Today’s mortgage, refinancing rates: July 31, 2022

Mortgage rates have fallen in recent days as fears of a looming recession have grown.

The Federal Reserve announced last week that it was raising the federal funds rate by 75 basis points, which investors were largely expecting. The Fed raised this rate to try to lower inflation, which hit a 41-year high in June.

As inflation rose, mortgage rates also increased, which tempered demand for home purchases. The 30-year average fixed mortgage rate is now 2.5 percentage points higher than it was a year ago.

“As we have seen in recent months, the housing market remains for the most part healthy and demand remains at current rate levels, even as things have cooled down,” said Robert Heck, Morty’s vice president of mortgages. “When we look at the fundamentals, things remain different from how they were during the last housing crash and current market indicators do not predict that interest rate levels reach a level that would send mortgage benchmarks above 7%.” .

Current mortgage rates

Current refinancing rates

Mortgage calculator

Use our free mortgage calculator to see how today’s mortgage rates will affect your monthly payments. By linking different rates and terms, you will also understand how much you will pay for the entire term of your mortgage.

Mortgage calculator

Your estimated monthly payment

  • Pay a 25% a higher down payment would save you $ 8,916.08 on interest expense
  • Lower the interest rate by 1% would save you $ 51,562.03
  • By paying a supplement $ 500 each month would reduce the loan term by 146 months

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

Fixed mortgage rates at 30 years

The current 30-year average fixed mortgage rate is 5.3%, according to Freddie Mac. That’s a drop from last week, when it was 5.54%.

The 30-year fixed rate mortgage is the most common type of home loan. With this type of mortgage, you will pay back what you have borrowed in 30 years and your interest rate will not change over the life of the loan.

The 30-year long term allows you to spread your payments over a long period of time, which means you can keep your monthly payments lower and more manageable. The trade-off is that you will get a higher rate than you would with shorter terms or adjustable rates.

Fixed 15-year mortgage rates

The average 15-year fixed mortgage rate is 4.58%, a decrease from the previous week, according to data from Freddie Mac.

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 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 will have a higher monthly payment than you would have with a longer term.

5/1 Adjustable Mortgage Rates

The average adjustable mortgage rate of 5/1 is 4.29%, down from the previous week.

Adjustable rate mortgages can seem 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 will have a flat rate. After that, your rate will be changed once a year. If the rates are higher when your rate is changed, you will have a higher monthly rate than what you started with.

If you are considering an ARM, make sure you understand how much your rate might increase each time it adjusts and how much it might eventually rise over the life of the loan.

Are Mortgage Rates Going Up?

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

Over the past 12 months, the consumer price index has grown by 9.1%. The Federal Reserve has been working to keep inflation in check and expects to raise the federal funds target rate three more times this year, following increases in March, May, June and July.

While not directly tied to the federal funds rate, mortgage rates are often pushed up due to Fed rate hikes and investor expectations of how those hikes will impact the economy. As inflation remains high and the central bank continues to tighten monetary policy, mortgage rates are likely to remain at current levels. However, if rate hikes slow the economy so much that it enters a recession, mortgage rates could trend down.

How do I find personalized mortgage rates?

Some mortgage lenders allow you to customize the mortgage rate on their websites by entering the down payment amount, zip code, and credit score. The resulting rate isn’t set in stone, but it can give you an idea of ​​how much you’ll pay.

If you’re ready to start buying homes, you can request pre-approval from a lender. The lender takes a hard credit drawdown and looks at the details of your finances to lock in a mortgage rate.

How Do I Compare Mortgage Rates Between Lenders?

It is possible to apply for pre-qualification with multiple credit institutions. A lender takes a general look at your finances and gives you an estimate of the rate you will pay.

If you are further along in the home buying process, you have the option to apply for pre-approval from several lenders, not just one company. By receiving letters from more than one lender, you can compare personalized rates.

Applying for pre-approval requires hard credit. Try to apply with multiple lenders within a few weeks, because concentrating all your hard credits in the same amount of time will hurt your credit score less.

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