Mortgage of the day, refinancing rate: July 9, 2022
Average mortgage rates have fallen this week, according to Freddie Mac. The average 30-year fixed mortgage rate recently peaked at 5.81%, its highest level since 2008. But in recent weeks, this rate has been on a downward trend.
Rates have risen significantly this year and are now more than two percentage points higher than they were at the start of 2022. High rates combined with high home prices have reduced affordability for many buyers, which has caused some to drop out of the market. This has started to have a cooling effect on the demand for home purchases.
Today’s Mortgage Rates
Today’s Refinance Rates
Use our free mortgage calculator to see how today’s mortgage rates will affect your monthly and long-term 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 plugging in different terms and interest rates, you’ll see how your monthly payment might change.
Are mortgage rates increasing?
Mortgage rates started to recover from historic lows in the second half of 2021 and may continue to rise throughout 2022.
Over the past 12 months, the consumer price index has increased by 8.6%. The
has worked to keep inflation under control and plans to raise 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 higher by Fed rate hikes. As the central bank continues to tighten monetary policy to reduce inflation, mortgage rates are likely to remain high.
What do high rates mean for the housing market?
When mortgage rates rise, homebuyers’ purchasing power declines, as more of their projected housing budget must be spent on interest payments. If rates get high enough, buyers can be shut out of the market altogether, cooling demand and putting downward pressure on home price growth.
However, that doesn’t mean house prices will go down – in fact, they’re expected to rise even more this year, just at a slower pace than what we’ve seen over the past two years.
What is a good mortgage rate?
It can be difficult to know if a lender is offering you a good rate, which is why it’s so important to get pre-approved with several
and compare each offer. Apply for pre-approval from at least two or three lenders.
Your price isn’t the only thing that matters. Be sure to compare both your monthly costs and your upfront costs, including lender fees.
Although mortgage rates are heavily influenced by economic factors beyond your control, there are steps you can take to ensure you get a good rate:
- Consider fixed rates versus adjustable rates. You may be able to get a lower introductory rate with an adjustable rate mortgage, which can be beneficial if you plan to move before the end of the introductory period. But a fixed rate might be better if you’re buying a house forever, because you don’t risk your rate going up later. Examine the rates offered by your lender and weigh your options.
- Look at your finances. The stronger your financial situation, the lower your mortgage rate should be. Look for ways to increase your credit score or reduce your debt ratio, if necessary. Saving for a larger down payment also helps.
- Choose the right lender. Each lender charges different mortgage rates. Choosing the right one for your financial situation will help you get a good rate.