| 30-year fixed rate | 6.53% | 6.38% | +0.15 |
| Fixed rate over 15 years | 5.85% | 5.70% | +0.15 |
| 30-year jumbo mortgage rate | 6.57% | 6.39% | +0.18 |
| 30-year mortgage refinance rate | 6.63% | 6.42% | +0.21 |
Rates as of February 8, 2023.
How to Find Custom Mortgage Rates
To find a personalized mortgage rate, talk to your local mortgage broker or use an online mortgage service. In order to find the best home loan, you will need to consider your goals and your overall financial situation.
Specific mortgage rates will vary based on factors such as credit score, down payment, debt-to-income ratio and loan-to-value ratio. Having a higher credit score, higher down payment, low DTI, low LTV, or any combination of these factors can help you get a lower interest rate.
The interest rate isn’t the only factor that affects the cost of your home. Also, be sure to consider other costs such as fees, closing costs, taxes, and discount points. You should talk to a variety of lenders – for example, local and national banks, credit unions and online lenders – and a comparison store to find the best mortgage for you.
What is a good loan term?
One important thing to consider when choosing a mortgage loan is the term of the loan or the payment schedule. The most commonly offered loan terms are 15 and 30 years, although you can also find 10, 20 and 40 year mortgages. Mortgages are further divided into fixed rate and variable rate mortgages. Interest rates on a fixed rate mortgage are fixed for the term of the loan. Unlike a fixed rate mortgage, an adjustable rate mortgage’s interest rates are only fixed for a certain term (usually five, seven or 10 years). After that, the rate adjusts annually based on the current market interest rate.
One factor to consider when choosing between a fixed rate and variable rate mortgage is how long you plan to live in your home. For people who plan to stay in a new home for the long term, fixed rate mortgages may be the best option. Fixed rate mortgages offer more stability over time compared to adjustable rate mortgages, but adjustable rate mortgages can sometimes offer lower interest rates upfront. However, if you don’t plan on keeping your new home for more than three to ten years, an adjustable rate mortgage might give you a better deal. The best loan term depends on your personal situation and goals, so be sure to think about what’s important to you when choosing a mortgage.