Today’s mortgage and refinance rates: May 8, 2022 | Rates will likely remain above 5%
Mortgage rates continue to hover just above 5%. As inflation remains elevated and the Federal Reserve tightens monetary policy in response, rates aren’t likely to decrease any time soon.
“I believe the rates being above 5% will become a norm, and I don’t see a significant downward movement in the near future,” says Ralph DiBugnara, president of Home Qualified and senior vice president of Cardinal Financial.
However, it’s unclear how much further they could rise. DiBugnara says he believes that rates will continue their upward trend but begin to stabilize by the end of June.
Is it better to rent or buy right now?
Whether you should rent or buy depends on current costs in your area and your lifestyle. In some areas of the country, it’s possible to get a mortgage with a monthly payment that’s lower than the average rent — but that’s not true everywhere, especially if you’re in a high-cost urban area.
If you’re worried about your rent continuing to increase, it might make sense to look into buying a home. While rents can go up year after year, if you have a fixed-rate mortgage, you know you’ll be paying the same amount every month for as long as you have your mortgage.
“I still believe we are in a market that is advantageous to buy or own in,” says DiBugnara. “Higher rates mean less buying power in some cases, but rent is rising as fast or faster than home prices because of inflation, making buying the more ideal option for many.”
How are mortgage rates determined?
In general, mortgage rates tend to be high when the US economy is thriving and low when it is struggling. Mortgage rates reached all time lows during the pandemic as the Federal Reserve eased monetary policy to boost the economy. But as the central bank works to fight inflation, rates have been increasing and have surpassed 5%.
Your mortgage rate will be influenced both by current rate trends and factors you can control. With a good credit score, low debt-to-income ratio, and substantial down payment, you can secure a better rate.
How do I find personalized mortgage rates?
Some mortgage lenders let you customize your mortgage rate on their websites by entering your down payment amount, zip code, and credit score. The resulting rate isn’t set in stone, but it can give you an idea of what you’ll pay.
If you’re ready to start shopping for homes, you may apply for preapproval with a lender. The lender does a hard credit pull and looks at the details of your finances to lock in a mortgage rate.
How do I compare mortgage rates between lenders?
You can apply for prequalification with multiple lenders. A lender takes a general look at your finances and gives you an estimate of the rate you’ll pay.
If you’re farther along in the homebuying process, you have the option to apply for preapproval with several lenders, not just one company. By receiving letters from more than one lender, you can compare personalized rates.
Applying for preapproval requires a hard credit pull. Try to apply with multiple lenders within a few weeks, because lumping all of your hard credit pulls into the same chunk of time will hurt your credit score less