Mortgage of the day, refinancing rate: July 22, 2022

Average fixed mortgage rates rose for the second straight week. Rates have been volatile in recent weeks, peaking in late June and then falling rapidly in July. The average 30-year fixed mortgage rate is now 5.54%.

Compared to the same period last year, the average 30-year fixed mortgage rate increased by more than two percentage points. As rates have risen this year, a growing number of hopeful home buyers have been forced out of the market due to a lack of affordability.

“The combination of higher rates, higher home prices and the higher cost of basic necessities (food, gasoline, etc.) has caused buyer hesitation and put pressure on recent purchase requests mortgage lending, as seen by the latest home purchase index falling to a 22-year low,” says Steve Kaminski, head of U.S. residential lending at TD Bank. “Higher mortgage rates had already started halting refinancing activity earlier this year, also now at a 22-year low.”

Today’s Mortgage Rates

Today’s Refinance Rates

mortgage calculator

Use our free mortgage calculator to see how today’s interest rates will affect your monthly payments:

mortgage calculator

$1,161
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 clicking on “More details”, you will also see the amount you will pay over the life of your mortgage, including the amount of principal versus interest.

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.

In May, the consumer price index rose 9.1% year over year. The Federal Reserve has been struggling to keep inflation in check and plans to raise the target federal funds 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 due to Fed rate hikes and investor expectations of their impact on the economy. 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 from several mortgage lenders 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.

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