Mortgage Rates for Aug. 11, 2022: Important Rate Retreats

While a closely followed mortgage rate decreased, today rates followed a split path. While 15-year fixed mortgage rates made gains, interest rates on 30-year fixed-rate mortgages decreased. For variable rates, the 5/1 adjustable-rate mortgage trended upward.

Though mortgage rates have been rather consistently going up since the start of this year, what happens next depends on whether inflation continues to climb or begins to retreat.

Interest rates are dynamic and unpredictable — at least on a daily or weekly basis — and they respond to a wide variety of economic factors. Right now, they’re particularly sensitive to inflation and the prospect of a US recession. With so much uncertainty in the market, if you’re looking to buy a home, trying to time the market may not play to your favor.

If inflation rises and rates climb, this could translate to higher interest rates and steeper monthly mortgage payments. For this reason, you may have better luck locking in a lower mortgage interest rate sooner rather than later. No matter when you decide to shop for a home, it’s always a good idea to seek out multiple lenders to compare rates and fees to find the best mortgage for your specific situation.

30-year fixed-rate mortgages

The average interest rate for a standard 30-year fixed mortgage is 5.46%, which is a decrease of 6 basis points compared to one week ago. (A basis point is equivalent to 0.01%.) The most frequently used loan term is a 30-year fixed mortgage.

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 4.86%, which is an increase of 12 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.

But a 15-year loan will usually be the better deal, as long as you’re able to afford the monthly payments. 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 4.19%, an uptick of 1 basis point compared to a week ago. 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 shifts in the market could cause your interest rate to increase after that time, as detailed in the terms of your loan. For borrowers who plan to sell or refinance their house before the rate changes, an adjustable-rate mortgage may be a good option. But if that’s not the case, you might be on the hook for a much higher interest rate if the market rates change.

Mortgage rate trends

Though mortgage rates were historically low at the beginning of 2022, they have been climbing somewhat steadily since then.

The Federal Reserve recently raised interest rates by another 0.75 percentage points in an attempt to curb record-high inflation. The Fed has raised rates a total of four times this year, but inflation still remains high. 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 actions influence how much you pay to finance your home loan. If you’re looking to buy a house in 2022, keep in mind that the Fed has signaled it will continue to raise rates, and mortgage rates could increase as the year goes on.

Whether rates follow their upward projection or begin to level out hinges on if inflation actually slows. We use rates collected by Bankrate, which is owned by the same parent company as CNET, to track changes in these daily rates. This table summarizes the average rates offered by lenders across the country:

Average mortgage interest rates

Product

Rate

Last week

Change
30-year fixed 5.46% 5.52% -0.06
15-year fixed 4.86% 4.74% +0.12
30-year jumbo mortgage rate 5.43% 5.52% -0.09
30-year mortgage refinance rate 5.41% 5.50% -0.09

Rates as of Aug.

11, 2022.

How to shop for the best mortgage rate

When you are ready to apply for a loan, you can connect with a local mortgage broker or search online. In order to find the best home mortgage, you’ll need to consider your goals and current finances. A range of factors — including your down payment, credit score, loan-to-value ratio and debt-to-income ratio — will all affect the interest rate on your mortgage.

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 factors such as fees, closing costs, taxes and discount points. Be sure to shop around with multiple lenders — including credit unions and online lenders in addition to local and national banks — in order to get a loan that’s the best fit for you.

What’s the best loan term?

When picking a mortgage, you should consider 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. The interest rates in a fixed-rate mortgage are fixed for the duration of the loan.

For adjustable-rate mortgages, interest rates are set for a certain number of years (commonly five, seven or 10 years), then the rate fluctuates annually based on the market interest rate. One factor to consider when choosing between a fixed-rate and adjustable-rate mortgage is the length of time you plan on staying in your home. Fixed-rate mortgages might be a better fit for those who plan on living in a home for quite some time.

Fixed-rate mortgages offer greater stability over time compared to adjustable-rate mortgages, but adjustable-rate mortgages might 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. There is no best loan term as a rule of thumb; it all depends on your goals and your current financial situation.

Be sure to do your research and think about what’s most important to you when choosing a mortgage.

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