Current Mortgage Interest Rates as of December 20, 2022: Rates Declining

A few notable mortgage rates have dropped significantly over the past seven days. Average interest rates on both 15-year fixed and 30-year fixed mortgages were lowered. For variable rates, the 5/1 adjustable rate mortgage has also slipped down.

Mortgage rates have risen fairly steadily since the start of 2022, following a series of rate hikes by the Federal Reserve. Interest rates are dynamic and unpredictable – at least on a daily or weekly basis – and respond to a wide range of economic factors. But the Fed’s actions, designed to reduce the high rate of inflation, have an undoubted impact on mortgage rates.

If you’re looking to buy a home, trying to time the market may not play in your favor. If inflation continues to rise and rates continue to rise, this will likely translate into higher interest rates and higher monthly mortgage payments. Therefore, you may have a better chance of locking in a lower mortgage interest rate sooner rather than later. No matter when you decide to shop for a home, it’s always a good idea to find multiple lenders to compare rates and fees to find the best mortgage for your situation.

30-year fixed rate mortgage

The average rate you would pay for a 30-year, fixed-rate mortgage is 6.47%, a 16 basis point reduction from a week ago. (One basis point equals 0.01%.) The most common loan term is a 30-year fixed mortgage. A 30-year fixed-rate mortgage will typically have a higher interest rate than a 15-year fixed-rate mortgage, but will also have a lower monthly payment. While you’ll pay more interest over time — paying off your loan over a longer period of time — a 30-year fixed mortgage may be a good option if you’re looking for a lower monthly payment.

15-year fixed rate mortgage

The average rate for a 15-year fixed mortgage was 5.82%, down 19 basis points from the same time last week. A 15-year fixed mortgage with the same loan value and interest rate will have a higher monthly payment than a 30-year fixed mortgage. However, if you can afford the monthly payments, a 15-year loan has many advantages. These often include being able to charge a lower interest rate, pay off your mortgage sooner, and pay less total interest over the long term.

5/1 adjustable rate mortgage

5/1 ARM averaged 5.46%, down 4 basis points from last week. With an adjustable-rate mortgage, you typically get a lower interest rate for the first five years than with a fixed-rate 30-year mortgage. However, depending on the terms of your loan and how the rate changes with the market rate, you may be able to pay more after this time. So if you are planning to sell or refinance your home before the rate changes, an ARM may be a good option. But if that’s not the case, you could face a much higher interest rate if market rates change.

mortgage rate trends

While mortgage rates were historically low at the beginning of 2022, they have been rising steadily since then. In an effort to rein in record inflation, the Federal Reserve recently increased interest rates another 0.50 percentage point. The Fed has raised rates a total of seven times this year, but inflation is still high. As a general rule, when inflation is low, mortgage rates tend to be lower. When inflation is high, rates tend to be higher.

While the Fed doesn’t directly set mortgage rates, the central bank’s policy actions affect how much you pay to finance your home loan. If you’re looking to buy a home, keep in mind that the Fed has signaled that it will continue to raise rates through 2023, which will likely continue to raise mortgage rates.

We use rates collected by Bankrate, which is owned by the same parent company as CNET, to track rate changes over time. This table summarizes the average rates offered by lenders across the country:

Average mortgage interest rates

Product Ratio Last week Change
30 years fixed 6.47% 6.63% -0.16
15 years fixed 5.82% 6.01% -0.19
30-year major mortgage rate 6.45% 6.63% -0.18
30-year mortgage refinancing rate 6.54% 6.67% -0.13

Prices as of December 20, 2022.

How to find the best mortgage rates?

When you’re ready to apply for a loan, you can contact a local mortgage broker or search online. To find the best home mortgage, you need to consider your goals and overall financial situation.

Specific interest rates will vary based on factors such as credit score, down payment, debt-to-income ratio, and loan-to-value ratio. Having a higher credit score, a higher down payment, a lower DTI, a lower LTV, or any combination of these factors can help you get a lower interest rate.

Besides the mortgage interest rate, other costs such as closing costs, fees, discount points and taxes can affect the cost of your home. To get the mortgage loan that’s best for you, be sure to compare with multiple lenders, such as local and national banks, as well as credit unions and online lenders.

What is the best loan term?

When choosing a mortgage, remember to consider the loan term or payment schedule. The most common loan terms are 15 years and 30 years, but 10-, 20-, and 40-year mortgages are also available. Another important distinction is between fixed rate and adjustable rate mortgages. In fixed rate mortgages, interest rates are set over the life of the loan. Unlike a fixed-rate mortgage, the interest rates on an adjustable-rate mortgage are fixed only for a certain period of time (usually five, seven, or 10 years). After that, the rate is adjusted annually based on the market rate.

An important factor to consider when deciding between a fixed-rate and adjustable-rate mortgage is how long you plan to live in your home. For those planning to live long-term in a new home, a flat rate mortgage may be a better option. Fixed-rate mortgages are more stable over the long term, while adjustable-rate mortgages may have lower interest rates upfront. However, if you only intend to keep your home for a few years, you may be able to get a better deal with an adjustable rate mortgage. As a general rule, there is no best loan term; it all depends on your goals and current financial situation. It’s important to do your research and know your own priorities when choosing a mortgage.

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