Mortgage rate August 2022: What you need to know?

Mortgage rates continue to fluctuate in August 2022

It's the first week of August, and with that comes some good news for homebuyers.

For borrowers who elect to pay off their home faster, going into August, the average rate on a 15-year fixed mortgage is 4.58%, slightly down 0.24% from the previous week's rate of nearly 5%.

What is the forecast for mortgage interest rates in August 2022?

There's no doubt that interest rates will be going up this year, but how much and when is really anyone's guess. According to the latest Bankrate forecast, the 30-year fixed mortgage rate should average 5.35 percent in August, while the 15-year fixed mortgage rate should average 4.5 percent. You will find some experts forecasting a 6% interest rate once again by the end of the year. For now, and through August 2022, we should continue to see some temporary relief as interest rates seem to have pulled back...for now.

The best mortgage interest rates in August 2022 are slightly over 5.3 percent. This estimate was based on data from Freddie Mac showing that 15-year fixed rate mortgages had an average interest rate of 4.58 percent for the week ending July 28th, 2022.

Mortgage rates are at historically low levels.

Mortgage rates, like virtually all interest rates, are at historically low levels. The average 30-year fixed mortgage rate is currently 5.3%, according to Freddie Mac, which tracks the U.S.'s largest lenders. That's the lowest level since before the Great Recession and is lower than at any point since 1959 (when it was 3.88%).

While these numbers have been trending downward for years now, mortgage rates will certainly continue to fluctuate, and they could even rise going into 2023.

All-time low rates likely won't last forever.

As the economy grows and inflation rises, it's likely interest rates will increase. This is especially true if the Federal Reserve continues to raise its target rate beyond its current target of 2.5%.

So what can you do to prepare for this? One option is to get a fixed mortgage and lock in your rate for 30 years. That way, even if interest rates rise over time, you'll stay at a lower fixed rate. Another option is to reduce your monthly payments by refinancing into an adjustable-rate mortgage (ARM) with lower payments than your current ARM or fixed mortgage.

A variety of factors affect mortgage rates, including the economy.

Mortgage rates are tied to the economy, which is why we often see changes in mortgage rates that mirror changes in the economy.

The Federal Reserve (which is comprised of regional banks) sets interest rates for all types of loans and gets its information from a variety of sources, including:

• The U.S. stock market (including index values like the Dow Jones Industrial Average)
• The bond market (a bond is a loan issued by governments or corporations and can be bought or sold on an exchange; buying bonds is known as investing in them). Mortgage rates are based on yields from bonds issued by countries with low inflation rates because inflation makes it harder for lenders to predict future repayments—so if there's little risk of inflation, lenders can offer lower interest rates on their loans.
• The Federal Reserve’s monetary policy.
• Economic growth and inflation
• The Consumer Price Index (CPI) measures the average prices of a market basket of goods and services. These include food, clothing, shelter, fuel, transportation costs, medical care expenses, and recreational costs. Inflation is measured by taking the percentage change in CPI over a set period of time.
• Housing market data, and state over the housing market.

Several economic factors could affect mortgage rates in the next few years: inflation and economic growth are two variables that can cause lenders to raise their lending standards.

A good credit score can help you get a more favorable mortgage rate.

A good credit score can help you get a more favorable mortgage rate.

To get a good credit score, pay your bills on time and make sure you don't go over your limit.

Credit scores are based on five key factors:

• Payment history
• Debt amounts,
• Length of payments made
• Types of accounts
• New credit inquiries.

Good credit scores range from 700 to 799; fair scores fall between 650 and 699; while poor scores are under 650. You can check yours by visiting AnnualCreditReport.com or contacting one of the three main credit bureaus (Equifax®, Experian®, or TransUnion®). If you're worried about how it will affect your score if you do this often, check out CreditKarma's free service; it gives users access to their current FICO® Score. 

How to lock today's mortgage rate?

While locking your mortgage rate is a great way to ensure that you don’t pay more than you have to, it isn’t always necessary. If you are buying within the next year or so, it may make sense to lock in now rather than risk market changes that could occur before closing day. If you are borrowing money for 30 years, locking today means paying a higher interest rate on your loan—but not as high as if interest rates were to increase in the coming months and years.

If you plan on staying put for a while or refinancing again in five years (or longer), then locking your rate in now could save you some money compared with what would be available just around the corner.

The most important thing is making sure that whatever decision gets made is based on facts and not emotion!

Mortgage rate predictions for August 2022 are difficult because no one can predict the economic conditions of the next year with certainty.

Many will agree the past two years have been nothing short of a wild ride of unpredictable events in the United State and around the world. Unfortunately, we are not time travelers and therefore have no way of knowing what the future will hold regarding mortgage interest rates and the economy. But one thing is certain: mortgage rates will continue to be used as a tool to combat a rise in inflation. This means it's never been a better time to buy your lock in your rate and buy your dream home in 2022!

Low-interest rates are a good incentive to buy a new home, so if you're considering putting down roots here in Orlando or anywhere throughout the state of Florida or elsewhere around the country, now may be the best time for you to do it.

Conclusion

We hope this blog post has given you a good overview of the August 2022 mortgage interest rate market and helped you decide what kind of mortgage or home loan is right for your situation. Mortgage rates will likely keep climbing over the next few years, but there’s still plenty of time to get started on your home loan application. If you have any questions about our information or need advice from someone who can help with choosing a lender or getting pre-approved for a mortgage, just give your favorite Token Realty Real Estate Agent a call today!