The average 30-year fixed mortgage rate is currently at its highest level in 13 years, according to Freddie Mac. Mortgage rates shot up in early 2022 and have continued increasing in May. However, recent rate increases aren’t quite as dramatic as they have been in previous months, a sign that rate growth may be moderating.

If you’re getting ready to buy a home, locking in your rate sooner rather than later can help insure you against future increases while you shop.

“With such fluctuation happening daily, what you will lose usually will be a lot more than what you can gain by not securing your interest rate,” says Ralph DiBugnara, president of Home Qualified and senior vice president of Cardinal Financial.

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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’ll also see how much you’ll pay over the entire length of your mortgage, including how much goes toward the principal vs. interest.

Will mortgage rates go up in 2022?

To help the US economy during the COVID-19 pandemic, the Federal Reserve aggressively purchased assets, including mortgage-backed securities. This helped keep mortgage rates at historic lows.

However, the Fed is now planning to reduce the assets it holds and is expected to increase the federal funds rate five more times in 2022, following increases in March and May.

Average mortgage rates have ticked up recently, and the Fed’s announcements indicate that mortgage rates will probably continue to increase in 2022. You may want to lock in a rate now instead of risk a higher rate later, but don’t rush to buy a home if you aren’t ready.

  Today's mortgage and refinance rates: May 25, 2022 | Rates have stopped climbing

What is a fixed-rate mortgage vs. adjustable-rate mortgage?

Historically, adjustable mortgage rates tend to be lower than 30-year fixed rates. When mortgage rates go up, ARMs can start to look like the better deal — but it depends on your situation. 

Fixed-rate mortgages lock in your rate for the entire life of your loan. Adjustable-rate mortgages lock in your rate for the first few years, then your rate goes up or down periodically.

Because adjustable rates start low, they are worthwhile options if you plan on selling your home before the interest rate changes. For instance, if you get a 7/1 ARM and want to move before the seven year fixed-rate period is up, you won’t risk paying a higher rate later.

But if you want to buy a forever home, a fixed rate could still be a better fit, since you won’t chance your rate increasing in a few years.

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Source:: Business Insider

      

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