Today’s Mortgage Refinance Rates: September 1, 2022

After a temporary respite from record interest rates in August, mortgage borrowers are once again confronted with rising interest rates.

Interest rates peaked in June, with the average 30-year fixed-rate mortgage rate hitting 5.81% – the highest since 2008, according to Freddie Mac. Rates have trended downward since then, averaging 4.99% in early August. But now they are on the way up again.

The Federal Reserve has indicated that it will keep raising the federal funds rate until inflation falls to more acceptable levels. This has helped push up mortgage rates.

As mortgages become more expensive, many homebuyers have been forced to reassess their budgets and look for ways to keep their monthly payments affordable.

“Now is the time to seriously consider an adjustable rate mortgage or an interest rate only option to keep monthly payments down and as the perfect bridge to buying a home today – with the firm expectation that mortgage rates will come down once inflation over is tamed,” says Sarah Alvarez, vice president of William Raveis Mortgage. “Our team has a saying that goes, ‘You marry the house, but give up the price.'”

Getting a mortgage that pays less upfront can help make home ownership more affordable when interest rates are high, but make sure you understand how the loan works and the risks involved. For example, if you are unable to refinance an adjustable rate mortgage before your rate resets, you could end up with a higher monthly payment.

Mortgage rates today

Today’s refinancing rates

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Use our free mortgage calculator to see how today’s mortgage rates are affecting your monthly and long-term payments.

By entering different terms and interest rates, you can see how your monthly payment might change.

Are mortgage rates rising?

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

In the last 12 months, the consumer price index rose by 8.5%. The Federal Reserve has been working to bring inflation under control and plans to raise the federal funds rate three more times this year after raising it in March, May, June and July.

While not directly tied to the federal funds rate, mortgage rates are sometimes pushed higher as a result of Fed rate hikes and investor expectations of how those increases will affect the economy.

Inflation remains high but has gradually slowed, which bodes well for mortgage rates and the broader economy.

What do high rates mean for the housing market?

When mortgage rates rise, homebuyers’ purchasing power falls because more of their expected housing budget has to be devoted to paying interest. If interest rates get high enough, buyers can be squeezed out of the market entirely, dampening demand and putting pressure on home price growth.

However, that doesn’t mean house prices will fall – in fact, they’re expected to rise even more this year, just at a slower pace than in recent 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 by multiple mortgage lenders and compare each offer. Apply for pre-approval from at least two or three lenders.

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

Although mortgage rates are heavily influenced by economic factors beyond your control, there are some things you can do to ensure you’re getting a good rate:

• Consider fixed vs adjustable rates. You may be able to get a lower introductory rate with an adjustable rate mortgage, which can be good if you want to move before the end of the introductory period. But a fixed rate might be better if you’re buying a forever home because you don’t risk your interest rate going up later. Look at the interest rates your lender is offering and weigh your options.
• Look at your finances. The better your financial situation, the lower your mortgage rate should be. Look for ways to improve your credit score or reduce your debt-to-income ratio, if necessary. Saving up for a higher 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 interest rate.