Today's Mortgage Rates Start the Week Higher | April 5, 2021

Interest rates are higher today after taking a brief break last week. The average rate on a 30-year fixed-rate mortgage increased to 3.625% from 3.6%.

Most other loan categories are also seeing slightly higher rates. Even with the latest increase, rates are largely still below 4% and considered to be historically low. If you're interested in buying a home or refinancing a home loan, you should still be able to take advantage of favorable rates.

The latest rate on a 30-year fixed-rate mortgage is 3.625%.
The latest rate on a 15-year fixed-rate mortgage is 2.649%.
The latest rate on a 5/1 jumbo ARM is 2.971%.
The latest rate on a 7/1 conforming ARM is 4.434%.
The latest rate on a 10/1 conforming ARM is 4.733%.

Current 30-year fixed mortgage rates

The 30-year rate is 3.625%.
That's a one-day increase of 0.025 percentage points.
That's a one-month increase of 0.105 percentage points.

With a 30-year fixed-rate mortgage, your interest rate and monthly payments will remain steady over the full term of the loan. The mortgage is paid off in 360 months if you only make the required monthly payments. You can pay the loan off faster by either paying extra each month or paying the balance off in a lump sum. If you refinance the loan, your term will reset.

The interest rate on a 30-year mortgage will be higher than on a 15-year loan of the same size. The monthly payment, on the other hand, will be lower because you'll be spreading the payments out for twice as long. However, you'll pay more in total interest over the full term of the loan because you'll be paying a higher rate for a longer time.

Most borrowers are attracted to a 30-year loan because of the low monthly payments even though they are paying more interest.

Current 15-year fixed mortgage rates

The 15-year rate is 2.649%.
That's a one-day increase of 0.012 percentage points.
That's a one-month increase of 0.077 percentage points.

Both the interest rate and the monthly payment on a 15-year fixed-rate mortgage won't change throughout the full term of the loan. By making the required monthly payment, the loan will be paid off in 180 months unless you refinance. You can also pay the loan off faster by paying extra each month or making a lump sum payment.

Compared to a 30-yar loan, the interest rate on a 15-year mortgage will be lower but because you'll be paying the balance off in half the time, the monthly payments will be higher. Still, by paying a lower rate over a shorter term, you'll pay less in total interest than you would with a 30-year loan.

The opportunity to pay the loan off faster or save on interest is why some borrowers who can afford the higher payments choose a 15-year loan.

Current 5/1 jumbo adjustable-rate mortgage rates

The 5/1 ARM rate is 2.971%.
That's a one-day increase of 0.003 percentage points.
That's a one-month increase of 0.126 percentage points.

An adjustable-rate mortgage will actually have a fixed interest rate for a pre-specified number of years. As a result, the monthly payments won't change at first. Once the fixed-rate period ends, however, the interest rate will become variable and can either increase or decrease according to market conditions.

Rates will usually change every year. Once the rate starts to change, the monthly payment will also change in accordance with increases or decreases in the rate.

On a 5/1 adjustable-rate mortgage, for example, the interest rate and monthly payment will be fixed for the first five years and then adjust every year afterward. Other adjustable-rate terms include a 7/1 and a 10/1. ARMs will have a full term of 30 years.

The initial rate on a 5/1 ARM is usually among the lowest for a mortgage. The low rate can make this loan attractive to borrowers who don't intend to stay in the home long-term. However, if they stay beyond the first five years, they should be aware that the interest rate could increase substantially.

Current 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 3.382%.
The rate on a 30-year VA mortgage is 3.461%.
The rate on a 30-year jumbo mortgage is 3.771%.

Current 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 3.922%.
The refinance rate on a 15-year fixed-rate refinance is 2.972%.
The refinance rate on a 5/1 jumbo ARM is 3.415%.
The refinance rate on a 7/1 conforming ARM is 4.821%.
The refinance rate on a 10/1 conforming ARM is 5.093%.

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, 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 2. 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.