Interest rates

Mortgage interest rates for September 19, 2022: Rising rate trend

A number of major mortgage rates rose today. Average 15-year fixed and 30-year fixed mortgage rates both increased. We also saw an upward trend in the average 5/1 adjustable rate mortgage rate. Although mortgage rates have risen fairly steadily since the start of this year, what happens next will depend on whether inflation continues to rise or begins to fall. Interest rates are dynamic and unpredictable – at least on a daily or weekly basis – and they react to a wide variety of economic factors. Currently, they are 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 work in your favor. If inflation rises and rates rise, this could mean higher interest rates and higher monthly mortgage payments. Because of this, you may have a better chance of getting 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 research multiple lenders to compare rates and fees to find the best mortgage for your particular situation.

30 Year Fixed Rate Mortgages

The average 30-year fixed mortgage interest rate is 6.33%, up 25 basis points from a week ago. (One basis point equals 0.01%.) Thirty-year fixed mortgages are the most commonly used loan term. A 30 year fixed rate mortgage will generally have a smaller monthly payment than a 15 year mortgage, but generally a higher interest rate. You won’t be able to pay off your home as quickly and you’ll pay more interest over time, but a 30-year fixed rate 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 5.63%, an increase of 23 basis points compared to the same period last week. Compared to a 30-year fixed mortgage, a 15-year fixed mortgage with the same loan value and interest rate will result in a higher monthly payment. But a 15-year loan will usually be the best deal, as long as you can afford the monthly payments. You will generally get a lower interest rate and pay less interest in total because you are paying off your mortgage much faster.

5/1 Adjustable Rate Mortgages

A 5/1 ARM has an average rate of 4.76%, up 23 basis points from seven days 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. However, as the rate adjusts to the market rate, you may end up paying more after this period, as described in your loan terms. For this reason, an ARM can be a good option if you plan to sell or refinance your home before the rate changes. If not, market fluctuations can significantly increase your interest rate.

Mortgage Rate Trends

Although mortgage rates were historically low at the start of 2022, they have been rising fairly steadily since then. The Federal Reserve recently raised interest rates an additional 0.75 percentage points in an effort to curb record inflation. The Fed has raised rates a total of four times this year, but inflation remains elevated. Generally, when inflation is low, mortgage rates tend to be lower. When inflation is high, rates tend to be higher. Although the Fed does not set mortgage rates directly, central bank policy actions influence how much you pay to fund your home loan. If you’re looking to buy a home in 2022, keep in mind that the Fed has signaled it will continue to raise rates and mortgage rates may rise as the year progresses. Whether rates follow their upward projection or begin to stabilize depends on whether inflation actually slows. We use rates 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

Type of loan Interest rate A week ago To change
30-year fixed rate 6.33% 6.08% +0.25
Fixed rate over 15 years 5.63% 5.40% +0.23
30-year jumbo mortgage rate 6.32% 6.07% +0.25
30-year mortgage refinance rate 6.32% 6.08% +0.24

Updated September 19, 2022.

How to Shop for the Best Mortgage Rate

When you’re ready to apply for a loan, you can contact a local mortgage broker or search online. In order to find the best home loan, you will need to consider your goals and your overall financial situation. Things that affect the mortgage rate you might get include: your credit score, your down payment, your loan-to-value ratio, and your debt-to-income ratio. Generally, you want a higher credit score, higher down payment, lower DTI, and lower LTV to get a lower interest rate. Along with the mortgage interest rate, other costs including closing costs, fees, discount points, and taxes can also affect the cost of your home. You should shop around with multiple lenders — for example, credit unions and online lenders in addition to local and national banks — to get a mortgage that’s best for you.

What is the best loan term?

One important thing to consider when choosing a mortgage loan is the term of the loan or the payment schedule. The most common loan terms are 15 and 30 years, although there are also 10, 20 and 40 year mortgages. Mortgages are further divided into fixed rate and variable rate mortgages. Interest rates on a fixed rate mortgage are fixed for the term of the loan. For adjustable rate mortgages, the interest rates are stable for a number of years (most often five, seven or 10 years), then the rate fluctuates annually depending on the prevailing interest rate on the market. When choosing between a fixed rate mortgage and an adjustable rate mortgage, you need to think about how long you plan to stay in your home. For people planning to stay in a new home for the long term, fixed rate mortgages may be the best option. Fixed rate mortgages offer more stability over time compared 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 few years. The best loan term depends on your specific situation and goals, so be sure to consider what’s important to you when choosing a mortgage.