Mortgage Rates Keep Decreasing | April 19, 2021
Today's rates are down for almost all loan types and terms. Rates have been dropping since the beginning of last week. The average rate for a 30-year fixed-rate purchase loan is now below 3.4% after dropped another 0.025 percentage points. The rate for a 30-year refinance loan decreased by 0.021 percentage points.
The lower rates may make an already busy spring buying season even busier as attractive rates could draw more buyers. However, it is unclear how long the lower rates will last.
- The latest rate on a 30-year fixed-rate mortgage is 3.35%.
- The latest rate on a 15-year fixed-rate mortgage is 2.512%.
- The latest rate on a 5/1 jumbo ARM is 2.884%.
- The latest rate on a 7/1 conforming ARM is 4.293%.
- The latest rate on a 10/1 conforming ARM is 3.917%.
30-year fixed mortgage rates today
- The 30-year rate is 3.35%.
- That's a one-day decrease of 0.025 percentage points.
- That's a one-month decrease of 0.281 percentage points.
The interest rate and monthly payment on a 30-year fixed-rate mortgage will remain constant throughout the full term of the loan. The mortgage will be paid off in 360 months unless you refinance or sell the home. You can also shorten the loan term by making paying extra each month or making occasional lump sum payments applied to the principal.
Compared to a shorter-term loan like a 15-year mortgage, the interest rate on a 30-year mortgage will be higher. The monthly payments, on the other hand, will be lower because the balance is being stretched out for twice as long. Even though the monthly payments are lower, you'll pay more in total interest over the life of the loan because you're paying a higher rate for a longer time.
The low monthly payments make a 30-year mortgage the most popular loan around.
15-year fixed mortgage rates today
- The 15-year rate is 2.512%.
- That's a one-day decrease of 0.021 percentage points.
- That's a one-month decrease of 0.18 percentage points.
Both the interest rate and monthly payment on a 15-year fixed-rate loan won't change over the full loan term. The mortgage will be paid off in 180 months unless you pay extra each month, refinance or sell the home. You can also make extra lump sum payments applied to the principal to pay the loan off faster.
The interest rate on a 15-year loan will be lower than that on a 30-year loan. Because the payments are spread out over half the time, the monthly payment on a 15-year loan will be higher. However, you will save on total interest because you'll be paying a lower rate over a shorter time.
A 15-year mortgage can be a good option for borrowers who can afford the higher monthly payments in exchange for a shorter term and lower total interest.
5/1 jumbo adjustable-rate mortgage rates today
- The 5/1 ARM rate is 2.884%.
- That's a one-day decrease of 0.007 percentage points.
- That's a one-month decrease of 0.107 percentage points.
The interest rate and monthly payment on an adjustable-rate mortgage will be fixed for the first few years of the loan term. Once that period ends, the interest rate will reset, usually on a yearly basis. The monthly payments will change on a yearly basis as well in line with changes in the interest rate.
If you take out a 5/1 adjustable-rate loan, the interest rate will be fixed for the first five years of the mortgage then reset every year. Adjustable-rate loans will be paid off in 360 months. You can also get a 7/1 or 10/1 ARM.
A 5/1 ARM will usually have one of the lowest interest rates on the market. The low interest rate makes this type of loan a potential option for those who want a low rate and don't plan on staying in the home beyond five years. However, if you plan to stay in the home for a longer time know there is a risk the rate could increase.
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 3.043%.
- The rate on a 30-year VA mortgage is 3.091%.
- The rate on a 30-year jumbo mortgage is 3.579%.
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 3.68%.
- The refinance rate on a 15-year fixed-rate refinance is 2.716%.
- The refinance rate on a 5/1 jumbo ARM is 3.074%.
- The refinance rate on a 7/1 conforming ARM is 4.579%.
- The refinance rate on a 10/1 conforming ARM is 4.54%.
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 Friday, April 19. 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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