Mortgage rates continue to rise on January 17, 2022: what this means for buyers

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A number of mortgage rates continue to rise to their highest level since the start of 2020, including 15-year and 30-year fixed mortgage rates. We also saw a significant increase in the average rate for 5/1 variable rate mortgages. Mortgage rates have been quite low over the past period, making it a good time for potential buyers to lock in a fixed rate. But rates are dynamic and should continue to rise. Before buying a home, remember to consider your personal needs and financial situation, and speak with several lenders to find the best one for you.

30 Year Fixed Rate Mortgages

For a 30-year fixed-rate mortgage, the average rate you’ll pay is 3.51%, up 8 basis points from a week ago. (One basis point equals 0.01%.) The most commonly used loan term is a 30-year fixed mortgage. A 30 year fixed rate mortgage will usually have a lower monthly payment than a 15 year one, but usually a higher interest rate. Although you’ll pay more interest over time – you’re paying off your loan over a longer period – if you’re looking for a lower monthly payment, a 30-year fixed mortgage may be a good option.

15-year fixed rate mortgages

The average rate for a 15-year fixed mortgage is 2.83%, an increase of 14 basis points compared to the same period last week. 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. But a 15-year loan will usually be the best deal, if you can afford the monthly payments. 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 variable rate mortgage has an average rate of 3.51%, up 6 basis points from the same time 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, you might end up paying more after this time, depending on the terms of your loan and how the rate changes with the market rate. For borrowers who plan to sell or refinance their home before the rate changes, an ARM could be a good option. If not, market fluctuations can significantly increase your interest rate.

Mortgage Rate Trends

While 2022 started off with low mortgage rates, they have recently seen a rise. There are two major factors at play here: rising inflation rates and a growing economy. That said, rates can always go up and down for a variety of reasons. The spread of the omicron, for example, kept rates relatively low throughout December and into the new year. Overall, rates are expected to rise in 2022, notably with the Federal Reserve’s decision to reduce its bond purchases.

We use rates collected by Bankrate, which is owned by the same parent company as CNET, to track daily mortgage rate trends. This table summarizes the average rates offered by lenders in the United States:

Today’s Mortgage Interest Rates

Rates correct as of January 17, 2022.

How to find the best mortgage rates

You can get a personalized mortgage rate by contacting your local mortgage broker or using an online calculator. In order to find the best home loan, you will need to consider your goals and your overall financial situation. Things that affect the mortgage rate you might get include: your credit score, your down payment, your loan-to-value ratio, and your debt-to-income ratio. Typically, you want a good credit score, higher down payment, lower DTI, and lower LTV to get a lower interest rate. The interest rate isn’t the only factor that affects the cost of your home – be sure to factor in other costs too, such as fees, closing costs, taxes and discount points. Be sure to talk to several different 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 the best loan term?

When choosing a mortgage, you need to consider the length of the loan or the payment schedule. The most common loan terms are 15 and 30 years, although there are also 10, 20 and 40 year mortgages. Mortgages are further divided into fixed rate and variable rate mortgages. For fixed rate mortgages, the interest rates are fixed for the term of the loan. For adjustable rate mortgages, the interest rates are stable for a certain number of years (usually five, seven or 10 years), then the rate adjusts annually according to the market rate.

When choosing between a fixed rate mortgage and an adjustable rate mortgage, you need to consider how long you plan to stay in your home. For those planning to live long term in a new home, 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 may 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 is entirely up to your own circumstances and goals, so be sure to consider what’s important to you when choosing a mortgage.

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