Mortgage rates trended down slightly today and have remained relatively steady this week.
So far this year, average 30-year fixed rates have increased by more than two percentage points. Significantly higher rates have forced many homebuyers to rethink their budgets or even drop out of the market altogether.
“It’s certainly understandable that potential homebuyers are concerned and possibly overwhelmed by current levels of inflation, increased rates, low inventory, high home prices, and macroeconomic uncertainty,” says Steve Kaminski, head of US residential lending at TD bank. “But as always, I strongly recommend anyone entering the market right now to focus on something imperative that they can control – the fundamentals of preparation.”
If you’re thinking about buying a home soon, familiarize yourself with all the mortgage options available to you and use a mortgage calculator to understand how different rate levels impact your buying power.
Mortgage rates today
Mortgage refinance rates today
Use our free mortgage calculator to see how today’s mortgage rates will affect your monthly and long-term payments.
Your estimated monthly payment
- Paying a 25% higher down payment would save you $8,916.08 on interest charges
- Lowering the interest rate by 1% would save you $51,562.03
- Paying an additional $500 each month would reduce the loan length by 146 months
By plugging in different term lengths and interest rates, you’ll see how your monthly payment could change.
Are mortgage rates going up?
Mortgage rates started ticking up from historic lows in the second half of 2021, and may continue to increase throughout 2022. This is in part due to high levels of inflation and policy response to rising prices.
In the last 12 months, the Consumer Price Index rose by 9.1%. The Federal Reserve has been working to get inflation under control, and plans to increase the federal funds target rate four more times this year, following increases in March, May, and June.
Although not directly tied to the federal funds rate, mortgage rates are often pushed up as a result of Fed rate hikes and investor expectations of how those hikes will impact the economy. As elevated inflation remains and the central bank continues to tighten monetary policy, it is likely that mortgage rates will remain at their current levels. However, if rate hikes slow the economy so much that it enters a recession, mortgage rates could trend down.
What do high rates mean for the housing market?
When mortgage rates go up, home shoppers’ buying power decreases, as more of their anticipated housing budget has to go towards paying interest. If rates get high enough, buyers can get priced out of the market completely, which cools demand and puts downward pressure on home price growth.
However, that doesn’t mean home prices will fall — in fact, they’re expected to rise even more this year, just at a slower pace than what we’ve seen in the past couple of years.
Even with fewer buyers in the market, those who can afford to buy will still be competing over historically low inventory. When there are more buyers than there are houses available, home prices go up. So while conditions may loosen up a bit due to high rates, we aren’t likely to see a significant drop in prices.
What is a good mortgage rate?
It can be hard to know if a lender is offering you a good rate, which is why it’s so important to get preapproved with multiple mortgage lenders and compare each offer. Apply for preapproval with at least two or three lenders.
Your rate isn’t the only thing that matters. Be sure to compare both what your monthly costs would be as well as your upfront costs, including any lender fees.
Even though mortgage rates are heavily influenced by economic factors that are out of your control, there are some things you can do to help ensure you get a good rate:
- Consider fixed vs. adjustable rates. You may be able to get a lower introductory rate with an adjustable-rate mortgage, which can be good if you plan to move before the intro period ends. But a fixed rate could be better if you’re buying a forever home because you won’t risk your rate going up later. Look at the rates your lender offers and weigh your options.
- Look at your finances. The stronger your financial situation, the lower your mortgage rate should be. Look for ways to boost your credit score or lower your debt-to-income ratio, if necessary. Saving for a higher down payment also helps.
- Choose the right lender. Each lender charges different mortgage rates. Picking the right one for your financial situation will help you land a good rate.