Today's Mortgage, Refinance Rates: June 23, 2022 | 30-Year Rates Are Well Over 5...
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Today's mortgage and refinance rates: June 23, 2022 | 30-year rates are well over 5%
The average 30-year fixed mortgage rate jumped to 5.78% last week, a significant increase from 5.23% the week prior. According to Freddie Mac, this is the largest one-week rate jump since 1987. Average 15-year fixed and 5/1 adjustable rates also experienced significant increases.
The Federal Reserve met last week and voted to enact a 75 basis point, or 0.75%, increase to the federal funds rate. After the release of last week's Consumer Price Index report, which showed inflation getting worse, markets began pricing in the likelihood that the central bank would vote for a larger than expected rate hike. This pushed mortgage rates up.
"With the Fed announcing a 75 basis point hike, the largest since 1994, we should expect continued volatility over the coming days and weeks, as the market continues to reprice and tries to settle in at these rate levels," says Robert Heck, vice president of mortgage at Morty.
Rates might not continue to spike this drastically, but they will likely stay relatively high in 2022.
Mortgage rates today
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Mortgage refinance rates today
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Use our free mortgage calculator to see how today's mortgage rates will affect your monthly and long-term payments.
- Paying a 25% higher down payment would save you $8,916.08 on interest charges
- Lowering the interest rate by 1% would save you $51,562.03
- Paying an additional $500 each month would reduce the loan length by 146 months
By plugging in different term lengths and interest rates, you'll see how your monthly payment could change.
Are mortgage rates going up?
Mortgage rates started ticking up from historic lows in the second half of 2021, and may continue to increase throughout 2022. This is in part due to high levels of inflation and policy response to rising prices.
In the last 12 months, the Consumer Price Index rose by 8.6%. The Federal Reserve has been working to get inflation under control, and plans to increase the federal funds target rate four more times this year, following increases in March, May, and June.
Though not directly tied to the federal funds rate, mortgage rates are often pushed up as a result of Fed rate hikes. As the central bank continues to tighten monetary policy to lower inflation, it's likely that mortgage rates will remain elevated.
What do high rates mean for the housing market?
When mortgage rates go up, home shoppers' buying power decreases, as more of their anticipated housing budget has to go toward paying interest. If rates get high enough, buyers can get priced out of the market completely, which cools demand and puts downward pressure on home price growth.
However, that doesn't mean home prices will fall — in fact, they're expected to rise even more this year, just at a slower pace than what we've seen in the past couple of years.
Even with fewer buyers in the market, those who can afford to buy will still be competing over historically low inventory. When there are more buyers than there are houses available, home prices go up. So while conditions may loosen up a bit due to high rates, we aren't likely to see a significant drop in prices.
What is a good mortgage rate?
It can be hard to know if a lender is offering you a good rate, which is why it's so important to get preapproved with multiple mortgage lenders and compare each offer. Apply for preapproval with at least two or three lenders.
Your rate isn't the only thing that matters. Be sure to compare both what your monthly costs would be as well as your upfront costs, including any lender fees.
Even though mortgage rates are heavily influenced by economic factors that are out of your control, there are some things you can do to help ensure you get a good rate:
- Consider fixed vs. adjustable rates. You may be able to get a lower introductory rate with an adjustable-rate mortgage, which can be good if you plan to move before the intro period ends. But a fixed rate could be better if you're buying a forever home because you won't risk your rate going up later. Look at the rates your lender offers and weigh your options.
- Look at your finances. The stronger your financial situation, the lower your mortgage rate should be. Look for ways to boost your credit score or lower your debt-to-income ratio, if necessary. Saving for a higher down payment also helps.
- Choose the right lender. Each lender charges different mortgage rates. Picking the right one for your financial situation will help you land a good rate.
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