Mortgage rates have increased following upbeat economic news and rate hike talk from the Federal Reserve, according to a recent survey.

Even though rates are still significantly cheaper than a few years ago, further increases for home loan rates are likely in the future.

If homeowners refinance before the rates start rising, they may still be able to save thousands of dollars.

Freddie Mac reports that the average 30-year fixed-rate mortgage interest rate increased to 3.12% last week, from 3.10% the previous week.

In response to economic improvement and monetary policy shifts, mortgage rates went up, said Freddie Mac's chief economist, Sam Khater.  Unemployment is falling in the United States, wages are rising, and the Federal Reserve is ending its pandemic policies.

At the time of the Freddie Mac survey, 30-year fixed-rate mortgages had an average rate of 2.67%. Despite this, rates are still quite a bit lower than before COVID-19 became so widespread.

There may be no more deals for mortgage borrowers for a while. Post a two-day-long meeting, the Fed indicated that they would increase interest rates several times in 2022. 

Reports by Freddie Mac state that the average interest rate on a 15-year fixed-rate mortgage last week was 2.34%, down from 2.38% the week before. At this time last year, 15-year loans had an average rate of 2.21%.
Freddie Mac's numbers are averages, so one might find a lender with a lower rate than average. If you look around, you might find 30-year mortgages at under 3% - and 15-year loans at under 2%.

Short-term refinancing is popular with homeowners who can handle higher monthly payments. You will pay much less interest over the life of your loan if you have a 15-year mortgage.

Mortgage rates that adjust every five years

ARM rates averaged 2.45% last week, unchanged from the week before. These loans averaged 2.79% last year.

In general, ARMs have lower rates at the beginning than fixed-rate mortgages. Eventually, they begin to adjust - moving up or down in accordance with the prime rate or another benchmark.

What is the impact of Omicron on mortgage rates?

In the near term, mortgage rates may moderate, depending on how fast the new variant spreads. As earlier COVID variants raised economic threat levels, they helped keep mortgage rates lower.

In Peter Warden's words, if Omicron wrecks the United States in the same way it has ravaged Europe, it will almost most likely cause a good deal of economic damage.

At the start of 2021, rates were at their lowest, and Freddie Mac research shows that homeowners who refinanced into new 30-year loans during the first half of the year saved over $2,800 annually in mortgage payments.

The best way to secure the lowest interest rate possible is to ensure your credit score is as high as possible. Your credit score is free to check.

Be sure to compare multiple mortgage offers in your area and for someone with your credit profile when you start the mortgage process. Comparing at least five rate quotes is widely regarded as the best method for finding a highly discounted rate.

You can cut homeownership costs in other ways if a refinance isn't right for you. You can feel confident you aren't overpaying for your homeowner’s insurance when you obtain quotes from multiple insurers when it's time to renew.