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Here are today's mortgage rates as of January 4, 2023: rates are higher

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Some major mortgage rates have increased over the past seven days. Both the average 15-year and 30-year fixed mortgage rates increased. For variable rates, the 5/1 adjustable rate mortgage also increased.

Mortgage rates rose dramatically in 2022 as the Federal Reserve raised interest rates several times throughout the year. 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 actions of the Fed, designed to dampen the high rate of inflation, had an unmistakable impact on mortgage rates.

The outlook for 2023 remains uncertain. Although higher rates are likely to remain, the biggest increases may be behind us. That said, trying to time the market is tricky. If inflation persists, further interest rate hikes could follow. As such, you may have better luck locking in a lower mortgage interest rate now instead of waiting; after all, you can always refinance 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 6.60%, up 3 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 smaller monthly payment than a 15 year mortgage, but generally a higher interest rate. Although you’ll pay more interest over time – you’re paying off your loan over a longer period – if you’re looking for a lower monthly payment, a 30-year fixed mortgage may be a good option.

15-year fixed rate mortgages

The average rate for a 15-year fixed mortgage is 5.97%, an increase of 4 basis points from seven days ago. Compared to a 30-year fixed mortgage, a 15-year fixed mortgage with the same loan value and interest rate will have a higher monthly payment. But a 15-year loan will generally be the best deal, if you can afford the monthly payments. You will generally 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 5.51%, an increase of 6 basis points from seven days ago. For the first five years, you’ll typically get a lower interest rate with a 5/1 variable rate mortgage compared to a 30-year fixed mortgage. But since the rate varies with the market rate, you might end up paying more after that time, as described in your loan terms. If you plan to sell or refinance your home before the rate changes, an adjustable rate mortgage may be right for you. But if not, you may end up paying a much higher interest rate if market rates change.

Mortgage Rate Trends

Mortgage rates were historically low at the start of 2022, but rose steadily throughout the year. The Federal Reserve raised interest rates seven times in an attempt to curb record inflation. 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 in 2023, and those increases could drive mortgage rates even 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:

Current Average Mortgage Interest Rates

Type of loan Interest rate A week ago Change
30-year fixed rate 6.60% 6.57% +0.03
Fixed rate over 15 years 5.97% 5.93% +0.04
30-year jumbo mortgage rate 6.55% 6.55% CN
30-year mortgage refinance rate 6.66% 6.69% -0.03

Rates as of January 4, 2023.

How to Shop for the Best Mortgage Rate

You can get a personalized mortgage rate by contacting your local mortgage broker or using an online calculator. In order to find the best home loan, you will need to consider your goals and your overall financial situation.

Specific interest rates will vary based on factors such as credit rating, down payment, debt to income ratio and loan to value ratio. Having a higher credit score, higher 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 shop around with multiple lenders — like credit unions and online lenders in addition to local and national banks — to get a mortgage that’s right for you.

How does the loan term affect my mortgage?

When choosing a mortgage, you need to consider the length of the loan or the payment schedule. The most common loan terms are 15 and 30 years, although there are also 10, 20 and 40 year mortgages. Another important distinction is between fixed rate and adjustable rate mortgages. For fixed rate mortgages, the interest rates are fixed for the term of the loan. Unlike a fixed rate mortgage, an adjustable rate mortgage’s interest rates are only fixed for a certain amount of time (usually five, seven or 10 years). After that, the rate fluctuates annually based on the market interest rate.

An important factor to consider when choosing between a fixed rate and variable rate mortgage is how long you plan to stay in your home. For those planning on staying in a new home for the long term, fixed rate mortgages may be the best option. Fixed rate mortgages offer more stability over time than adjustable rate mortgages, but adjustable rate mortgages may offer lower interest rates upfront. If you don’t plan to keep your new home for more than three to ten years, an adjustable rate mortgage may give you a better deal. The best loan term depends on your specific situation and goals, so be sure to consider what’s important to you when choosing a mortgage.

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