Rising mortgage rates could make home loans more expensive, but the news isn't all bad.
In 2022, mortgage rates have been steadily climbing. Of course, it's never good for borrowers when interest rates go up. But there may be a silver lining that qualified borrowers should consider.
Here are the average mortgage rates for April 19 so you can get an idea of where rates stand today:
|Mortgage Type||Today's Interest Rate|
|30-year fixed mortgage||5.193%|
|20-year fixed mortgage||5.042%|
|15-year fixed mortgage||4.354%|
30-year mortgage rates
The average 30-year mortgage rate today is 5.193%. Rates were below 3.00% last year, so this is a significant increase -- although rates still remain relatively affordable by historical standards.
20-year mortgage rates
The average 20-year mortgage rate today is 5.042%. Although this loan has a lower rate than the 30-year mortgage, you can expect higher monthly payments due to the fact you're making 120 fewer of them.
15-year mortgage rates
The average 15-year mortgage rate today is 4.354%. Although this rate is much more competitive than the longer-term loans, it's still up considerably this year. And monthly payments will be high because you are paying off your loan so fast.
The average 5/1 ARM rate is 3.991%. ARM stands for adjustable-rate mortgage, and ARMs are risky loans because your rate can begin changing after five years. If rates are higher at that time, you will pay more each month and over time for your home loan.
Are rising mortgage rates all bad news?
Rising mortgage rates can make monthly payments higher and can increase total borrowing costs over time. It can also be more difficult to qualify for a mortgage as rates rise, since lenders consider housing payments relative to income when approving loans.
The one bright spot is that the rising rates could reduce demand for houses. With reduced demand, the hot housing market could cool and buyers could find themselves no longer facing bidding wars which were common throughout 2021.
Qualified borrowers can also still qualify for competitive rates that remain low by historical standards even if they are up from last year's record lows. It's a good idea to get quotes from several of the best mortgage lenders to try to find the most affordable home loan for your needs.
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