Mortgage of the day, refinancing rate: July 24, 2022

After a few volatile weeks for mortgage rates, last week remained relatively calm. The average 30-year fixed mortgage rate rose, according to Freddie Mac, but only by 3 basis points, or 0.03 percentage points.

The Federal Open Market Committee of the Federal Reserve is meeting this week to discuss another hike in the federal funds rate. June consumer price index data showed inflation still going strong, leading some to speculate that the Fed would raise rates by a full percentage point. But most experts currently expect an increase of 0.75 percentage points.

What impact will this have on mortgage rates? Mortgages are not directly linked to the federal funds rate, but may be affected by rate increases. Steve Kaminski, head of US residential lending at TD Bank, says we could see a slight increase in response to Fed action, after which rates should stabilize or come back down.

“Many economists are calling for longer-term rates to remain near or within 50 basis points of current levels, which could prolong current housing market conditions,” Kaminski said.

Mortgage rates today

Mortgage refinance rates today

mortgage calculator

Use our free mortgage calculator to see the impact of today’s mortgage rates on your monthly payments. By plugging in different rates and terms, you’ll also understand how much you’ll pay over the life of your mortgage.

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$1,161
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

Click “More Details” for tips on how to save money on your long-term mortgage.

30-year fixed mortgage rates

The current average 30-year fixed mortgage rate is 5.54%, according to Freddie Mac. This is the second week in a row that this rate has increased. Last week it was at 5.51%,

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 long 30-year 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 4.75%, an increase from the previous week and the second week in a row that this rate has increased, according to data from Freddie Mac.

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 4.31%, down from the previous week.

Variable rate mortgages can seem very attractive to borrowers when rates are high, as the rates on these mortgages are usually 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.

Are mortgage rates increasing?

Mortgage rates started to recover from historic lows in the second half of 2021 and could continue to rise throughout 2022. This is largely due to high levels of inflation and the policy response to rising prices .

Over the past 12 months, the consumer price index has increased by 9.1%. The Federal Reserve has been struggling to keep inflation under control and plans to raise the target federal funds rate four more times this year, following increases in March, May and June.

Although not directly tied to the fed funds rate, mortgage rates are often pushed higher due to Fed rate hikes and investor expectations of the impact of those hikes on the economy. . As inflation remains elevated and the central bank continues to tighten monetary policy, mortgage rates are likely to stay at current levels. However, if rate hikes slow the economy so much that it enters a recession, mortgage rates could fall.

How can I find personalized mortgage rates?

Some mortgage lenders allow you to customize your mortgage rate on their websites by entering your down payment amount, zip code and credit score. The resulting rate is not fixed, but it can give you an idea of ​​what you will pay.

If you’re ready to start buying homes, you can get pre-approved from a lender. The lender makes a firm credit application and reviews your financial details to lock in a mortgage rate.

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