Mortgage of the day, refinancing rate: August 3, 2022

Mortgage rates fell over the weekend and appear to have stabilized over the past two days. Rates have been volatile recently due to inflation and fears of a recession.

The Federal Reserve has raised the federal funds rate in an effort to rein in price growth, but many now fear it can’t do that without slowing the economy so much that it slips into a mild recession.

Homebuyers have had a tough few years navigating a tough housing market, first due to rapidly rising house prices during the pandemic and then, in 2022, rapidly rising mortgage rates. But as demand cools, those who can still afford to buy might have a bit more wiggle room with slightly lower rates and less competition.

“Buyers who have been waiting on the sidelines may see an opportunity to re-enter the market as things normalize a bit and volatility eases,” said Robert Heck, vice president of mortgages at Morty. “While this may take years to materialize, the Fed has made it clear that it will continue to take the necessary steps to bring inflation down.”

Today’s Mortgage Rates

Today’s Refinance Rates

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Use our free mortgage calculator to see how today’s interest rates will affect your monthly payments:

By clicking on “More details”, you will also see the amount you will pay over the life of your mortgage, including the amount of principal versus interest.

Are mortgage rates increasing?

Mortgage rates started to recover from historic lows in the second half of 2021 and have risen significantly so far in 2022. More recently, rates have been relatively volatile.

In June, the consumer price index rose 9.1% year over year. The Federal Reserve has been struggling to keep inflation in check and plans to raise the target federal funds rate three more times this year, following increases in March, May, June and July.

Although not directly tied to the fed funds rate, mortgage rates are sometimes pushed higher due to Fed rate hikes and investors’ expectations of the impact of those hikes on the economy. . If inflation remains high, mortgage rates could remain at current levels or even increase. But as a recession becomes more likely, mortgage rates could fall.

What do high rates mean for the housing market?

When mortgage rates rise, homebuyers’ purchasing power declines, as more of their projected housing budget must be spent on interest payments. If rates get high enough, buyers can be shut out of the market altogether, cooling demand and putting downward pressure on home price growth.

However, that doesn’t mean house prices will go down – in fact, they’re expected to rise even more this year, just at a slower pace than what we’ve seen over the past two years.

What is a good mortgage rate?

It can be difficult to know if a lender is offering you a good rate, which is why it’s so important to get pre-approved from several mortgage lenders and compare each offer. Apply for pre-approval from at least two or three lenders.

Your price isn’t the only thing that matters. Be sure to compare both your monthly costs and your upfront costs, including lender fees.

Although mortgage rates are heavily influenced by economic factors beyond your control, there are steps you can take to ensure you get a good rate:

• Consider fixed rates versus adjustable rates. You may be able to get a lower introductory rate with an adjustable rate mortgage, which can be beneficial if you plan to move before the end of the introductory period. But a fixed rate might be better if you’re buying a house forever, because you don’t risk your rate going up later. Examine the rates offered by your lender and weigh your options.
• Look at your finances. The stronger your financial situation, the lower your mortgage rate should be. Look for ways to increase your credit score or reduce your debt ratio, if necessary. Saving for a larger down payment also helps.
• Choose the right lender. Each lender charges different mortgage rates. Choosing the right one for your financial situation will help you get a good rate.