Mortgage rates spiked this week ahead of yesterday’s rate hike announcement from the
, with 30-year fixed mortgage rates nearing 6%. Rates remain elevated today.
On Wednesday, the Fed said it would raise the federal funds rate by 75 basis points, or 0.75%. The central bank had initially signaled that it was planning to enact a 50 basis point increase, but after last week’s Consumer Price Index report showed that inflation was accelerating again, it ultimately decided it needed to move more aggressively to combat price increases.
Mortgage rates aren’t directly influenced by the federal funds rate, but they often trend up or down in anticipation of Fed policy decisions and how those decisions might impact the broader economy. As inflation has grown and the Fed has tightened monetary policy, mortgage rates have risen this year and are now 2% higher than they were at the beginning of 2022. They’ve slowed their ascent in the past couple of months, but as prices continue to grow out of control, they may rise further this year.
Today’s mortgage rates
Today’s refinance rates
Use our free mortgage calculator to see how today’s interest rates will affect your monthly 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 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.
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.
In May, the Consumer Price Index rose by 8.6% year-over-year. 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.
Though not directly tied to the federal funds rate, mortgage rates are often pushed up as a result of Fed rate hikes. As the central bank continues to tighten monetary policy to lower inflation, it’s likely that mortgage rates will remain elevated.
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 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.
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
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.