Current national mortgage and refinance rates, February 7, 2022 – Rates rise

Mortgage rates jumped for all types of loans compared to a week ago, according to data compiled by Bankrate. Rates for 30-year fixed, 15-year fixed, 5/1 ARMs and jumbo loans jumped.

Rates as of February 7, 2022.

The rates listed here are Bankrate’s overnight average rates and are based on the assumptions here. Actual rates available across the site may vary. This story has been reviewed by Bill McGuire. All rate data accurate as of Monday, February 7th, 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 interest rates

30-year fixed-rate mortgage moves upward, +0.21%

The average rate you’ll pay for a 30-year fixed mortgage is 3.95 percent, an increase of 21 basis points over the last seven days. This time a month ago, the average rate on a 30-year fixed mortgage was lower, at 3.44 percent.

At the current average rate, you’ll pay principal and interest of $468.24 for every $100,000 you borrow. That’s an additional $6.83 per $100,000 compared to last week.

15-year fixed mortgage rate advances,+0.14%

The average rate you’ll pay for a 15-year fixed mortgage is 3.31 percent, up 14 basis points since the same time last week.

Monthly payments on a 15-year fixed mortgage at that rate will cost roughly $435 per $100k borrowed. Yes, that payment is much bigger than it would be on a 30-year mortgage, 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 moves up, +0.03%

The average rate on a 5/1 adjustable rate mortgageis 2.85 percent, ticking up 3 basis points from a week ago.

Adjustable-rate mortgages, or ARMs, are mortgage loans that come with a floating interest rate. To put it another way, the interest rate can change from time to time throughout the life of the loan, unlike fixed-rate mortgages. These loan types are best for those who expect to refinance or sell before the first or second adjustment. Rates could be much higher when the loan first adjusts, and thereafter.

Monthly payments on a 5/1 ARM at 2.85 percent would cost about $409 for each $100,000 borrowed over the initial five years, but could ratchet higher by hundreds of dollars afterward, depending on the loan’s terms.

Jumbo mortgage interest rate moves up, +0.23%

Today’s average rate for jumbo mortgages is 3.97 percent, an increase of 23 basis points since the same time last week. A month ago, jumbo mortgages’ average rate was lower, at 3.46 percent.

At today’s average rate, you’ll pay $475.11 per month in principal and interest for every $100,000 you borrow. Compared to last week, that’s $13.70 higher.

Rate review: How mortgage rates have changed

  • 30-year fixed mortgage rate: 3.95%, up from 3.74% last week, +0.21
  • 15-year fixed mortgage rate: 3.31%, up from 3.17% last week, +0.14
  • 5/1 ARM mortgage rate: 2.85%, up from 2.82% last week, +0.03
  • Jumbo mortgage rate: 3.97%, up from 3.74% last week, +0.23

Mortgage refinance rates

30-year fixed-rate refinance rises, +0.27%

The average 30-year fixed-refinance rate is 3.99 percent, up 27 basis points over the last week. A month ago, the average rate on a 30-year fixed refinance was lower, at 3.45 percent.

At the current average rate, you’ll pay $475.11 per month in principal and interest for every $100,000 you borrow. That’s an increase of $13.70 over what you would have paid last week.

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 new year, however, has been characterized by rising rates. The days of sub-3 percent mortgage interest on the 30-year fixed are behind us, and many experts think the average rate on this loan will be 3.5 to 4 percent by the end of 2022. That’s still great by historical standards though. The ultra-low rates of 2020 and 2021 were an anomaly, but even 4 percent is a deal in the scheme of things.

“Mortgage rates continue to surge, as they have since the beginning of the year, as the outlook takes shape for Fed rate hikes that are sooner and faster than previously expected,” McBride says. “Mortgage rates are still well below 4 percent but in an environment of already sky-high home prices, more would-be homebuyers are priced out with each move higher in mortgage rates.”

Comparing mortgage options

The 30-year fixed-rate mortgage is the most popular option for homeowners, and 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.

How do mortgage rates affect homebuyers?

In a housing boom, low mortgage rates can present pros and cons for borrowers. One pro: Low rates give borrowers more buying power. A $300,000 loan at 4 percent equates to a monthly payment of $1,432. If rates fall to 3 percent, the payment plunges to $1,265.

However, that sort of decline also can help push up home prices — and values indeed have jumped in recent months.

Here’s one way to see the offsetting effects of soaring home prices and plunging mortgage rates. Say you decided not to buy a $300,000 home a year ago, when the 30-year mortgage rate was at about 3.75 percent. Your down payment at 20 percent would have been $60,000, and your monthly payment would have been $1,111.

Today, the price of the same home has jumped to $335,000, but you can land a 30-year loan at 3 percent. As a result, your monthly payment rises only slightly, to $1,130. However, you’ll have to come up with an extra $7,000 to make a 20 percent down payment.

Keep reading:

Featured lenders for February 7, 2022

Source link

Leave a Reply

Your email address will not be published. Required fields are marked *