A handful of closely watched mortgage rates fell further today. The sharp drop in interest rates for 30-year fixed rate mortgages is notable, and 15-year fixed rates have also fallen. For variable rates, the 5/1 variable rate mortgage declined slightly.

Although mortgage rates have risen fairly steadily since the start of this year, what happens next will depend on whether inflation continues to rise or begins to fall. Interest rates are dynamic and unpredictable – at least on a daily or weekly basis – and they react to a wide variety of economic factors. Currently, they are particularly sensitive to inflation and the prospect of a US recession. With so much uncertainty in the market, if you’re looking to buy a home, trying to time the market may not work in your favor. If inflation rises and rates rise, this could mean higher interest rates and higher monthly mortgage payments. Because of this, you may have a better chance of getting a lower mortgage interest rate sooner rather than 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 interest rate on a standard 30-year fixed mortgage is 5.27%, down 44 basis points from a week ago. (One basis point equals 0.01%.) Thirty-year fixed mortgages are the most commonly used loan term. A 30-year fixed rate mortgage will generally have a higher interest rate than a 15-year fixed rate mortgage, but also a lower monthly payment. 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 on a 15-year fixed mortgage is 4.59%, down 33 basis points from seven days ago. You will definitely have a higher monthly payment with a 15-year fixed mortgage compared to a 30-year fixed mortgage, even if the interest rate and loan amount are the same. However, as long as you can afford the monthly payments, a 15-year loan has several advantages. These typically include the ability to get a lower interest rate, pay off your mortgage sooner, and pay less total interest over the long term.

5/1 Adjustable Rate Mortgages

A 5/1 ARM has an average rate of 4.14%, down 5 basis points from a week ago. With a variable rate mortgage, you’ll generally get a lower interest rate than a 30-year fixed mortgage for the first five years. But because the rate adjusts to the market rate, you might end up paying more after that time, as described in your loan terms. For this reason, an ARM can be a good option if you plan to sell or refinance your home before the rate changes. But if not, you may have to pay a much higher interest rate if market rates change.

Mortgage Rate Trends

Although mortgage rates were historically low at the start of 2022, they have been rising fairly steadily since then. The Federal Reserve recently raised interest rates an additional 0.75 percentage points in an effort to curb record inflation. The Fed has raised rates a total of four times this year, but inflation remains high. 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 directly set mortgage rates, central bank policy actions influence how much you pay to fund your home loan. If you’re looking to buy a home in 2022, keep in mind that the Fed has signaled it will continue to raise rates and mortgage rates may rise as the year progresses. Whether rates follow their upward projection or begin to stabilize depends on whether inflation actually slows.

We use rates 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 in the United States:

Average Mortgage Interest Rates

Product	Assess	Last week	To change
30 years fixed	5.27%	5.71%	-0.44
15 years fixed	4.59%	4.92%	-0.33
30-year jumbo mortgage rate	5.21%	5.67%	-0.46
30-year mortgage refinance rate	5.27%	5.68%	-0.41

Rates as of August 2, 2022.

How to find the best mortgage rates

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 mortgage interest rates will vary based on factors such as credit rating, down payment, debt-to-income ratio and loan-to-value ratio. Having a good credit score, a 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 – be sure to also consider additional factors such as fees, closing costs, taxes and discount points. Be sure to talk to several different lenders — for example, local and national banks, credit unions, and online lenders — and a comparison store to find the best loan for you.

What is a good loan term?

An important thing to consider when choosing a mortgage loan is the length of the loan or the payment schedule. The most commonly offered loan terms are 15 and 30 years, although you can also find 10, 20 and 40 year mortgages. Mortgages are further divided into fixed rate and variable rate mortgages. Interest rates on a fixed rate mortgage are fixed for the term of the loan. For adjustable rate mortgages, the interest rates are stable for a number of years (usually five, seven or 10 years), then the rate fluctuates annually depending on the market rate.

When choosing between a fixed rate mortgage and an adjustable rate mortgage, you need to consider 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 compared to adjustable rate mortgages, but adjustable rate mortgages can sometimes offer lower interest rates upfront. However, if you don’t plan to keep your new home for more than three to ten years, an adjustable rate mortgage might 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.