Mortgage rates have changed dramatically since the start of the year.
The average rate for a 30-year fixed rate has doubled since sitting around 3% this time a year ago. High inflation is a major cause of rising rates, along with the Federal Reserve’s increases to its own interest rate to quell that high inflation.
High mortgage rates have turned the housing market upside down, with a previously hyper-competitive market now cooling significantly. While prices are falling in some areas, that may not make up for the increased costs homebuyers face in the form of significantly higher mortgage rates. Be sure to calculate your monthly payment – and give yourself wiggle room in your budget – to decide if a home is actually affordable to you.
Here are today’s average interest rates and what they mean for borrowers.
A handful of principal mortgage rates all increased today. The amazing growth in borrowing costs for fixed-rate 30-year mortgages is notable, but 15-year fixed rates also inched upward. We also saw an upswing in the average rate of 5/1 adjustable-rate mortgages (ARM).
The average mortgage rates are as follows:
- 30-year mortgage rate: 6.86%
- The average 20-year fixed-rate mortgagecurrently sits at 6.83%
- 15-year mortgage rate: 5.97%
- 10-year fixed mortgage rates are averaging 6.21%
- 5/1 ARM rate: 5.12%
Mortgage Rate Forecast: What Is Driving Mortgage Rate Change?
Inflation has been high this year, with the consumer price index at 8.3% year-over-year in August. That was down from July’s 8.5%, but still higher than expected, and it prompted the Federal Reserve to raise its key interest rate by 0.75 percentage points for the third time in a row this year.
Those factors have both pushed mortgage rates higher this year, from around 3.3% in January to more than 6% at the end of September.
“Inflation is absolutely in the driver’s seat, particularly as it pertains to mortgage rates. Until we get some sustained evidence that inflation is beginning to recede, the upward pressure on mortgage rates will remain,” says Odeta Kushi, deputy chief economist at First American Financial Corporation. By Jason Stauffer