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Today’s mortgage and refinance rates: December 31, 2021 | Competitive adjustable rates

For most of 2020 and 2021, fixed mortgage rates were significantly lower than adjustable rates. Now, adjustable rates are dropping and staying competitive with fixed rates.

You may like an adjustable-rate mortgage if you plan to move before the initial rate period ends, because then you won’t risk a rate increase. But because rates are at all-time lows, rates will likely be higher by the time your rate period ends. If you plan to stay in the home for a long time, a fixed-rate mortgage could be a better deal so you keep a low rate.

Mortgage rates today

Mortgage refinance rates today

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Use our free mortgage calculator to see how today’s interest rates will affect your monthly payments.

By clicking on “More details,” you’ll also see how much you’ll pay over the entire length of your mortgage, including how much goes toward the principal vs. interest.

Will mortgage rates go up in 2022?

The Federal Reserve has been aggressively buying assets, including mortgage-backed securities, to help the US economy during the COVID-19 pandemic. This has been one factor keeping mortgage rates low.

In early November, the Fed announced that it will begin tapering asset purchasing. Then it said in December that it will be tapering purchasing at twice the speed than it originally predicted, and it plans to increase the federal funds rate three times in 2022.

These announcements indicate that mortgage rates could go up in 2022. You may want to lock in a low mortgage rate before the end of the year if you’re worried about rates going up in 2022.

What is a fixed-rate mortgage vs. adjustable-rate mortgage?

In the past few weeks, fixed mortgage rates have been inching upward as adjustable rates drop. An adjustable-rate mortgage (ARM) could be a good deal depending on your situation.

Fixed-rate mortgages lock in your rate for the entire life of your loan. Adjustable-rate mortgages lock in your rate for the first few years, then your rate goes up or down periodically.

Because adjustable rates are starting low, they are worthwhile options if you plan on selling your home before the interest rate changes. For instance, if you get a 7/1 ARM and want to move before seven years, you won’t risk paying a higher rate later.

But if you want to buy a forever home, a fixed rate could still be a better fit. Fixed rates are relatively low, and you won’t chance your rate increasing in a few years.

Read the original article on Business Insider

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