Today’s Mortgage Rates, May 5, 2022 | Rates Trending Higher

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Looking at today’s mortgage rates a number of significant rates went higher. The averages for both 30-year fixed and 15-year fixed mortgages both were driven higher. We also saw an increase in the average rate of 5/1 adjustable-rate mortgages (ARMs).

It’s only been 15 months since the 30-year average mortgage rate fell to a record low, but recently the same loan type reached over 5% for the first time in more than a decade. Recently, the Fed announced a 0.5% increase to short-term interest rates with more increases to come this year. This move is in response to elevated inflation, but could also put more upward pressure on mortgage rates.

Higher interest rates may help to cool a housing market that has been red hot for much of the past two years. However, housing inventory in the US remains low, which means buyers shouldn’t expect a cakewalk when it comes to getting their offers accepted.

That doesn’t mean you need to shelve your home buying plans, instead, refocus on the fundamentals. In the end, your monthly mortgage payment matters more than home prices and interest rates. Stay within your home-buying budget, and limit your housing costs (including property taxes and insurance) to no more than 28% of your income before taxes. Be sure to shop around for the best deal on your mortgage, that way you can limit your fees and secure the best possible rate regardless of what the market is doing.

Here’s where the current rate trends are moving and what you need to know about them.

The average mortgage rates are as follows:

Mortgage Rate Trends: Why Are Mortgage Rates Spiking?

Long-term mortgage rate trends are closely tied to the 10-year Treasury bond rates, as bond yields go up, 30-year mortgage rates typically move in tandem. Bond yields, and mortgage rates, are impacted by a wide range of economic conditions. Currently, steep inflation and the Federal Reserve Bank’s monetary policy are two strong drivers behind the recent surge in rates.

The Federal Reserve has already begun raising short-term interest rates, which puts upwards pressure on mortgage rates and it has clearly communicated its intention to continue raising short-term rates. The Fed is slowly increasing rates in an effort to combat skyrocketing inflation, which hit a 40-year high of 8.5% in March, according to the most recent Consumer Price Index (CPI) compiled by the Bureau of Labor Statistics. Sharp increases in the cost of food, fuel and housing were behind this steep climb.

Current Mortgage Rates: Is It a Good Time to Buy a House Right Now?

Even with the recent dramatic increases, mortgage rates haven’t reached unhealthy levels.

Not that long ago favorable interest rates helped to offset rising home prices. Now that rates are well above their all-time lows, buyers may need to consider adjusting their home buying budget.

You may want to time the market to find a lower rate, but that strategy could just as easily backfire. Don’t let broader market factors get in the way of becoming a homeowner, if it’s the right next move for you. It is possible to find what you want in a home at a price you can afford by expanding your home search. Don’t forget that mortgage rates aren’t fixed and vary widely from one lender to the next. This makes it important to shop around to compare offers from a variety of lenders.

History of the 30-Year Fixed Mortgage Rate

Today’s rates fall within a typical historical range, even though they are higher than they were in 2020 or 2021. What this means is current mortgage interest rates are still very good from a long-term view despite breaking through the psychological barrier of 5%.

NextAdvisor generally uses Bankrate survey data. However, this chart above is pulling data from the Freddie Mac survey. Freddie Mac is a government-sponsored entity that collects mortgage data. The rates in this chart differ slightly from the data elsewhere on this page, the historical trends generally track with each other. Looking back at Freddie Mac historical rates offers a good snapshot into how today’s rates compare with the past two decades.

What to Know About Loans Fees

The industry term for the upfront fees you pay when you get a home loan is closing costs. This includes lender fees and escrow fees, such as taxes and insurance. Certain closing costs vary by loan size, but overall you can expert to pay 3% to 6% of the total loan balance. Your closing costs play a crucial role in determining your annual percentage rate (APR). In other words, the higher your closing costs, the higher your APR will be…

Today’s Mortgage Refinance Rates

Refinancing became a bit more expensive today as 30-year fixed and 15-year fixed refinance mortgages saw their average rates go higher. If you’ve been considering a 10-year refinance loan, just know average rates also moved up.

The refinance averages for 30-year, 15-year, and 10-year loans are:

Compare national mortgage rates from various lenders.

30-Year Mortgage Rates

For a 30-year fixed-rate mortgage, the average rate you’ll pay is 5.48%, which is an increase of 6 basis points from the previous week.

15-Year Mortgage Interest Rates

The median rate for a 15-year fixed mortgage is 4.73%, which is an increase of 8 basis points compared to a week ago.

A 15-year, fixed-rate mortgage’s monthly payment is larger than what you would pay with a 30-year mortgage. But, 15-year loans have some considerable benefits: You’ll save thousands of dollars in interest and pay off your loan much earlier.

5/1 ARM Mortgage Rates

A 5/1 ARM has an average rate of 3.78%, which is an addition of 11 basis points since seven days ago.

An ARM is ideal for households who will sell or refinance before the rate changes. If that’s not the case, their interest rates could end up being significantly higher after a rate adjusts.

For the first five years, a 5/1 ARM will typically have a lower interest rate compared to a 30-year fixed mortgage. Keep in mind that depending on how much your loan’s rate adjusts, your payment has the potential to increase by a large amount.

How We Determine Mortgage Rates

To get an idea of ​​where mortgage rate may move, we rely on information collected by Bankrate, which is owned by the same parent company as NextAdvisor. The daily rates survey focuses on mortgages where the borrower has a 740+ credit score, 20% equity or more, and lives in the home.

The current average rates listed below and based on the Bankrate mortgage rate survey:

Rates as of May 5, 2022.

Mortgage Rate Frequently Asked Questions (FAQ):

How Do I Get the Best Mortgage Rate?

Getting loan offers from a few lenders is a great way to get the lowest rate.

The mortgage rate you’ll qualify for depends on a number of factors lenders consider when assessing how the likelihood that you’ll be able to afford a mortgage for the long term. Your credit score factors into the decision. And your loan-to-value (LTV) ratio is also important, so having a larger down payment is better for your mortgage rate.

But banks will consider your circumstances differently. So you can provide the same documentation to three different banks, and find that none of the mortgage rates and fees you are offered are the same.

Should I Lock in My Mortgage Rate Now?

Mortgage rates move up and down on a daily basis, and it’s impossible to time the market. So locking in your interest rate right now is a good idea because overall, rates are historically favorable.

A rate lock will only last for a set amount of time, typically 30-60 days. If you hit a snag during closing and it looks like your rate lock will expire you should contact your lender. It may offer an extension of the lock, however, you might have to pay a fee for that privilege.

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