According to Freddie Mac, the average 30-year fixed mortgage rate is currently at its highest level in 13 years. Mortgage rates shot up in early 2022 and continued to rise in May. However, recent rate hikes have not been as dramatic as in previous months, a sign that interest rate growth may be moderating.
If you’re getting ready to buy a home, locking in your rate sooner rather than later can help insure against future increases as you shop.
“With such fluctuations happening on a daily basis, what you usually lose will be much more than what you can gain by not securing your interest rate,” said Ralph DiBugnara, president of Home Qualified and senior vice president of Cardinal Financial.
Mortgage interest today
Mortgage Refinance Rates Today
Use our free mortgage calculator to see how current interest rates will affect your monthly payments.
Your Estimated Monthly Payment
- pay a 25% higher deposit would save you! $8,916.08 on interest charges
- Reduction of interest by 1% would you save $51,562.03
- Pay extra $500 each month would reduce the length of the loan by 146 months
By clicking ‘More details’ you will also see how much you will pay over the entire term of your mortgage, including how much will go to principal versus interest.
Will mortgage interest rates rise in 2022?
To help the US economy during the COVID-19 pandemic, the
aggressively purchased assets, including mortgage-backed securities. As a result, mortgage interest rates remained historically low.
However, the Fed now plans to reduce the assets it owns and is expected to raise Federal Funds interest rates five more times in 2022, following hikes in March and May.
Average mortgage rates have risen sharply recently, and the Fed’s announcements indicate that mortgage rates are likely to continue rising in 2022. You may want to lock in a rate now rather than risk a higher rate later, but don’t rush to buy a home if you’re not ready.
What is a fixed rate mortgage vs. a variable rate mortgage?
Historically, adjustable mortgage rates have typically been lower than the 30-year fixed rate. When mortgage rates rise, ARMs may seem like the better deal, but it depends on your situation.
Fixed-rate mortgages fix your interest for the entire term of your loan. Adjustable-rate mortgages hold your rate for the first few years, after which your rate goes up or down periodically.
Because adjustable rates start low, they are valuable options if you plan to sell your home before interest rates change. For example, if you get a 7/1 ARM and want to move before the seven-year fixed-rate period is over, you don’t risk paying a higher interest rate later.
But if you want to buy a forever home, a fixed interest rate may still be a better fit, since you do not run the risk that your interest rate rises in a few years.