Lately, mortgage rates have been trending upward. Average 15-year fixed rates averaged 4.85%, up from 4.78% last week, according to the latest data from Bankrate. Meanwhile rates on 30-year fixed mortgages also increased, averaging 5.51%, up from 5.44% a week earlier. And some pros say we may see more increases down the line. (You can see the lowest rates you may qualify for here.)
What’s next for mortgage rates?
For the last several months, mortgage rates have been climbing up, and that may continue: Indeed, we talked to six economists and real estate pros and here’s what they predict will happen to rates. “Rates have already risen significantly since the start of the year, and they’re poised to climb even higher by the time 2023 comes around. While it isn’t guaranteed, rates of 6% or higher are possible,” LendingTree’s senior economic analyst Jacob Channel told MarketWatch Picks. But some others say rates could level off: “It’s even possible that rates could hit a ceiling over the next few weeks or months and then remain steady or even come back down from there,” Robert Heck, vice president of mortgage at Morty, told MarketWatch Picks.
Why do mortgage rates matter?
Even fluctuations of 1% can equal tens of thousands of dollars over the life of a loan, which is why it may be important to lock in the lowest possible rate available to you. But if the rate you’ve managed to lock in isn’t as low as you’d hoped for, it doesn’t mean you should hold off on buying the home, if you love it and can afford it, pros say — as trying to time the market and get an even lower rate isn’t something that’s ever guaranteed.
How to get the lowest mortgage rate
Experts recommend getting quotes from 3 to 5 lenders to make sure you’re getting the lowest mortgage rate. Take time to understand various lender’s rates and terms and choose the one that seems to suit your needs best. Not only do lenders look at your credit score and financial accounts, they also will calculate a borrower’s debt-to-income ratio (DTI), a number you want to make sure is at or below 36%. To calculate your DTI, divide your monthly debt payments (mortgage; credit card payments; auto, student or personal loans; child support) by your gross monthly income. If you’re within the 36% threshold, your chances of being denied a mortgage decrease, and surprisingly, having a higher DTI number is the single top reason borrowers are denied mortgages.