Today’s mortgage & refinance rates, August 4th, 2022: Most rates fall

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Mortgage rates were mostly down compared to a week ago, according to data compiled by Bankrate. Rates for 30-year fixed, 15-year fixed and jumbo loans decreased, while rates for adjustable rate mortgages remained flat.

Mortgage rates have been on a wild ride as of late, with the 30-year fixed briefly reaching 6 percent as the Federal Reserve cracks down on inflation. The rate chart could continue to look choppy — the Fed’s rate-raising stance against inflation also could lead to a recession, and that could cause mortgage rates to retreat.

The central bank raised rates again at its July 27 meeting. The one-two punch of consecutive rate increases of three-quarters of a point are likely to cool the economy. “The cumulative effect of this sharp rise in rates has cooled the housing market and caused the economy to start slowing, but hasn’t done much to lower inflation,” says Greg McBride, CFA, Bankrate chief financial analyst.

Today’s mortgage rates for home purchase
Loan term Today’s Rate Last week Change
30-year mortgage rate 5.52% 5.57% -0.05
15-year mortgage rate 4.74% 4.82% -0.08
5/1 ARM mortgage rate 4.18% 4.18% N/C
30-year jumbo mortgage rate 5.52% 5.53% -0.01

Rates accurate as of August 4, 2022.

The rates listed above are averages based on the assumptions shown here. Actual rates listed across the site may vary. This story has been reviewed by in-house editor Bill McGuire. All rate data accurate as of Thursday, August 4th, 2022 at 7:30 a.m.

You can save thousands of dollars over the life of your mortgage by getting multiple offers.

“All too often, some homeowners take the path of least resistance when seeking a mortgage, in part because the process of buying a home can be stressful, complicated and time-consuming,” says Mark Hamrick, Bankrate senior economic analyst. “But when we’re talking about the potential of saving a lot of money, seeking the best deal on a mortgage has an excellent return on investment. Why leave that money on the table when all it takes is a bit more effort to shop around for the best rate, or lowest cost, on a mortgage?”

Mortgage interest rates

30-year mortgage drops, -0.05%

The average rate for a 30-year fixed mortgage is 5.52 percent, down 5 basis points over the last seven days. Last month on the 4th, the average rate on a 30-year fixed mortgage was higher, at 5.67 percent.

At the current average rate, you’ll pay principal and interest of $569.04 for every $100k you borrow.

While the 30-year rate is the most popular mortgage term, as with any financial product, the 30-year mortgage has some downsides, including:

  • More total interest paid. A 30-year term means you’ll pay more overall in interest compared with what you’d pay with a shorter-term loan.
  • Higher mortgage rates. Lenders charge higher interest rates for 30-year mortgages compared to 15-year loans. That’s because they’re taking on the risk of not being repaid for a longer time span.
  • Slower equity growth. The amortization table for a 30-year mortgage reveals a harsh reality: In the early years, almost all of your payments go to interest rather than principal. A 15-year loan brings a higher monthly payment but much faster payoff of the loan amount.
  • Buying more house than you should. Just because you might be able to afford more house with a 30-year loan doesn’t mean you should stretch your budget to the breaking point. Give yourself some breathing room for other financial goals and unexpected expenses. Use Bankrate’s home affordability calculator to determine how much house you can afford.
  • 15-year fixed mortgage rate declines,-0.08%

    The average rate you’ll pay for a 15-year fixed mortgage is 4.74 percent, down 8 basis points over the last seven days.

    Monthly payments on a 15-year fixed mortgage at that rate will cost approximately $517 per $100k borrowed. That may put more pressure on your monthly budget than a 30-year mortgage would, but it comes with some big advantages: You’ll come out several thousand dollars ahead over the life of the loan in total interest paid and build equity much more rapidly.

    5/1 ARM rate stays put

    The average rate on a 5/1 adjustable rate mortgage is 4.18 percent, unchanged over the last 7 days.

    Adjustable-rate mortgages, or ARMs, are mortgage terms that come with a floating interest rate. In other words, the interest rate can change intermittently throughout the life of the loan, unlike fixed-rate mortgages. These types of loans are best for people who expect to sell or refinance before the first or second adjustment. Rates could be substantially higher when the loan first adjusts, and thereafter.

    While borrowers shunned ARMs during the pandemic days of super-low rates, this type of loan has made a comeback as mortgage rates have risen.

    Monthly payments on a 5/1 ARM at 4.18 percent would cost about $482 for each $100,000 borrowed over the initial five years, but could increase by hundreds of dollars afterward, depending on the loan’s terms.

    Jumbo mortgage drops, -0.01%

    The average rate you’ll pay for a jumbo mortgage is 5.52 percent, down 1 basis point over the last seven days. This time a month ago, the average rate was greater than 5.52, at 5.63 percent.

    At today’s average rate, you’ll pay a combined $561.53 per month in principal and interest for every $100k you borrow. That’s lower by $7.51 than it would have been last week.

    Rate review: How mortgage rates have shifted over the past week

    • 30-year fixed mortgage rate: 5.52%, down from 5.57% last week, -0.05
    • 15-year fixed mortgage rate: 4.74%, down from 4.82% last week, -0.08
    • 5/1 ARM mortgage rate: 4.18%, unchanged from last week
    • Jumbo mortgage rate: 5.52%, down from 5.53% last week, -0.01

    Interested in refinancing? See rates for home refinance

    Current 30 year mortgage refinance rate falls, –0.05%

    The average 30-year fixed-refinance rate is 5.50 percent, down 5 basis points compared with a week ago. A month ago, the average rate on a 30-year fixed refinance was higher, at 5.64 percent.

    At the current average rate, you’ll pay $561.53 per month in principal and interest for every $100,000 you borrow. That’s lower by $7.51 than it would have been last week.

    Rate trends: Where are mortgage rates headed?

    Mortgage rates plunged early in the pandemic and scraped record lows — below 3 percent — at the start of 2021. The days of sub-3 percent mortgage interest on the 30-year fixed are behind us, and rates rose past 5 percent in 2022.

    “Low interest rates were the medicine for economic recovery following the financial crisis, but it was a slow recovery so rates never went up very far,” says Greg McBride, CFA, Bankrate chief financial analyst. “The rebound in the economy, and especially inflation, in the late pandemic stages has been very pronounced, and we now have a backdrop of mortgage rates rising at the fastest pace in decades.”

    Comparing mortgage options

    The 30-year fixed mortgage is the most popular loan for homeowners. This type of loan has a number of advantages, including:

    • Lower monthly payment: Compared to a shorter term, such as 15 years, the 30-year mortgage offers lower payments spread over time.
    • Stability: With a 30-year mortgage, you lock in a consistent principal and interest payment. Because of the predictability, you can plan your housing expenses for the long term. Remember: Your monthly housing payment can change if your homeowners insurance and property taxes go up or, less likely, down.
    • Buying power: With lower payments, you can qualify for a larger loan amount and a more expensive home.
    • Flexibility: Lower monthly payments can free up some of your monthly budget for other goals, like saving for emergencies, retirement, college tuition or home repairs and maintenance.
    • Strategic use of debt: Some argue that Americans focus too much on paying down their mortgages rather than adding to their retirement accounts. A 30-year fixed mortgage with a smaller monthly payment can allow you to save more for retirement.

    That said, shorter term loans have gained popularity as rates have been historically low. Although they have higher monthly payments compared to 30-year mortgages, there are some big benefits if you can afford the upfront costs. Shorter-term loans can help you achieve:

    • Greatly reduced interest costs: Because you pay off the loan faster, you’ll be able to pay less interest overall.
    • Lower interest rate: On top of less time for that interest to compound, most lenders price shorter-term mortgages with lower rates.
    • Build equity faster: The faster you pay off your mortgage, the faster you’ll own value in your home outright. That’s especially handy if you want to borrow against your property to fund other spending.
    • Debt-free sooner: A shorter-term mortgage means you’ll own your house free and clear sooner than you would with a longer-term loan.

    What causes mortgage rates to change

    Mortgage rates are influenced by a range of economic factors, from inflation to unemployment numbers. Typically, higher inflation means higher interest rates and vice versa. As inflation rises, the dollar loses value, which in turn drives off investors for mortgage-backed securities, causing the prices to fall and yields to climb. When yields climb, rates get more expensive for borrowers.

    Generally speaking, when the economy is strong, more people buy homes. That drives demand for mortgages. Increased demand for mortgages can cause rates to increase. The opposite is also true; less demand can lead to lower rates.

    Learn more:

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