Average 30-year fixed mortgage rates calmed somewhat and may have reached a peak for how high they’ll go ahead of the next Federal Reserve meeting. But any surprising economic data could still cause some volatility.
Inflation has showed signs of slowing, but it’s still well above the Fed’s target annual rate of 2%. The Fed has indicated that it will continue to act aggressively to fight inflation, which means another 75-basis-point hike to the federal funds rate may be coming later this month.
As the Fed has raised its benchmark rate, mortgage rates have also trended up to levels not seen since 2008. With record high mortgage rates and still-elevated home prices, many would-be homebuyers are struggling with affordability in the current market.
Mortgage rates are likely to remain near their current levels for the remainder of 2022, but may start to trend down in 2023, while home price growth is expected to slow. If you’re waiting for the market to ease before buying a home, you may have an opportunity to do so in the new year.
Use our free mortgage calculator to see how today’s interest rates will affect your monthly payments:
By clicking on “More details,” you’ll also see how much you’ll pay over the entire length of your mortgage, including how much goes toward the principal vs. interest.
Mortgage rates started ticking up from historic lows in the second half of 2021 and have increased significantly so far in 2022. More recently, rates have been relatively volatile.
In the last 12 months, the Consumer Price Index rose by 8.5%. The Federal Reserve has been working to get inflation under control, and plans to increase the federal funds target rate three more times this year, following increases in March, May, June, and July.
Though not directly tied to the federal funds rate, mortgage rates are sometimes pushed up as a result of Fed rate hikes and investor expectations of how those hikes will impact the economy.
Inflation remains elevated, but has started to slow, which is a good sign for mortgage rates and the broader economy.
When mortgage rates go up, home shoppers’ buying power decreases, as more of their anticipated housing budget has to go toward 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.
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:
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Please note: While the offers mentioned above are accurate at the time of publication, they’re subject to change at any time and may have changed, or may no longer be available.
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