Just like that, mortgage rates today are up again as we enter July. While June gave us a bit of a breather, July came in strong with a huge jump.
Mortgage Rates Go Up in July Just Like the Summer Weather
If you’ve been keeping tabs with our monthly mortgage rates reports, you’re probably aware that June’s mortgage rates went down near the 5.00% mark (5.09% to be exact). This was a pretty significant decrease considering that May had a 5.27% rate.
June 2022 Mortgage Rates Recap
Q2 2022 ended with a bit of a breather for those paying off their housing loans. The 2022 US housing market predictions were all pretty consistent as far as mortgage rates today are concerned. The past couple of years of being in a pandemic allowed us to enjoy historically low mortgage rates.
Industry experts and analysts made all sorts of predictions for the 2022 market, including a steady increase in interest rates. Almost everyone made fearless forecasts that 2022 will end with 5.00% in mortgage rates. Little did we know that it’ll only take a few months into 2022 to fulfill those predictions.
The increase in mortgage rates today is inevitable given the continuous increase in property prices and demand for housing. One of the main factors that sped up the spike in mortgage rates today is the Eastern Europe geopolitical issue. Although the US real estate industry is not directly affected by it, the economic ramifications of the conflict did. Inflation rates today are as high as they can be. Unfortunately, it doesn’t look like it’s going down anytime soon.
Related: Mortgage Rates Watch: June 2022
Inflation Rates Are Still on an Upward Trend
The US inflation rate went up from 3.2% in 2011 up to 4.7% ten years later. This simply means that the dollar’s buying power has weakened in a decade. Today, we are already nearly double 2021’s rate. The US Bureau of Labor Statistics says that consumer prices have gone up 8.6% year-over-year in May 2022. The US BLS website also states that shelter prices have gone up 5.5% over the past year. Today, this is the largest 12-month increase since the period that ended in February 1991. Inevitably, inflation has also affected mortgage rates.
If you’re considering buying a home or an investment property, you would do well to do the math first before making any final decisions. Perhaps if you have enough extra cash lying around to make an all-cash purchase, now would be a good time to buy real estate. But if you’re starting out as an investor and don’t have enough money to buy in cash, you will have to take out a loan.
If you were buying a property back in 2021 or even in the latter half of 2020, you might have hit the jackpot with a low-interest loan or even a refinance. Because of the low-interest rate, plenty of real estate investors and first-time home buyers went out to buy real estate. These same investors and house buyers are still enjoying 3.00% mortgage rates today. Those who took out a loan for a 30-year fixed-rate mortgage in December 2020 are paying only 2.68% interest on their mortgage today.
Home buyers anticipated some sort of increase in mortgage rates today as the economy has reopened and is recovering well. What we all weren’t prepared for was the sudden global economic slowdown today because of the Russia-Ukraine crisis.
Related: When Will Mortgage Rates Go Down in 2022?
Inflation has been one of the biggest factors affecting US mortgage rates today.
Mortgage Rates Today and What to Expect in July 2022
Given how high inflation is today and how strong consumer demand is for housing, investors and home buyers can expect mortgage rates today to continue to go up in the following months.
Here are the current mortgage rates today according to Nerd Wallet:
- 30-year fixed-rate mortgage: 5.33%, 5.41% APR
- 15-year fixed-rate mortgage: 4.45%, 4.60% APR
- 5-year adjustable rate mortgage: 4.78%, 4.26% APR
- 30-year fixed-rate FHA: 4.17%, 4.98% APR
- 30-year fixed-rate VA: 4.69%, 5.06% APR
Forbes has very similar numbers for the following mortgage rates today:
- 30-year fixed-rate mortgage: 5.66%, 5.67% APR
- 15-year fixed-rate mortgage: 4.90%, 4.93% APR
- 5-year adjustable rate mortgage: 4.27%, 5.70% APR
Rocket Mortgage also has almost the same numbers:
- 30-year fixed-rate mortgage: 5.38%, 5.66% APR
- 15-year fixed-rate mortgage: 4.75%, 5.23% APR
- 30-year fixed-rate FHA: 4.88%, 5.94% APR
- 30-year fixed-rate VA: 4.88%, 5.38% APR
If the past quarter is an indicator, it is safe to assume that mortgage rates will continue to go up over the next few months. Rates have steadily increased since March 2022, which gave us a 12-year high of 5.22% in April. Not only are rates expected to go up, but home construction, even if it is picking up, will continue to lag behind the housing demand. This is likely to put buyers in a very tight situation in months to come, whether they take out a loan, refinance, or buy in cash.
Related: Why Real Estate Investors Need a Mortgage Calculator
How Can Buyers and Investors Purchase a Home Given Mortgage Rates Today?
Despite the fact that things are getting more expensive today, home buyers can still make purchases if they want to. They only need to make wiser decisions.
Look for Lending Options That Will Not Be a Burden to You
For instance, not a lot of home buyers and investors have the means to make all-cash purchases. In most cases, an investor or buyer will have to take out a loan. One, they have to understand that lending is still a business and the lender still has to make money off the deal. The sooner you accept this reality, the better you can manage your expectations.
You have several lender types to choose from. You can get a loan from conventional banks, credit unions, mortgage companies, brokers, and even mortgage marketplaces. A lot of lenders are actually pretty reasonable if you just know how to talk to them. You just need to meet certain requirements and make the necessary preparations for the loan you are about to ask for.
Before applying for a loan, you must first check your credit score. This is pretty important as it is one of the first things lenders will look at. In case your credit score is lower than what lenders require, then you need to improve it before submitting an application.
You also need to save up for your down payment. The industry standard for a down payment on a real estate property is 20%. The bigger the down payment, the more likely you are to have lower interest rates on your mortgage.
Having a stable source of income today is also a key factor in acquiring not just a loan but a refinance, as well. Lenders today have learned from the previous housing market crash in the early 2000s and have stricter requirements for loan and refinance applications. As long as you meet those requirements, you’ll be alright.
Invest in More Affordable Housing Markets
Those who want to cut costs on housing expenses should simply consider investing in more affordable real estate markets. On top of the loan and its entailing interest rates, you will also have to consider the market you’re buying in. Not all markets are created equal. And each one has its own share of good and bad deals. At the end of the day, you will need to take a step back and make an objective assessment of the market.
Is it worth getting a loan or refinance given the mortgage rates today? As an investor, are you willing to wait longer to get the return on investment based on the market’s cash on cash return and cap rate? As for getting a refinance, do you intend to own the house for a longer period or not? Is the cost of owning a property in that area worth paying larger interest rates for?
These are just some of the things you need to ask yourself and know about if you plan to buy a house now.
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Refinance Only Under Certain Conditions
We can’t talk about mortgages and loans without talking about refinancing. Refinancing a mortgage has helped a lot of property owners and real estate investors cope financially. However, just because you can refinance doesn’t mean you should. You need to make an honest assessment of your situation today before deciding whether to refinance or not.
Most folks refinance for the following reasons:
- To get a lower interest rate
- To shorten their mortgage term
- To change their fixed-rate mortgage to an adjustable-rate mortgage and vice versa
- To tap into home equity to generate funds for emergencies, bigger purchases, or debt consolidation
A refinance can cost anywhere between 3.0% and 6l0% of the loan’s principal. And just like an original mortgage, it also requires an appraisal, title search, and application fees—all of which will cost you a good deal of money. On top of that, if you buy a property now and don’t intend to make money from it for a long time, keep in mind that closing costs today aren’t cheap. Refinancing might hurt you more in this situation.
So before you go out applying for a refinance today, you need to make sure you can afford it. Getting a refinance today can be a great move if it lowers your mortgage payments, reduces your mortgage term, or helps you build equity. If used correctly, it can help you overcome your debt and improve your financial situation today.
Moving Forward in 2022
Considering how things are going today, experts and industry insiders are predicting that mortgage rates will continue to rise. With an increasing demand for housing, the backlog in inventory, as well as inflation, home buyers and investors should take more time to compare rates today.
According to Bankrate’s chief financial analyst Greg McBride:
Conducting an online search can save thousands of dollars by finding lenders offering a lower rate and more competitive fees.
He goes on to say that now is not the best time to go with an ARM despite the seemingly low-interest rates we see today.
At this point, anyone considering buying a home should pay closer attention to the markets they’re considering. They should take note of what the trends are and what the different forecasts say about them. Investors should be well aware to keep themselves updated with the latest movement in mortgage rates, housing prices, and rental comps, among others.
Wrapping It Up
Considering the mortgage rates today, home buyers and investors are taking extra measures to ensure they make the wisest buying decisions. Money is hard to come by today and not everyone has extra cash to spend on an income property. For this reason, one should have access to the right real estate information and data.
Fortunately, a website like Mashvisor exists. It gives subscribers access to up-to-date real estate market information needed to make an accurate real estate analysis. If you’re an investor and you want to make sure that getting a loan and paying for increasing mortgage rates are worth it, check out Mashvisor. It will give you the details you need to analyze investment properties properly with tools like a real estate heat map and investment property calculator.
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