Current Mortgage Rates for June 20, 2022: Rates Go Up
A couple of mortgage rates are higher again today, with 15-year fixed and 30-year fixed mortgage rates both climbing substantially. We also saw an inflation in the average rate of 5/1 adjustable-rate mortgages.
Mortgage rates have been consistently going up since the start of this year, and are expected to keep climbing throughout 2022. In general, interest rates are dynamic -- they rise and fall on a daily basis depending on economic factors, including inflation and the federal funds rate, which the Federal Reserve has already increased three times this year.
Because the Fed plans to keep hiking interest rates in order to contain inflation, prospective homebuyers will likely be able to lock in a lower rate now rather than later this year. Interviewing multiple lenders to compare rates and fees will help you find the best option for your financial situation. Keep in mind that home prices come down not only to interest rates but a variety of factors.
While we can't predict in the long term how the Fed's policies will impact the housing market, higher rates means that homebuyers will in the short term be dealing with steeper monthly payments.
30-year fixed-rate mortgages
The average interest rate for a standard 30-year fixed mortgage is 5.99%, which is a growth of 21 basis points from one week ago. (A basis point is equivalent to 0.01%.) Thirty-year fixed mortgages are the most frequently used loan term. A 30-year fixed mortgage will usually have a higher interest rate than a 15-year fixed rate mortgage -- but also a lower monthly payment. You won't be able to pay off your house as quickly and you'll pay more interest over time, but a 30-year fixed 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 5.18%, which is an increase of 27 basis points from seven days ago.
Compared to a 30-year fixed mortgage, a 15-year fixed mortgage with the same loan value and interest rate will have a bigger monthly payment. However, as long as you're able to 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 4.10%, a climb of 16 basis points from seven days ago.
With an ARM mortgage, you'll typically get a lower interest rate than a 30-year fixed mortgage for the first five years. However, you may end up paying more after that time, depending on the terms of your loan and how the rate changes with the market rate. If you plan to sell or refinance your house before the rate changes, an ARM might make sense for you.
If not, shifts in the market may significantly increase your interest rate.
Mortgage rate trends
While 2022 kicked off with low mortgage rates, rates have been increasing over recent months, shattering the historic lows from the start of the pandemic. Rates are rising in response to record-high inflation and recent action by the Federal Reserve, which raised interest rates 0.75 percentage points this month -- the highest rate increase since 1994. As a general rule, when inflation is low, mortgage rates tend to be lower -- when inflation is high, rates tend to be higher.
Though the Fed does not directly set mortgage rates, the central bank's policy moves do influence how much you'll end up paying for your home loan.The Fed has signaled it will continue to raise rates over the course of this year, so if you're looking to buy a house in 2022, expect mortgage rates to keep trending up. We use data 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 nationwide:
Current average mortgage interest rates
|30-year fixed rate||5.99%||5.78%||+0.21|
|15-year fixed rate||5.18%||4.91%||+0.27|
|30-year jumbo mortgage rate||5.91%||5.79%||+0.12|
|30-year mortgage refinance rate||5.94%||5.75%||+0.19|
Updated on June 20, 2022.
How to shop for the best mortgage rate
When you are ready to apply for a loan, you can reach out to a local mortgage broker or search online.
Make sure to consider your current financial situation and your goals when searching for a mortgage. Things that affect what the interest rate you might get on your mortgage include: your credit score, down payment, loan-to-value ratio and your debt-to-income ratio. 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.
Apart from the mortgage interest rate, other factors including closing costs, fees, discount points and taxes might also affect the cost of your house. Make sure to comparison shop with multiple lenders -- like credit unions and online lenders in addition to local and national banks -- in order to get a mortgage loan that's the best fit for you.
What's the best loan term?
One important factor to consider when choosing a mortgage is the loan term, or payment schedule. The most common mortgage 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 fixed for the life of the loan. Unlike a fixed-rate mortgage, the interest rates for an adjustable-rate mortgage are only fixed for a certain amount of time (typically five, seven or 10 years).
After that, the rate adjusts annually based on the market interest 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 people who plan on staying in a home for a while.
Fixed-rate mortgages offer greater stability over time in comparison to adjustable-rate mortgages, but adjustable-rate mortgages can sometimes offer lower interest rates upfront. However you might get a better deal with an adjustable-rate mortgage if you only plan to keep your home for a couple years. There is no best loan term as a rule of thumb; it all depends on your goals and your current financial situation.
Make sure to do your research and understand your own priorities when choosing a mortgage.