November 24, 2024

Mortgage rates increased again this week. The average 30-year fixed rate, now at 5.89%, is closer to 6% than it’s been in over a decade, according to Freddie Mac. Rates previously peaked in June and had been trending down, but the likelihood of more aggressive Federal Reserve policy has pushed them back up.
 
The Fed has been raising the federal funds rate to tame inflation. In July, prices rose at an annual rate of 8.5%, which was a slower pace than the previous month, but still well above the central bank’s target of 2%.
The Fed wants to avoid consumers starting to view such a high level of inflation as normal. During a Q&A at the Cato Institute’s 40th Annual Monetary Conference on Thursday, Fed Chair Jerome Powell said this is what made it so hard to bring down the high inflation seen throughout the 1970s and into the 1980s, which only slowed when then-Chair Paul Volcker aggressively raised rates and pushed the economy into two recessions.
“It is very much our view, and my view, that we need to act now, forthrightly, strongly, as we have been doing and we need to keep at it until the job is done to avoid that,” Powell said. “We think we can avoid the very high social costs that Paul Volcker and the Fed had to bring into play in order to get inflation back down and set us up for a long period of price stability.”
Because the Fed has indicated it will continue acting aggressively to bring inflation down, it’s likely mortgage rates will remain elevated throughout 2022. But if we enter a recession, rates could start to trend down.
Use our free mortgage calculator to see how today’s mortgage rates would impact your monthly payments. By plugging in different rates and term lengths, you’ll also understand how much you’ll pay over the entire length of your mortgage.
Click “More details” for tips on how to save money on your mortgage in the long run.
The current average 30-year fixed mortgage rate is 5.89%, according to Freddie Mac. This is an increase from last week, when it was at 5.66%.
The 30-year fixed-rate mortgage is the most common type of home loan. 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 lengthy 30-year term allows you to spread out your payments over a long period of time, meaning you can keep your monthly payments lower and more manageable. The trade-off is that you’ll have a higher rate than you would with shorter terms or adjustable rates. 
The average 15-year fixed mortgage rate is 5.16%, an increase from the prior week, according to Freddie Mac data. This is the first time this rate has surpassed 5% since 2009.
If you want 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 a good fit for you. Because 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’ll have a higher monthly payment than you would with a longer term.
The average 5/1 adjustable mortgage rate is 4.64%, an increase from the previous week.
Adjustable rate mortgages can look very attractive to borrowers when rates are high, because the rates on these mortgages are typically lower than fixed mortgage rates. A 5/1 ARM is a 30-year mortgage. For the first five years, you’ll have a fixed rate. After that, your rate will adjust once per year. If rates are higher when your rate adjusts, you’ll have a higher monthly payment than what you started with.
If you’re considering an ARM, make sure you understand how much your rate could go up each time it adjusts and how much it could ultimately increase over the life of the loan.
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. 
Some mortgage lenders let you customize your mortgage rate on their websites by entering your down payment amount, zip code, and credit score. The resulting rate isn’t set in stone, but it can give you an idea of what you’ll pay.
If you’re ready to start shopping for homes, you may apply for preapproval with a lender. The lender does a hard credit pull and looks at the details of your finances to lock in a mortgage rate.

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