Savings window opens: 3 key mortgage rates sit below 5% | July 22, 2022
Falling by more than a quarter point, 20-year rates offer buyers a desirable blend of a lower rate and smaller monthly mortgage payment.
Based on data compiled by Credible, three key mortgage refinance rates have fallen and one has risen since yesterday.
- 30-year fixed-rate refinance: 5.875%, up from 5.625%, +0.250
- 20-year fixed-rate refinance: 4.990%, down from 5.625%, -0.635
- 15-year fixed-rate refinance: 4.750%, down from 4.875%, -0.125
- 10-year fixed-rate refinance: 4.750%, down from 5.000%, -0.250
Rates last updated on July 22, 2022. These rates are based on the assumptions shown here. Actual rates may vary. With 5,000 reviews, Credible maintains an "excellent" Trustpilot score.
What this means: Mortgage refinance rates edged down for three key terms today, with 20-year rates falling more than half a point and dipping back under the 5% mark. Rates for 10- and 15-year terms are more than a full percentage point lower than 30-year terms, meaning homeowners looking to refinance may want to consider a shorter term for greater interest savings. But homeowners looking to stick with a longer term should consider refinancing to a 20-year term while rates are under 5%.
Today’s mortgage rates for home purchases
Based on data compiled by Credible, three key mortgage rates for home purchases have fallen and one remained unchanged since yesterday.
- 30-year fixed mortgage rates: 5.625%, unchanged
- 20-year fixed mortgage rates: 4.990%, down from 5.250%, -0.260
- 15-year fixed mortgage rates: 4.750%, down from 4.875%, -0.125
- 10-year fixed mortgage rates: 4.750%, down from 4.990%, -0.240
Rates last updated on July 22, 2022. These rates are based on the assumptions shown here. Actual rates may vary. Credible, a personal finance marketplace, has 5,000+ Trustpilot reviews with an average star rating of 4.7 (out of a possible 5.0).
What this means: Mortgage rates dropped for three terms today, giving buyers an opportunity to save on interest. Borrowers looking for a longer repayment term and smaller monthly payment may find their best bargains with 20-year rates, which are back under 5%. Mortgage rates are likely to continue to fluctuate, so buyers may want to lock in a low rate today ahead of future upswings.
To find great mortgage rates, start by using Credible’s secured website, which can show you current mortgage rates from multiple lenders without affecting your credit score. You can also use Credible’s mortgage calculator to estimate your monthly mortgage payments.
How mortgage rates have changed over time
Today’s mortgage interest rates are well below the highest annual average rate recorded by Freddie Mac – 16.63% in 1981. A year before the COVID-19 pandemic upended economies across the world, the average interest rate for a 30-year fixed-rate mortgage for 2019 was 3.94%. The average rate for 2021 was 2.96%, the lowest annual average in 30 years.
The historic drop in interest rates means homeowners who have mortgages from 2019 and older could potentially realize significant interest savings by refinancing with one of today’s lower interest rates. When considering a mortgage refinance or purchase, it’s important to take into account closing costs such as appraisal, application, origination and attorney’s fees. These factors, in addition to the interest rate and loan amount, all contribute to the cost of a mortgage.
Are you looking to buy a home? Credible can help you compare current rates from multiple mortgage lenders at once in just a few minutes. Use Credible’s online tools to compare rates and get prequalified today.
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How Credible mortgage rates are calculated
Changing economic conditions, central bank policy decisions, investor sentiment, and other factors influence the movement of mortgage rates. Credible average mortgage rates and mortgage refinance rates reported in this article are calculated based on information provided by partner lenders who pay compensation to Credible.
The rates assume a borrower has a 740 credit score and is borrowing a conventional loan for a single-family home that will be their primary residence. The rates also assume no (or very low) discount points and a down payment of 20%.
Credible mortgage rates reported here will only give you an idea of current average rates. The rate you actually receive can vary based on a number of factors.
Why do mortgage rates fluctuate?
Here are some of the most common reasons why mortgage rates move frequently:
The employment rate is an indicator of demand for mortgages. When more people are unemployed, fewer people will be looking to get a mortgage and buy a home – and that lower demand will push interest rates down. When the employment rate improves, demand for mortgages will likely keep pace. And as demand for mortgages rises, so will mortgage interest rates.
The bond market
Because bonds are a lower-risk type of investment, demand for bonds can increase when investors are wary of other investment vehicles, or fearful of the overall state of the economy. Increased demand for bonds causes their price to rise and their earnings – called their yield – to fall.
When bond yields fall, consumer interest rates generally do as well, including mortgage interest rates. When investors feel more confident about the economy, demand for bonds declines, bond prices drop and yields rise. And interest rates tend to follow.
Federal Reserve System
"The Fed," as it’s commonly called, is the United States’ central bank. But it doesn’t actually set mortgage rates. Rather, multiple things the Fed does influence mortgage rates. For example, while mortgage rates don’t mirror the Fed funds rate – the rate banks apply when borrowing lending money to each other overnight – they do tend to follow it. If that rate rises, mortgage rates typically rise in tandem.
Global banking systems and economies are closely interconnected. When economies in other parts of the world – especially Europe and Asia – experience a downturn, it affects investors and financial institutions in the United States. And, when foreign economies are doing well, they may attract more American investors – and divert those investment dollars out of the U.S. economy.
If you’re trying to find the right mortgage rate, consider using Credible. You can use Credible's free online tool to easily compare multiple lenders and see prequalified rates in just a few minutes.
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As a Credible authority on mortgages and personal finance, Chris Jennings has covered topics that include mortgage loans, mortgage refinancing, and more. He’s been an editor and editorial assistant in the online personal finance space for four years. His work has been featured by MSN, AOL, Yahoo Finance, and more.