A couple of closely followed mortgage rates shrank over the last week. 15-year fixed and 30-year fixed mortgage rates both trailed off. The average rate of the most common type of variable-rate mortgage, the 5/1 adjustable-rate mortgage, notched higher.

Mortgage rates increased dramatically in 2022, as the Federal Reserve hiked interest rates repeatedly throughout the year. Interest rates are dynamic and unpredictable — at least on a daily or weekly basis — and they respond to a wide variety of economic factors. But the Fed’s actions, designed to mitigate the high rate of inflation, had an unmistakable impact on mortgage rates.

The outlook for 2023 remains uncertain. Though higher rates are likely to here to stay, the biggest increases may be behind us. That noted, trying to time the market is tricky. If inflation persists, more interest rate hikes could follow. As such, you may have better luck locking in a lower mortgage interest rate now instead of waiting; after all, you can always refinance later on. No matter when you decide to shop for a home, it’s always a good idea to seek out multiple lenders to compare rates and fees to find the best mortgage for your specific situation.

30-year fixed-rate mortgages

The 30-year fixed-mortgage rate average is 6.42%, which is a decrease of 21 basis points from one week ago. (A basis point is equivalent to 0.01%.) The most common loan term is a 30-year fixed mortgage. A 30-year fixed rate mortgage will usually have a lower monthly payment than a 15-year one — but often a higher interest rate. You won’t be able to pay off your house as quickly and you’ll pay more interest over time, but a 30-year fixed mortgage is a good option if you’re looking to minimize your monthly payment.

15-year fixed-rate mortgages

The average rate for a 15-year, fixed mortgage is 5.86%, which is a decrease of 13 basis points compared to a week ago. Compared to a 30-year fixed mortgage, a 15-year fixed mortgage with the same loan value and interest rate will have a bigger monthly payment. However, as long as you can afford the monthly payments, there are several benefits to a 15-year loan. You’ll usually get a lower interest rate, and you’ll pay less interest in total because you’re paying off your mortgage much quicker.

5/1 adjustable-rate mortgages

A 5/1 ARM has an average rate of 5.52%, an uptick of 2 basis points from the same time last week. With an adjustable-rate mortgage mortgage, you’ll usually get a lower interest rate than a 30-year fixed mortgage for the first five years. However, since the rate shifts with the market rate, you might end up paying more after that time, as described in the terms of your loan. Because of this, an ARM might be a good option if you plan to sell or refinance your house before the rate changes. If not, changes in the market might significantly increase your interest rate.

Mortgage rate trends

Mortgage rates were historically low at the beginning of 2022 but increased steadily throughout the year. The Federal Reserve raised interest rates seven times in an attempt to curb record-high inflation. As a general rule, when inflation is low, mortgage rates tend to be lower. When inflation is high, rates tend to be higher.

Though the Fed does not directly set mortgage rates, the central bank’s policy actions influence how much you pay to finance your home loan. If you’re looking to buy a house, keep in mind that the Fed has signaled it will continue to raise rates in 2023, and that those increases may drive mortgage rates even higher.

We use data collected by Bankrate, which is owned by the same parent company as CNET, to track changes in these daily rates. This table summarizes the average rates offered by lenders nationwide:

Today’s mortgage interest rates

Rates accurate as of Jan. 10, 2023.

How to shop for the best mortgage rate

To find a personalized mortgage rate, meet with your local mortgage broker or use an online mortgage service. Make sure to think about your current financial situation and your goals when searching for a mortgage.

A range of factors — including your down payment, credit score, loan-to-value ratio and debt-to-income ratio — will all affect your mortgage interest rate. Generally, you want a higher credit score, a larger down payment, a lower DTI and a lower LTV to get a lower interest rate.

The interest rate isn’t the only factor that affects the cost of your home — be sure to also consider additional factors such as fees, closing costs, taxes and discount points. You should talk to several different lenders — such as local and national banks, credit unions and online lenders — and comparison shop to find the best mortgage loan for you.

How does the loan term impact my mortgage?

When picking a mortgage, remember to consider the loan term, or payment schedule. The mortgage terms most commonly offered are 15 years and 30 years, although you can also find 10-, 20- and 40-year mortgages. Mortgages are further divided into fixed-rate and adjustable-rate mortgages. For fixed-rate mortgages, interest rates are set for the life of the loan. For adjustable-rate mortgages, interest rates are set for a certain number of years (commonly five, seven or 10 years), then the rate adjusts annually based on the market interest rate.

One important factor to consider when choosing between a fixed-rate and adjustable-rate mortgage is the length of time you plan on living in your home. Fixed-rate mortgages might be a better fit if you plan on staying in a home for quite some time. Fixed-rate mortgages offer greater stability over time in comparison to adjustable-rate mortgages, but adjustable-rate mortgages can sometimes offer lower interest rates upfront. However you could get a better deal with an adjustable-rate mortgage if you’re only planning to keep your home for a few years. The best loan term all depends on an individual’s situation and goals, so make sure to take into consideration what’s important to you when choosing a mortgage.