Current Mortgage Interest Rates on Oct. 18, 2022: Rates Move Higher

A number of closely followed mortgage rates crept higher today. The average 15-year fixed and 30-year fixed mortgage rates both moved up. We also saw an upswing in the average rate of 5/1 adjustable-rate mortgages.

Mortgage rates have been increasing consistently since the start of 2022, following in the wake of a series of interest hikes by the Federal Reserve.

Interest rates are dynamic and unpredictable — at least on a daily or weekly basis — and they respond to a wide variety of economic factors. But the Fed’s actions, designed to mitigate the high rate of inflation, are having an unmistakeable impact on mortgage rates. If you’re looking to buy a home, trying to time the market may not play to your favor.

If inflation continues to increase and rates continue to climb, it will likely translate to higher interest rates — and steeper monthly mortgage payments. As such, 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

For a 30-year, fixed-rate mortgage, the average rate you’ll pay is 7.18%, which is an increase of 13 basis points as seven days ago. (A basis point is equivalent to 0.01%.) The most common loan term is a 30-year fixed mortgage.

A 30-year fixed rate mortgage will usually have a smaller monthly payment than a 15-year one — but typically a higher interest rate. 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 6.35%, which is an increase of 11 basis points from the same time last week. You’ll definitely have a larger monthly payment with a 15-year fixed mortgage compared to a 30-year fixed mortgage, even if the interest rate and loan amount are the same.

But a 15-year loan will usually be the better deal, if 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 5.40%, a rise of 6 basis points compared to a week 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, since the rate adjusts with the market rate, you could end up paying more after that time, as described in the terms of your loan. Because of this, an adjustable-rate mortgage could be a good option if you plan to sell or refinance your house before the rate changes. If not, shifts in the market could significantly increase your interest rate.

Mortgage rate trends

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

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 five 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 information 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 across the country:

Today’s mortgage interest rates

Rates accurate as of Oct.

18, 2022.

How to find personalized mortgage rates

When you are ready to apply for a loan, you can reach out to a local mortgage broker or search online. When researching home mortgage rates, think about your goals and current financial situation. 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 higher credit score, a higher 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 additional factors such as fees, closing costs, taxes and discount points. Make sure you speak with a variety of lenders — for example, local and national banks, credit unions and online lenders — and comparison shop to find the best loan for you.

How does the loan term impact my mortgage?

One important thing to consider when choosing a mortgage is the loan term, or payment schedule.

The loan terms most commonly offered are 15 years and 30 years, although you can also find 10-, 20- and 40-year mortgages. 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 (most frequently five, seven or 10 years). After that, the rate changes annually based on the market interest rate. When deciding between a fixed-rate and adjustable-rate mortgage, you should think about the length of time you plan to live in your home.

Fixed-rate mortgages might be a better fit if you plan on living in a home for a while. Fixed-rate mortgages offer greater stability over time in comparison to adjustable-rate mortgages, but adjustable-rate mortgages may offer lower interest rates upfront. If you don’t plan to keep your new house for more than three to 10 years, though, an adjustable-rate mortgage may give you a better deal.

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 understand what’s most important to you when choosing a mortgage.

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