Today's mortgage rates are still relatively low — here's why you may want to apply for one sooner than later

It's no secret that the homebuying market looks a lot different than it did over the last two years. For one, continually increasing mortgage rates are making the process even less affordable and average home prices are still near all-time highs.

Average rates for the ever-popular 30-year fixed-rate mortgage have been floating around the 5% mark since April this year — the first time in over a decade — with the most recent weekly average rate clocking in at 5.81% at the time of this writing.

When comparing all this to 2020 and 2021, rates have certainly gone up. However, putting today's 30-year rate in context with how the average rate has trended over the last few decades shows us that it's still relatively low — and relatively affordable.

According to Freddie Mac data going back to 1971, the long-term average for 30-year mortgage rates is just under 8%, with the record-high average reaching a whopping 16.64% in 1981. All in all, in context, today's 30-year 5.81% rate still falls below the historical average rate.

The 5.81% rate we see today — not so short of the average 6.28% rate we just saw in early June, a record-high since 2008 — might sound the alarm for many homebuyers. After all, these rates show a significant jump from the record-lows we saw in 2020 and 2021. The lowest average 30-year rate was just last year when rates tumbled to an average of 2.96% and even fell as low as 2.65% in Jan. 2021.

Of course it's critical to remind ourselves that the onslaught of the pandemic provided a unique and exceptional circumstance for the housing market. The Federal Reserve's target rate dropped to near zero to stimulate the economy and made borrowing money cheaper across the board, including mortgages. But as the economy rebounds, inflation rises and the Federal Reserve continues monetary tightening, we can see mortgage rates going back up — and they're predicted to climb even higher this year.

If you're looking to buy a new home, now is likely the better time to lock in a lower rate compared to what you may be able to get in the future.

While financing a new home can certainly seem daunting, a mortgage is generally seen as "good debt" to take on. Real estate — or more specifically, the land it sits on — tends to appreciate over time, meaning it goes up in value over the long-term.

Today's economic climate, however, rightfully makes it a bit harder to make a down payment on a new home given the rising prices of everything else. That said, there are lenders who offer some good options.

Chase Bank, for example, offers a DreaMaker℠ loan that allows homebuyers to make a down payment as low as 3% if they meet certain income requirements. This is an attractive financing option for those who want to make as small a down payment as possible in order to reserve more money for other expenses.

Another solid option is SoFi, which offers homebuyers a number of discounts that can help them save as much money as possible throughout the homebuying process. If you lock in a 30-year rate for a conventional loan, you can receive a 0.25% discount on your interest rate. And when you purchase a home through the SoFi Real Estate Center, powered by HomeStory, you can receive up to $9,500 in cash back. Another appealing perk is that SoFi members can also get a $500 discount on their mortgage loan.

Today's increasing mortgage rates are giving homebuyers reason for pause, yet with rates projected to go up even more, it's worth considering locking in what is still a relatively low rate today, historically speaking.

Remember that the mortgage rate you receive will depend on personal variables such as where you live, your credit score and how much you expect to put as a down payment, plus the mortgage type, term and amount.

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