Today’s mortgage & refinance rates, March 4th, 2022 – Most rates fall

Mortgage interest rates were mostly down compared to a week ago, according to data compiled by Bankrate. Rates for 30-year fixed, 5/1 ARMs and jumbo loans declined, while rates for 15-year fixed mortgages rose.

Rates as of March 4, 2022.

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

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 declines, -0.04%

The average rate you’ll pay for a 30-year fixed mortgage is 4.21 percent, down 4 basis points over the last seven days. A month ago, the average rate on a 30-year fixed mortgage was lower, at 3.84 percent.

At the current average rate, you’ll pay $489.02 per month in principal and interest 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 does have some negatives, 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 a more expensive 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 trends upward,+0.03%

    The average rate for the benchmark 15-year fixed mortgage is 3.50 percent, up 3 basis points since the same time last week.

    Monthly payments on a 15-year fixed mortgage at that rate will cost roughly $448 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 faster.

    5/1 ARM eases, -0.01%

    The average rate on a 5/1 ARM is 2.92 percent, down 1 basis point over the last 7 days.

    Adjustable-rate mortgages, or ARMs, are mortgage loans 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 loans. These types of loans are best for those who expect to sell or refinance before the first or second adjustment. Rates could be substantially higher when the loan first adjusts, and thereafter.

    Monthly payments on a 5/1 ARM at 2.92 percent would cost about $415 for each $100,000 borrowed over the initial five years, but could climb hundreds of dollars higher afterward, depending on the loan’s terms.

    Jumbo mortgage interest rate falls, -0.03%

    The average jumbo mortgage rate is 4.22 percent, down 3 basis points over the last week. A month ago, the average rate on a jumbo mortgage was lesser, at 3.84 percent.

    At today’s average rate, you’ll pay principal and interest of $489.02 for every $100,000 you borrow.

    Rate review: How interest rates have changed this week

    • 30-year fixed mortgage rate: 4.21%, down from 4.25% last week, -0.04
    • 15-year fixed mortgage rate: 3.50%, up from 3.47% last week, +0.03
    • 5/1 ARM mortgage rate: 2.92%, down from 2.93% last week, -0.01
    • Jumbo mortgage rate: 4.22%, down from 4.25% last week, -0.03

    Interested in refinancing? See mortgage refinance rates

    Current 30 year mortgage refinance rate moves lower, –0.03%

    The average 30-year fixed-refinance rate is 4.18 percent, down 3 basis points since the same time last week. A month ago, the average rate on a 30-year fixed refinance was lower, at 3.87 percent.

    At the current average rate, you’ll pay $482.04 per month in principal and interest for every $100,000 you borrow. Compared with last week, that’s $6.98 lower.

    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 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 loan for homeowners. This mortgage has a number of advantages. Among them:

    • 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.

    Why mortgage rates 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.

    A strong economy usually means more people buying homes, which drives demand for mortgages. This increased demand can push rates higher. The opposite is also true; less demand can trigger a drop in rates.

    Keep reading:

    Featured lenders for March 4, 2022

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