Mortgage rates for average borrowers fell today for the second time. The declines are across the board, including fixed-rate and adjustable rate mortgages, a range of loan lengths and both purchase and refinance loans.
The average rate for a 30-year fixed-rate loan fell to 3.391%, the first time the rate has fallen below 3.4% since early-March. A month ago, the rate was 3.608%.
Today's lower rates could help ease the affordability crunch the housing market has felt over the last few weeks. How long they'll stay this low remains to be seen.
- The latest rate on a 30-year fixed-rate mortgage is 3.391%.
- The latest rate on a 15-year fixed-rate mortgage is 2.542%.
- The latest rate on a 5/1 jumbo ARM is 2.912%.
- The latest rate on a 7/1 conforming ARM is 4.315%.
- The latest rate on a 10/1 conforming ARM is 4.19%.
30-year fixed mortgage rates today
- The 30-year rate is 3.391%.
- That's a one-day decrease of 0.089 percentage points.
- That's a one-month decrease of 0.217 percentage points.
A 30-year fixed-rate mortgage will have a monthly payment that won't change over the term of the loan. As a result, the monthly payment won't change either. The mortgage will be paid off in 360 months. Less if you pay extra, refinance or sell the home. Extra mortgage payments applied to the principal will also reduce the amount of total interest you pay.
The interest rate on a 30-year loan will be higher than the rate on a short-term loan like a 15-year, however, the monthly payment will be lower because you're dividing the balance over twice the months. Because you're paying a higher rate over a longer term, you'll pay more in total interest on a 30-year loan compared to a 15-year.
Most home loan borrowers choose a 30-year mortgage because of the lower monthly payments.
15-year fixed mortgage rates today
- The 15-year rate is 2.%.
- That's a one-day decrease of 0.043 percentage points.
- That's a one-month decrease of 0.125 percentage points.
The interest rate on a 15-year fixed-rate loan will also remain unchanged throughout the full term of the mortgage. The monthly payment will remain unchanged as well. If you only pay the required monthly minimum, the mortgage will be paid off in 180 months. You can also choose to pay extra each month or make lump-sum payments if you want to shorten the term of the loan and the amount of interest paid.
A 15-year loan will have a lower interest rate when compared to a 30-year loan, but the monthly payments will be higher. This is because you're paying the balance off in half the time. You will, however, pay less in total interest than you would with a longer term loan because you're paying a lower rate for less time.
Borrowers who can afford the higher monthly payments may find a 15-year loan more practical if they want to save on interest or pay the mortgage off faster.
5/1 jumbo adjustable-rate mortgage rates today
- The 5/1 ARM rate is 2.912%.
- That's a one-day increase of 0.031 percentage points.
- That's a one-month decrease of 0.073 percentage points.
An adjustable-rate mortgage will actually have a fixed interest rate for a number of years. Once that fixed-rate period ends, the interest rate will reset once a year according to market conditions. Your monthly payment won't change while the loan is in the fixed-rate period, but will change in response to any changes in the interest rate.
A 5/1 adjustable-rate loan, for example, will have a fixed rate and monthly payment for the first five years of the mortgage, then reset every year after. You can also find ARMs with 7/1 and 10/1 fixed-rate periods. ARMs will typically have a full term of 360 months.
The interest rate on a 5/1 ARM will be among the lowest on the market, making it a potential option for borrowers who don't plan to keep the home longer than five years. However, if they decide to stay in the home, they should be aware that the rate could rise.
Today's VA, FHA and jumbo loan rates
The average rates for FHA, VA and jumbo loans are:
- The rate on a 30-year FHA mortgage is 3.104%.
- The rate on a 30-year VA mortgage is 3.147%.
- The rate on a 30-year jumbo mortgage is 3.642%.
Today's mortgage refinance rates
The average rates for 30-year loans, 15- year loans and 5/1 jumbo ARMs are:
- The refinance rate on a 30-year fixed-rate refinance is 3.712%.
- The refinance rate on a 15-year fixed-rate refinance is 2.752%.
- The refinance rate on a 5/1 jumbo ARM is 3.165%.
- The refinance rate on a 7/1 conforming ARM is 4.597%.
- The refinance rate on a 10/1 conforming ARM is 4.87%.
Where are mortgage rates heading this year?
Mortgage rates sunk through 2020. Millions of homeowners responded to low mortgage rates by refinancing existing loans and taking out new ones. Many people bought homes they may not have been able to afford if rates were higher.
In January 2021, rates briefly dropped to the lowest levels on record, but trended higher through the month and into February.
Looking ahead, experts believe interest rates will rise more in 2021, but modestly. Factors that could influence rates include how quickly the COVID-19 vaccines are distributed and when lawmakers can agree on another economic relief package. More vaccinations and stimulus from the government could lead to improved economic conditions, which would boost rates.
While mortgage rates are likely to rise this year, experts say the increase won’t happen overnight and it won’t be a dramatic jump. Rates should stay near historically low levels through the first half of the year, rising slightly later in the year. Even with rising rates, it will still be a favorable time to finance a new home or refinance.
Factors that influence mortgage rates include:
- The Federal Reserve. The Fed took swift action when the pandemic hit the United States in March of 2020. The Fed announced plans to keep money moving through the economy by dropping the short-term Federal Fund interest rate to between 0% and 0.25%, which is as low as they go. The central bank also pledged to buy mortgage-backed securities and treasuries, propping up the housing finance market. The Fed has reaffirmed its commitment to these policies for the foreseeable future multiple times, most recently at a late January policy meeting.
- The 10-year Treasury note. Mortgage rates move in lockstep with the yields on the government’s 10-year Treasury note. Yields dropped below 1% for the first time in March 2020 and have been slowly rising since then. Currently, yields have been hovering above 1% since the beginning of the year, pushing interest rates slightly higher. On average, there is typically a 1.8 point “spread” between Treasury yields and benchmark mortgage rates.
- The broader economy. Unemployment rates and change in gross domestic product are important indicators of the overall health of the economy. When employment and GDP growth are low, it means the economy is weak, which can push interest rates down. Thanks to the pandemic, unemployment levels reached all-time highs early last year and have not yet recovered. GDP also took a hit, and while it has bounced back 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 little bit of work and will depend on both personal financial factors and market conditions.
Check your credit score and credit report. Errors or other red flags that may be dragging your credit score down. Borrowers with the highest credit scores are the ones who will get the best rates, so checking your credit report before you start the house-hunting process is key. Taking steps to fix errors will help you raise your score. If you have high credit card balances, paying them down can also provide a quick boost.
Save up money for a sizeable down payment. This will lower your loan-to-value ratio, which means how much of the home’s price the lender has to finance. A lower LTV usually translates to 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 you have the money to finance the home purchase.
Shop around for the best rate. Don’t settle for the first interest rate that a lender offers you. Check with at least three different lenders to see who offers the lowest interest. Also consider different types of lenders, such as credit unions and online lenders in addition to traditional banks.
Also take time to find out about different loan types. While the 30-year fixed-rate mortgage is the most common type of mortgage, consider a shorter-term loan like a 15-year loan or an adjustable-rate mortgage. These types of loans often come with a lower rate than a conventional 30-year mortgage. Compare the costs of all to see which one best fits 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 — can be more affordable options for those who qualify.
Finally, lock in your rate. Locking your rate once you’ve found the right rate, loan product and lender will help guarantee your mortgage rate won’t increase before you close on the loan.
Our mortgage rate methodology
Money’s daily mortgage rates show the average rate offered by over 8,000 lenders across the United States the most recent business day rates are available for. Today, we are showing rates for Wednesday, April 14. Our rates reflect what a typical borrower with a 700 credit score might expect to pay for a home loan right now. These rates were offered to people putting 20% down and include discount points.
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