Mortgage of the day, refinancing rate: October 14, 2022

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The average 30-year fixed mortgage rate rose to 6.92% this week, according to Freddie Mac. This is the highest rate since 2002. Average 15-year fixed rates also exceeded 6% for the first time in 14 years.

On Thursday, the Bureau of Labor Statistics released its Consumer Price Index report for September. Prices rose 8.2% year-over-year last month, a very slight slowdown from August’s 8.3% rate, but still higher than expected.

This still-hot CPI report, combined with last week’s strong jobs report, virtually guarantees that the Federal Reserve will adopt another additional hike in the fed funds rate at its November meeting.

Rising inflation and Fed hikes have helped push mortgage rates up more than three percentage points this year. With the latest economic data pointing to further Fed rate hikes, mortgage rates are expected to remain elevated for the remainder of this year and will only begin to decline later in 2023.

The good news is that markets have already priced in expectations for further increases, so while mortgage rates aren’t expected to fall, they may not rise much further.

Today’s Mortgage Rates

Type of mortgage Average rate today
This information was provided by Zillow. See more mortgage rates on Zillow

Today’s Refinance Rates

Type of mortgage Average rate today
This information was provided by Zillow. See more mortgage rates on Zillow

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 have risen significantly so far in 2022.

Over the past 12 months, the consumer price index has increased by 8.2%. The Federal Reserve has been struggling to keep inflation in check and is expected to raise the target federal funds rate two more times this year, following increases at its past five meetings.

Although not directly tied to the fed funds rate, mortgage rates are sometimes pushed higher due to Fed rate hikes and investors’ expectations of the impact of those hikes on the economy. .

Inflation remains high, but has started to slow, which is a good sign for mortgage rates and the economy in general.

What do high rates mean for the housing market?

When mortgage rates rise, the purchasing power of homebuyers decreases, 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.

Home prices have continued to rise this year, but at a slower pace than what we have 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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