On Tuesday, Nerdwallet released the average mortgage rates in the country:
On Tuesday, May 17, 2022, the average interest rate on a 30-year fixed-rate mortgage dropped five basis points to 5.267% APR. The average rate on a 15-year fixed-rate mortgage fell two basis points to 4.372% APR, and the average rate on a 5-year adjustable-rate mortgage went up six basis points to 3.804% APR, according to rates provided to NerdWallet by Zillow. The 30-year fixed-rate mortgage is 22 basis points lower than one week ago and 224 basis points higher than one year ago. A basis point is one one-hundredth of one percent. Rates are expressed as an annual percentage rate, or APR.
The growth of adjustable rate mortgages is something to note, also known as ARMs. ARMs applications are up 3% from January. Since these types of mortgages start at a lower interest rate than fixed-rate mortgages, buyers seem to take the risk to afford a mortgage on the front end more quickly. However, note that we said risk in the previous sentence. Since the rate is adjusted at a predetermined schedule, buyers should look closely to see if they can afford said mortgage down the road, assuming that the rates will be higher. If it seems like that is too much of a risk for one to handle, then a fixed rate mortgage may still be your best option because at least the payments stay the same for the life of the mortgage or until you refinance to a lower rate. Remember, what goes up must come down. The actual questions are when will it come down, and can you afford to wait, or are you better off now?
If you have any questions about strategizing whether to buy now or later, please feel free to reach out to our team of Real Estate Advisors. We can help you make the wisest decision for you!
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Link to full Nerdwallet article: https://www.nerdwallet.com/article/mortgages/mortgage-interest-rates-forecast