Mortgage rates continued their upward trend with rates rising from last Friday on almost all types of loans. Refinancing rates have also increased over the past week. Although rates are on the rise this week, they are still very good for those looking to buy a home or refinance their mortgage.
- Today’s rate on a 30 year fixed rate mortgage is 3.13%
- Today’s rate on a 15 year fixed rate mortgage is 2.337%
- Today’s rate on an ARM 5/1 jumbo is 2.846%
Today’s 30-year fixed mortgage rates
- Today’s average is 3.13%, up 0.77 percentage points from last week.
Conventional 30-year fixed rate mortgages account for 75% of all new mortgages, making them the most popular type of home loan sought by borrowers. With this type of mortgage, you’ll pay a fixed monthly amount for the life of the loan (or until you sell or refinance). Your interest rate will also be the same for the life of the loan.
Compared to a 15 year fixed rate mortgage, you will have to pay a higher interest rate on a 30 year mortgage, but your monthly payments will be lower because you are spreading the debt over a longer period of time. . However, you will pay more interest over the life of the loan.
Today’s 15-year fixed mortgage rates
- Today’s average is 2.337%, up 0.029 percentage point from last week.
A 15-year mortgage can be a good option for those who want to save on the full amount of interest paid over the life of the loan. These loans carry lower interest rates than 30-year mortgages because borrowers pay them off in half the time. However, since the loan is repaid in a shorter period, your monthly mortgage payments will be higher than with a 30-year loan.
As with other fixed rate mortgages, your interest rate and the amount of your monthly payments will not change during the life of the loan.
Today’s 5/1 Jumbo Variable Rate Mortgage Rates
- Today’s average is 2.846%, up 0.035 percentage points from last week
Variable rate mortgages were popular with some buyers because they offered the lowest initial interest rate. However, today the 30 year fixed rate mortgage often offers a lower interest rate. As a result, MRAs may have become less attractive.
Variable rate mortgages have a fixed initial term, during which the interest rate on your loan and your monthly payments will stay the same. After this initial period, the interest rate will increase or decrease depending on market conditions.
With an ARM 5/1, your interest rate will be fixed for the first five years of the loan, then reset each year thereafter. Therefore, your mortgage payments will be the same for the first five years of the loan, but may change each year thereafter.
Today’s VA, FHA, and Jumbo Loan Rates
The average rates for FHA, VA and jumbo loans are:
- Today’s rate on a 30-year FHA mortgage is 2.965%.
- Today’s rate on a 30-year VA mortgage is 3.046%.
- Today’s rate on a 30-year jumbo mortgage is 3.579%.
Current mortgage refinancing rates
The average rates for 30-year, 15-year and 5/1 jumbo ARM loans are:
- Today’s rate on a 30 year fixed rate refinance is 3.48%.
- Today’s rate on a 15 year fixed rate refinance is 2.591%.
- Today’s rate on a Jumbo ARM 5/1 is 3.239%.
Where are mortgage rates going?
The past year has been eventful for the mortgage industry. Economic stress caused by the COVID-19 pandemic has led interest rates to set 16 new all-time lows in 2020. To begin 2021, rates fell to 2.65%, the current record. (That’s according to Freddie Mac, who tracks weekly rates for the most qualified borrowers.)
As a result, millions of homeowners have taken advantage of low rates to refinance their existing mortgages and save on their monthly payments. Lower interest rates have also made it easier for many buyers to afford larger, more spacious homes away from urban centers.
Looking ahead, there are a number of factors that many experts believe will drive interest rates to slightly higher levels by the end of 2021. These factors include the distribution of the COVID-19 vaccine and increased economic revival of the new administration, which lead to improved economic conditions.
While mortgage rates are likely to rise, experts say the increase will not happen overnight and it will not be a dramatic jump. Rates are expected to remain at historically low levels throughout the first half of the year, only to recover slightly later in the year. Even with rates rising, this will still be a good time to finance a new home.
Factors that influence mortgage rates include:
- The Federal Reserve. The Federal Reserve took swift action when the pandemic first hit the United States in March 2020. The Fed announced its intention to maintain liquidity by lowering the Federal Fund’s short-term interest rate to between 0 % and 0.25%. The central bank has also committed to buying mortgage-backed securities and treasury bills. As late as the end of January, the reaffirmed its commitment to these policies for the foreseeable future.
- The 10-year Treasury note. Mortgage rates move at the same pace as the yields on 10-year government treasury bills. Yields fell below 1% for the first time in March and have slowly risen since then. Currently, yields have hovered above 1% year-to-date, pushing interest rates up slightly. On average, there is typically a 1.8 point “spread” between Treasury yields and benchmark mortgage rates.
- The economy in the broad sense. Unemployment levels and gross domestic product are important indicators of the overall health of the economy. When unemployment and GDP are low, it means the economy is weak, which can lower interest rates. Thanks to the pandemic, unemployment levels hit historic highs early last year and have yet to recover. GDP has also been affected, and although it has rebounded somewhat, there is still a lot of room for improvement.
Tips for getting the lowest mortgage rate possible
There is no universal mortgage rate that all borrowers receive. Qualifying for the lowest mortgage rates takes a bit of work and will depend on both personal financial factors and market conditions.
Look for mistakes or other red flags that could lower your credit score. The borrowers with the highest credit scores will get the best rates, so it’s essential to check your credit report before you begin the home search process. Taking action to correct mistakes will help increase your score. If you have high credit card balances, paying them off can also give you a quick boost.
Save money for a large down payment. This will lower your loan-to-value ratio, or the portion of the house price that the lender has to finance. A lower LTV usually results in a lower mortgage rate. Lenders also like to see money that has been saved in an account for at least 60 days. It tells the lender that you have the money to finance the purchase of the house.
Shop around for the best rate. Don’t settle for the first interest rate a lender offers you. Check with at least three different lenders to see who is offering the lowest interest rate. Also consider the different types of lenders, such as credit unions and online lenders, in addition to traditional banks.
Also take the time to learn about the different types of loans. While the 30-year fixed-rate mortgage is the most common type of mortgage, consider a shorter-term loan such as a 15-year loan or an adjustable rate mortgage. These types of loans often have a lower rate than a conventional 30-year mortgage. Compare everyone’s costs to see which one best suits your needs and financial situation. Government loans – such as those backed by the Federal Housing Authority, the Department of Veterans Affairs, and the Department of Agriculture – may be more affordable options for those who qualify.
Finally, lock in your rate. Locking in your rate once you’ve found the right rate, the right loan product, and the lender will help ensure that your mortgage rate doesn’t increase until the loan closes.
Our mortgage rate methodology
Money’s Daily Mortgage Rates show the average rate offered by over 8,000 lenders in the United States on the previous business day. Our rates reflect what a typical borrower with a credit score of 700 can expect to pay on a home loan right now. These rates were offered to people contributing 20% and include discount points.
