Interest rates

Mortgage Interest Rates Today for September 12, 2022: Rate Increase

A variety of notable mortgage rates saw growth on Monday. Both the average 15-year and 30-year fixed mortgage interest rates increased. For variable rates, the 5/1 variable rate mortgage also increased.

Although mortgage rates have risen fairly steadily 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 react to a wide variety of economic factors. Currently, they are particularly sensitive to inflation and the prospect of a 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 interest rate on a standard 30-year fixed mortgage is 6.08%, up 3 basis points from a week ago. (One basis point equals 0.01%.) The most commonly used loan term is a 30-year fixed mortgage. A 30-year fixed rate mortgage will generally 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 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 5.40%, an increase of 17 basis points from seven days ago. You will definitely have a higher 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 best deal, as long as you can afford the monthly payments. These typically include the ability to get a lower interest rate, pay off your mortgage sooner, and pay less total interest over the long term.

5/1 Adjustable Rate Mortgages

A 5/1 ARM has an average rate of 4.53%, an increase of 7 basis points from last week. You’ll typically get a lower interest rate (compared to a 30-year fixed mortgage) with a 5/1 variable rate mortgage in the first five years of the mortgage. But you might end up paying more after that time, depending on the terms of your loan and how the rate adjusts to the market rate. If you plan to sell or refinance your home before the rate changes, an adjustable rate mortgage may be right for you. Otherwise, changes in the market could 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 high. 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 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 in the United States:

Today’s Mortgage Interest Rates

Rates exact as of September 12, 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. When researching mortgage rates, consider your current goals and finances. Specific mortgage rates will vary based on factors such as credit score, down payment, debt-to-income ratio and loan-to-value ratio. Having a good credit score, a higher down payment, low DTI, low LTV, or any combination of these factors can help you get a lower interest rate. Beyond the mortgage rate, additional costs such as closing costs, fees, discount points and taxes can also affect the cost of your home. Be sure to shop around with multiple lenders — like credit unions and online lenders, in addition to local and national banks — to get a mortgage that’s best for you.

How does the loan term affect my mortgage?

When choosing a mortgage, you need to consider the length of the loan or the payment schedule. The most common mortgage 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 stable for the life of the loan. Unlike a fixed rate mortgage, an adjustable rate mortgage’s interest rates are only stable for a certain period of time (usually five, seven or 10 years). After that, the rate fluctuates annually based on the market rate.

One factor to consider when choosing between a fixed rate and variable rate mortgage is how long you plan to live in your home. If you plan to live long term in a new home, fixed rate mortgages may be the best option. While variable rate mortgages can sometimes offer lower interest rates upfront, fixed rate mortgages are more stable over time. However, if you don’t plan on keeping your new home for more than three to ten years, an adjustable rate mortgage might give you a better deal. The best loan term depends on individual circumstances and goals, so be sure to consider what’s important to you when choosing a mortgage.