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Mortgage rates remain relatively unchanged today after yesterday’s Consumer Price Index data showed that inflation slowed more than expected in October.
On a weekly basis, average rates have rebounded above 7%, Freddie Mac said Thursday, mirroring higher rates seen earlier this week. But rates have started to fall again in recent days, with 30-year fixed rates now holding steady below 7%.
October’s cooling CPI report is great news for mortgage rates and the economy in general. Although inflation remains high, it finally seems that the Federal Reserve’s efforts are paying off.
The Fed has aggressively raised the fed funds rate this year in an attempt to cool the overheated economy. As inflation begins to come back down to a more sustainable level, the Fed may be able to slow the pace of its hikes, which would likely keep mortgage rates from rising further.
Mortgage rates today
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Mortgage refinance rates today
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Use our free mortgage calculator to see how today’s interest rates will affect your monthly payments.
Your estimated monthly payment
- pay one 25% a higher down payment would save you $8,916.08 on interest charges
- Lower the interest rate by 1% would save you $51,562.03
- Pay an extra fee $500 each month would reduce the term of the loan by 146 month
By clicking on “More details”, you will also see the amount you will pay over the life of your mortgage, including the amount of principal versus interest.
30-year fixed mortgage rates
The current average 30-year fixed mortgage rate is 7.08%, according to Freddie Mac. This is an increase from the previous week.
The 30-year fixed rate mortgage is the most common type of mortgage. With this type of mortgage, you’ll pay back what you borrowed over 30 years and your interest rate won’t change for the life of the loan.
The 30-year long term allows you to spread your payments out over a long period, which means you can keep your monthly payments lower and more manageable. The tradeoff is that you’ll get a higher rate than with shorter terms or adjustable rates.
15-year fixed mortgage rates
The average 15-year fixed mortgage rate is 6.38%, an increase from the previous week, according to data from Freddie Mac. The last time this rate was above 6% was in 2008.
If you’re looking for the predictability that comes with a fixed rate, but are looking to spend less on interest over the life of your loan, a 15-year fixed rate mortgage might be right for you. Since these terms are shorter and have lower rates than 30-year fixed rate mortgages, you could potentially save tens of thousands of dollars in interest. However, you will have a higher monthly payment than you would with a longer term.
5/1 Adjustable Mortgage Rates
The average 5/1 adjustable mortgage rate is 6.06%, an increase from the previous week. It is also the first time that this rate has exceeded 6% since 2008.
Variable rate mortgages can seem very attractive to borrowers when rates are high, as rates on these mortgages are generally lower than fixed mortgage rates. A 5/1 ARM is a 30 year mortgage. For the first five years, you will have a fixed rate. After that, your rate will adjust once a year. If rates are higher when your rate adjusts, you’ll have a higher monthly payment than you started with.
If you’re considering an ARM, make sure you understand how much your rate might increase each time it adjusts and how much it might ultimately increase over the life of the loan.
Will mortgage rates increase in 2022?
To help the US economy during the COVID-19 pandemic, the Federal Reserve has been aggressively buying assets, including mortgage-backed securities. This has helped keep mortgage rates at historically low levels.
However, the Fed has started to reduce the assets it holds and is expected to raise the federal funds rate two more times in 2022, following increases in its last five meetings.
Although not directly tied to the fed funds rate, mortgage rates are sometimes pushed higher due to Fed rate hikes and investors’ expectations of the impact of those hikes on the economy. .
Inflation remains high, but has started to slow, which is a good sign for mortgage rates and the economy in general.
What is a Fixed Rate Mortgage or an Adjustable Rate Mortgage?
Historically, adjustable mortgage rates have tended to be lower than 30-year fixed rates. When mortgage rates rise, ARMs may start to look like the best deal, but it depends on your situation.
Fixed rate mortgages lock in your rate for the life of your loan. Variable rate mortgages lock in your rate for the first few years, then your rate increases or decreases periodically.
Because adjustable rates start low, they are attractive options if you plan to sell your home before interest rates change. For example, if you get a 7/1 ARM and want to move before the end of the seven-year fixed rate period, you won’t risk paying a higher rate later.
But if you want to buy a house forever, a fixed rate might still be a better fit because you don’t risk your rate going up in a few years.
Are HELOCs a good idea right now?
Many homeowners have gained great net worth over the past couple of years as home prices have risen at an unprecedented rate. But since rates are so high today, tapping into that equity can be costly.
For homeowners looking to leverage the value of their home to cover a big purchase, like a home improvement, a home equity line of credit (HELOC) can still be a good option.
A HELOC is a line of credit that lets you borrow against the equity in your home. It works similar to a credit card in that you borrow what you need rather than getting the full amount you borrow in one lump sum.
Depending on your finances and the type of HELOC you get, you may be able to get a better rate with a HELOC than with a home equity loan or cash refinance. Just keep in mind that HELOC rates are variable, so if rates start to increase further, yours will likely increase as well.
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