Today’s Mortgage Rates for May 18, 2022: Rates Tick Downward Again
A few key mortgage rates have moved downward since the start of this week. Today, average interest rates for both 15-year fixed and 30-year fixed mortgages had a downswing. We also saw a cut in the average rate of 5/1 adjustable-rate mortgages.
Mortgage rates have been slowly rising since the start of this year, and are expected to increase throughout 2022.
Rates are now closer to 2018 levels than the historic lows seen during the height of the pandemic. Interest rates are dynamic — they rise and fall on a daily basis depending on economic factors. In general, now is a good time for prospective homebuyers to lock in a lower rate rather than later this year.
Speaking with multiple lenders will help you find the best rate available for your financial situation.
30-year fixed-rate mortgages
The average interest rate for a standard 30-year fixed mortgage is 5.40%, which is a decline of 17 basis points compared to one week ago. (A basis point is equivalent to 0.01%.) Thirty-year fixed mortgages are the most common loan term. A 30-year fixed mortgage will usually have a greater interest rate than a 15-year fixed rate mortgage — but also a lower monthly payment. Although you’ll pay more interest over time — you’re paying off your loan over a longer timeframe — 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 4.76%, which is a decrease of 5 basis points from the same time last week.
Compared to a 30-year fixed mortgage, a 15-year fixed mortgage with the same loan value and interest rate will have a larger monthly payment. However, if you can afford the monthly payments, there are several benefits to a 15-year loan. You’ll typically get a lower interest rate, and you’ll pay less interest in total because you’re paying off your mortgage much quicker.
5/1 adjustable-rate mortgages
A 5/1 ARM has an average rate of 5.36%, a decrease of 19 basis points from the same time last week.
For the first five years, you’ll typically get a lower interest rate with a 5/1 ARM compared to a 30-year fixed mortgage. But since the rate changes with the market rate, you might end up paying more after that time, as described in the terms of your loan. If you plan to sell or refinance your house before the rate changes, an adjustable-rate mortgage may make sense for you.
But if that’s not the case, you could be on the hook for a much higher interest rate if the market rates change.
Mortgage rate trends
Though 2022 kicked off with low mortgage rates, there has been an uptick in recent months, and rates will likely continue going up throughout 2022. Home loan rates are influenced by multiple economic factors. A major one is government policy set by the Fed, which raised rates by half a percentage point in May 2022, the highest increase in 22 years, in response to record-high inflation.
This was the second rate increase by the Fed and several more are expected throughout the year. So, if you’re looking to buy a house in 2022, expect mortgage rates to keep going higher. We use information 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 across the US:
Today’s mortgage interest rates
Rates accurate as of May 18, 2022.
How to find the best mortgage rates
You can get a personalized mortgage rate by reaching out to your local mortgage broker or using an online calculator. When looking into home mortgage rates, think about your goals and current financial situation. A range of factors — including your down payment, credit score, loan-to-value ratio and debt-to-income ratio — will all affect your mortgage rate.
Having a good credit score, a larger down payment, a low DTI, a low LTV, or any combination of those factors can help you get a lower interest rate. The interest rate isn’t the only factor that affects the cost of your home — be sure to also consider other costs such as fees, closing costs, taxes and discount points. Make sure to comparison shop with multiple lenders — such as credit unions and online lenders in addition to local and national banks — in order to get a mortgage that’s the best fit for you.
How does the loan term impact my mortgage?
One important consideration when choosing a mortgage is the loan term, or payment schedule.
The most common loan terms are 15 years and 30 years, although 10-, 20- and 40-year mortgages also exist. Mortgages are further divided into fixed-rate and adjustable-rate mortgages. For fixed-rate mortgages, interest rates are the same for the life of the loan.
Unlike a fixed-rate mortgage, the interest rates for an adjustable-rate mortgage are only set for a certain amount of time (usually five, seven or 10 years). After that, the rate fluctuates annually based on the market rate. When choosing between a fixed-rate and adjustable-rate mortgage, you should think about the length of time you plan to stay in your home.
Fixed-rate mortgages might be a better fit for those who plan on staying in a home for quite some time. Fixed-rate mortgages offer more stability over time compared to adjustable-rate mortgages, but adjustable-rate mortgages may offer lower interest rates upfront. However you may get a better deal with an adjustable-rate mortgage if you only intend to keep your home for a few years.
The best loan term all depends on your own situation and goals, so make sure to take into consideration what’s important to you when choosing a mortgage.