Mortgage of the day, refinancing rate: June 3, 2022
The average 30-year fixed rate fell for the third week in a row, according to Freddie Mac, and now stands at 5.09%. For much of 2022, rates have been skyrocketing – but now appear to be stabilizing somewhat and have held steady for the past few days.
Whether this current trend holds will depend on how inflation develops and how
responds to rising prices. The central bank began raising the federal funds rate in March in an effort to curb inflation. It is expected to continue on this path with rate hikes of 0.50% at its June and July meetings. Although not directly related to mortgage rates, increases in the federal funds rate often cause mortgage rates to rise.
“If inflation spirals out of control and prompts the Fed to take even more aggressive action, rates could reach a level that could send demand and affordability into a steeper downward spiral than the decline we are seeing now,” says Robert Heck. , vice president of mortgages at Morty. “That said, current market indicators do not expect interest rate levels over the next ten years to reach a level that would push mortgage benchmarks above 7%. This, and other indicators of the market, suggest that we will settle at these rate levels and adjust to these rates as a new normal.”
Today’s Mortgage Rates
Today’s Refinance Rates
Use our free mortgage calculator to see how today’s mortgage rates will affect your monthly and long-term payments.
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 plugging in different terms and interest rates, you’ll see how your monthly payment might change.
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.
Over the past 12 months, the consumer price index has increased by 8.3%. The Federal Reserve has tried to control inflation. It plans to raise the target federal funds rate five more times this year, following increases in March and May.
Although not directly tied to the federal funds rate, mortgage rates are often pushed higher by Fed rate hikes. 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 are going to fall – in fact, they’re expected to rise even more this year, just at a slower pace than what we’ve seen recently.
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 with several
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.