Mortgage rates rose a little today, but are still slightly lower than last week.
At the start of the month, rates had trended lower, hitting a low of 5.09%, according to Freddie Mac. But the news that inflation was higher than expected and the
raising its rate by 75 basis points helped push up mortgage rates. Today, they remain elevated but appear to have slowed their ascent as the market settles to these new rate levels.
The rate that the Fed controls is the federal funds rate. Mortgage rates are not directly influenced by the fed funds rate, but they often trend up or down in anticipation of Fed policy decisions and how those decisions might impact the economy. economy in general.
Mortgage rates today
Mortgage refinance rates today
Use our free mortgage calculator to see how today’s mortgage rates will affect your monthly and long-term payments.
Your estimated monthly payment
- pay one 25% a higher down payment would save you $8,916.08 on interest charges
- Lower the interest rate by 1% would save you $51,562.03
- Pay an extra fee $500 each month would reduce the term of the loan by 146 month
By plugging in different terms and interest rates, you’ll see how your monthly payment might change.
Are mortgage rates increasing?
Mortgage rates started to recover from historic lows in the second half of 2021 and may continue to rise throughout 2022. This is partly due to high levels of inflation and the policy response to rising prices.
Over the past 12 months, the consumer price index has increased by 8.6%. The Federal Reserve has been struggling to keep inflation under control and plans to raise the target federal funds rate four more times this year, following increases in March, May and June.
Although not directly tied to the federal funds rate, mortgage rates are often pushed higher by Fed rate hikes. As the central bank continues to tighten monetary policy to reduce inflation, mortgage rates are likely to remain high.
What do high rates mean for the housing market?
When mortgage rates rise, the purchasing power of homebuyers decreases, as more of their projected housing budget must be spent on interest payments. If rates get high enough, buyers can be shut out of the market altogether, cooling demand and putting downward pressure on home price growth.
However, that doesn’t mean house prices will go down – in fact, they’re expected to rise even more this year, just at a slower pace than what we’ve seen over the past two years.
Even with fewer buyers in the market, those who can afford to buy will still be competing for historically low inventory. When there are more buyers than available homes, home prices go up. So, while conditions may ease a bit due to high rates, we are unlikely to see a significant drop in prices.
What is a good mortgage rate?
It can be difficult to know if a lender is offering you a good rate, which is why it’s so important to get pre-approved with several
and compare each offer. Apply for pre-approval from at least two or three lenders.
Your price isn’t the only thing that matters. Be sure to compare both your monthly costs and your upfront costs, including lender fees.
Although mortgage rates are heavily influenced by economic factors beyond your control, there are steps you can take to ensure you get a good rate:
- Consider fixed rates versus adjustable rates. You may be able to get a lower introductory rate with an adjustable rate mortgage, which can be beneficial if you plan to move before the end of the introductory period. But a fixed rate might be better if you’re buying a house forever, because you don’t risk your rate going up later. Examine the rates offered by your lender and weigh your options.
- Look at your finances. The stronger your financial situation, the lower your mortgage rate should be. Look for ways to increase your credit score or reduce your debt ratio, if necessary. Saving for a larger down payment also helps.
- Choose the right lender. Each lender charges different mortgage rates. Choosing the right one for your financial situation will help you get a good rate.