The average 30-year mortgage rate reached its highest point for 2021, jumping to 3.57% to finish the year.
The average rate offered to homebuyers using a conventional 30-year fixed mortgage—the most popular type of home loan—rose to 3.57% from 3.50% the previous business day, matching the 2021 high first reached in late November. The average for a 15-year fixed mortgage rose to 2.61% from 2.58% the previous business day, hitting its highest point since early December. (The latest rates were retrieved on Dec. 30.)
Fixed mortgage rates tend to track the direction of 10-year Treasury yields, which usually rise with heightened inflation fears (and fall when those fears subside.) Investor concerns about rising inflation have generally pushed yields to a higher range since the summer, though they fell after the omicron variant of COVID-19 emerged, causing uncertainty about whether the economy will slow down significantly as a result. Yields rose last week after the government reported an unexpectedly low number of weekly jobless claims.
Even at this 2021 peak, the 30-year average is still pretty low by historic standards. According to a Freddie Mac measure that dates back farther than our data, the 30-year hasn’t gone more than about half a percentage point higher than its record low of last winter. Three years ago, it was almost 5% and at the start of the 1990s, around 10%.
During the pandemic, these relatively low rates have bolstered buying power, allowing house hunters to buy more expensive homes with the same monthly budget and helping to fuel a fiercely competitive residential real estate boom that has only recently begun to cool slightly. For the same reasons, the uptick in rates over the past few months has discouraged borrowing, in particular refinancing activity. An index measuring the volume of applications to refinance an existing mortgage is down 41% in the last 12 months, according to the Mortgage Bankers Association.
Mortgage rates, like the rates on any loan, are going to depend on your credit score, with lower rates going to people with better scores, all else being equal. The rates shown reflect the average offered by more than 200 of the country’s top lenders, assuming the borrower has a FICO credit score of 700-759 (within the “good” or “very good” range) and a loan-to-value ratio of 80%. They also assume the borrower doesn’t purchase any mortgage or “discount” points. Borrowers pay these points, or upfront fees, to obtain a lower interest rate, spending more initially to save in the long run. Whether or not you should pay points depends on how long you plan to keep the loan. Here’s how to calculate that.
30-Year Mortgage Rates Increase
A 30-year fixed mortgage is by far the most common type of mortgage because it offers a consistent and relatively low monthly payment. (Shorter-term fixed mortgages have higher payments because the borrowed money is paid back more quickly.)
Besides conventional 30-year mortgages, some are backed by the Federal Housing Authority or the Department of Veterans Affairs. FHA loans offer borrowers with lower credit scores or a smaller down payment a better deal than they might otherwise get; VA loans let current or past members of the military and their families skip a down payment.
- 30-year fixed: The average rate rose to 3.57%, up from 3.5% the previous business day. A week ago, it was 3.51%. For every $100,000 borrowed, monthly payments would cost about $452.96, or $3.36 more than a week ago.
- 30-year fixed (FHA): The average rate rose to 3.38% from 3.29% the previous business day. A week ago, it was 3.27%. For every $100,000 borrowed, monthly payments would cost about $442.37, or $6.07 more than a week ago.
- 30-year fixed (VA): The average rate rose to 3.49% from 3.37% the previous business day. A week ago, it was 3.35%. For every $100,000 borrowed, monthly payments will cost about $448.49, or $7.78 more than a week ago.
All else being equal, a higher rate increases your monthly payment, but there are other parts of the equation. For example, if you know your monthly payment can’t be more than $2,000, you can get a $387,000 home at a 3.4% rate or a $380,000 home at a 3.6% rate. Both assume a 30-year loan, a 20% down payment, typical homeowners’ insurance costs, and property taxes, per our mortgage calculator.
15-Year Mortgage Rate Rises
The major advantage of a 15-year fixed mortgage is that it offers a lower interest rate than the 30-year and you’re paying off your loan more quickly, so your total borrowing costs are far lower. But for the same reason—that the loan is paid back over a shorter time frame—the monthly payments will be higher.
- 15-year fixed: The average rate rose to 2.61%, up from 2.58% the previous business day. A week ago, it was 2.56%. For every $100,000 borrowed, monthly payments would cost about $671.98, or $2.36 more than a week ago.
Besides fixed-rate mortgages, there are adjustable-rate mortgages (ARMs), where rates change based on a benchmark index tied to Treasury bonds or other interest rates. Most adjustable-rate mortgages are actually hybrids, where the rate is fixed for a period of time and then adjusted periodically. For example, a common type of ARM is a 5/1 loan, which has a fixed rate for five years (the “5” in “5/1”) and is then adjusted every one year (the “1”).
Jumbo Mortgage Rates Climb
Jumbo loans, which allow you to borrow bigger amounts for more expensive properties, tend to have slightly higher interest rates than loans for more standard amounts. Jumbo means over the limit that Fannie Mae and Freddie Mac are willing to buy from lenders, and those limits are about to go up. In 2022, the limit for a single-family home will now be $647,200 (except in Hawaii, Alaska, and a few federally designated high-cost markets, where the limit is $970,800.)
- Jumbo 30-year fixed: The average rate rose to 3.53% from 3.46% the previous business day. A week ago, it was 3.45%. For every $100,000 borrowed, monthly payments would cost about $450.72, or $4.46 more than a week ago.
- Jumbo 15-year fixed: The average rate rose to 3.76% from 3.52% the previous business day. A week ago, it was 3.42%. For every $100,000 borrowed, monthly payments would cost about $727.72, or $16.76 more than a week ago.
Refinance Rates Move Up
Refinancing an existing mortgage tends to be slightly more expensive than getting a new one, especially in a low-rate environment.
- 30-year fixed: The average rate to refinance rose to 3.72% from 3.66% the previous business day. A week ago, it was 3.67%. For every $100,000 borrowed, monthly payments would cost about $461.41, or $2.82 more than a week ago.
- 15-year fixed: The average rate to refinance rose to 2.72% from 2.69% the previous business day. A week ago, it was 2.67%. For every $100,000 borrowed, monthly payments at that rate will cost about $677.20, or $2.38 more than a week ago.
Our rates for “today” reflect national averages provided by more than 200 of the country's top lenders one business day ago, and the “previous” is the rate provided the business day before that. Similarly, the week earlier references compare the data from five business days earlier (so bank holidays are excluded.) The rates assume a loan-to-value ratio of 80% and a borrower with a FICO credit score of 700 to 759—within the “good” to “very good” range. They’re representative of the rates customers would see in actual quotes from lenders, based on their qualifications, and may vary from advertised teaser rates.
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