Current mortgage and refinance rates for January 4th, 2022: Majority of rates rise

Mortgage rates were mostly up compared to a week ago, according to data compiled by Bankrate. Rates for 30-year fixed, 15-year fixed and jumbo loans ticked up, while 5/1 ARM rates remained flat.

Rates as of January 4, 2022.

The rates listed above are Bankrate’s overnight average rates and are based on the assumptions here. Actual rates displayed across the site may vary. This story has been reviewed by Bill McGuire. All rate data accurate as of Tuesday, January 4th, 2022 at 7:30am.

You can save thousands of dollars over the life of your mortgage by getting multiple offers. “It is so important to shop around,” says Greg McBride, CFA, Bankrate chief financial analyst. “Not everyone offers the same price, and some lenders may have motivation to be very competitive on price.”

Mortgage rates

Current 30 year mortgage rate advances, +0.06%

The average rate for the benchmark 30-year fixed mortgage is 3.30 percent, up 6 basis points from a week ago. This time a month ago, the average rate on a 30-year fixed mortgage was lower, at 3.18 percent.

At the current average rate, you’ll pay principal and interest of $434.66 for every $100k you borrow. That’s an additional $6.56 per $100,000 compared to last week.

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. Stretching out repayment to a 30-year term means you pay more overall in interest than you would with a shorter-term loan.
  • Higher mortgage rates. Compared to 15-year loans, lenders charge higher interest rates for 30-year loans 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 mortgage moves upward,+0.06%

    The average 15-year fixed-mortgage rate is 2.57 percent, up 6 basis points over the last week.

    Monthly payments on a 15-year fixed mortgage at that rate will cost around $396 per $100k borrowed. That may squeeze 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 quickly.

    5/1 ARM goes unchanged

    The average rate on a 5/1 ARM is 2.74 percent, unchanged since the same time last week.

    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 those who expect to refinance or sell before the first or second adjustment. Rates could be materially higher when the loan first adjusts, and thereafter.

    Monthly payments on a 5/1 ARM at 2.74 percent would cost about $402 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 rate goes up, +0.07%

    The average jumbo mortgage rate today is 3.31 percent, up 7 basis points since the same time last week. This time a month ago, the average rate was below that, at 3.17 percent.

    At today’s average jumbo rate, you’ll pay $434.66 per month in principal and interest for every $100,000 you borrow.

    Summary: How mortgage interest rates have changed

    • 30-year fixed mortgage rate: 3.30%, up from 3.24% last week, +0.06
    • 15-year fixed mortgage rate: 2.57%, up from 2.51% last week, +0.06
    • 5/1 ARM mortgage rate: 2.74%, unchanged from last week
    • Jumbo mortgage rate: 3.31%, up from 3.24% last week, +0.07

    Refinance rates

    30-year mortgage refinance rises, +0.08%

    The average 30-year fixed-refinance rate is 3.30 percent, up 8 basis points over the last seven days. A month ago, the average rate on a 30-year fixed refinance was lower, at 3.16 percent.

    At the current average rate, you’ll pay $434.66 per month in principal and interest for every $100,000 you borrow. That’s an increase of $6.56 over what you would have paid last week.

    What causes mortgage rates to change

    A number of economic factors influence mortgage rates. Among them are inflation and unemployment. Higher inflation typically leads to higher mortgage rates. The opposite is also true; when inflation is low, mortgage rates typically are as well. As inflation increases, the dollar loses value. That drives investors away from mortgage-backed securities (MBS), which causes the prices to decrease and yields to increase. When yields move higher, rates become 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.

    What comes next:

    Featured lenders for today, January 4, 2022

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