Current Mortgage Rates as of January 2, 2023: Rising Rate Trend
A handful of major mortgage rates are now higher today. Both the average 15-year and 30-year fixed mortgage rates increased. For variable rates, the 5/1 adjustable rate mortgage also ticked.
Mortgage rates have risen fairly steadily since the start of 2022, following a series of interest rate hikes by the Federal Reserve. Interest rates are dynamic and unpredictable – at least on a daily or weekly basis – and they react to a wide variety of economic factors. But the Fed’s actions, designed to dampen the high rate of inflation, are having an unmistakable impact on mortgage rates.
If you’re looking to buy a home, trying to time the market may not work in your favor. If inflation continues to rise and rates continue to rise, this will likely translate into higher interest rates and higher monthly mortgage payments. As such, you may have a better chance of getting a lower mortgage interest rate sooner rather than later. No matter when you decide to shop for a home, it’s always a good idea to research multiple lenders to compare rates and fees to find the best mortgage for your particular situation.
30 Year Fixed Rate Mortgages
The average 30-year fixed mortgage rate is 6.66%, up 10 basis points from a week ago. (One basis point equals 0.01%.) Thirty-year fixed-rate mortgages are the most common loan term. A 30-year fixed rate mortgage will generally have a higher interest rate than a 15-year fixed rate mortgage, but also a lower monthly payment. You won’t be able to pay off your home as quickly and you’ll pay more interest over time, but a 30-year fixed rate mortgage is a good option if you’re looking to minimize your monthly payment.
15-year fixed rate mortgages
The average rate for a 15-year fixed mortgage is 5.98%, up 11 basis points from a week ago. You will definitely have a higher monthly payment with a 15-year fixed mortgage compared to a 30-year fixed mortgage, even if the interest rate and loan amount are the same. But a 15-year loan will usually be the best deal, if you can afford the monthly payments. You will most likely get a lower interest rate and pay less interest in total because you are paying off your mortgage much faster.
5/1 Adjustable Rate Mortgages
A 5/1 ARM has an average rate of 5.50%, an addition of 8 basis points from a week ago. For the first five years, you’ll typically get a lower interest rate with a 5/1 ARM compared to a 30-year fixed mortgage. But changes in the market could cause your interest rate to increase after this period, as stated in the terms of your loan. For this reason, an ARM can be a good option if you plan to sell or refinance your home before the rate changes. But if not, you may end up paying a much higher interest rate if market rates change.
Mortgage Rate Trends
Although mortgage rates were historically low at the start of 2022, they have been rising steadily ever since. The Federal Reserve recently raised interest rates an additional 0.50 percentage points in an effort to curb record inflation. The Fed has raised rates a total of seven times this year, but inflation remains high. Generally, when inflation is low, mortgage rates tend to be lower. When inflation is high, rates tend to be higher.
Although the Fed does not set mortgage rates directly, central bank policy actions influence how much you pay to fund your home loan. If you’re looking to buy a home, keep in mind that the Fed has signaled that it will continue to raise rates through 2023, which would likely continue to drive mortgage rates higher.
We use information collected by Bankrate, which is owned by the same parent company as CNET, to track these daily rates. This table summarizes the average rates offered by lenders nationwide:
Today’s Mortgage Interest Rates
Rates exact as of January 2, 2023.
How to Find Custom Mortgage Rates
To find a personalized mortgage rate, talk to your local mortgage broker or use an online mortgage service. Be sure to consider your current financial situation and goals when looking for a mortgage.
A range of factors, including your down payment, credit score, loan-to-value ratio, and debt-to-income ratio, will all affect your mortgage rate. Having a higher credit score, larger down payment, low DTI, low LTV, or any combination of these factors can help you get a lower interest rate.
The interest rate isn’t the only factor that affects the cost of your home. Also be sure to consider other costs such as fees, closing costs, taxes and discount points. Be sure to talk to several different lenders — for example, local and national banks, credit unions, and online lenders — and a comparison store to find the best mortgage for you.
What is a good loan term?
When choosing a mortgage, you need to consider the length of the loan or the payment schedule. The most commonly offered mortgage terms are 15 and 30 years, although you can also find 10, 20 and 40 year mortgages. Mortgages are further divided into fixed rate and variable rate mortgages. Interest rates on a fixed rate mortgage are fixed for the term of the loan. Unlike a fixed rate mortgage, an adjustable rate mortgage’s interest rates are only the same for a certain amount of time (most often five, seven or 10 years). After that, the rate fluctuates every year depending on the current interest rate in the market.
One factor to consider when choosing between a fixed rate and variable rate mortgage is how long you plan to live in your home. Fixed rate mortgages may be more suitable for people who plan to live in a home for a while. While variable rate mortgages may offer lower interest rates initially, fixed rate mortgages are more stable over time. However, you might get a better deal with an adjustable rate mortgage if you only plan to keep your home for a few years. The best loan term is entirely up to your own circumstances and goals, so be sure to consider what’s important to you when choosing a mortgage.