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Published: Feb 16, 2021 10 min read
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The latest data shows interest rates for 15-year and 30-year fixed-rate mortgages declining at the end of last week compared to a week ago. Rates for the 5/1 ARM, however, are a little higher.

Rates have been hovering close to 3.1% since the beginning of the year. Homeowners and buyers can take advantage of rates that are close to historic lows to either refinance their mortgages or purchase a home.

  • The latest rate on a 30-year fixed-rate mortgage is 3.13%
  • The latest rate on a 15-year fixed-rate mortgage is 2.327%
  • The latest rate on a 5/1 jumbo ARM is 2.905%

Current 30-year fixed mortgage rates

  • The latest average rate is 3.13%, down 0.011 percentage points from last week.

The most popular type of mortgage is the 30-year fixed-rate loan. With this mortgage, both your interest rate and your monthly payments are fixed for the full term of the loan.

When compared to a 15-year loan, your interest rate will usually be higher. Your monthly payment, on the other hand, will be lower because you're spreading your payments out over a longer period of time. However, you will pay more in total interest by the time you pay off the loan.

Current 15-year fixed mortgage rate

  • The latest average is 2.327%, down 0.003 percentage points from last week.

With a 15-year fixed-rate mortgage your interest will remain fixed just lie with a 30-year fixed loan. Your monthly payment will also stay consistent throughout the life of the loan. These loans tend to be attractive to buyers who want to save on interest.

The interest rate on a 15-year loan is usually lower than on a 30-year loan and you pay for less time. As a result, you will pay less interest over the life of the loan. However, your monthly payment will be higher.

Current 5/1 jumbo adjustable-rate mortgage rates

  • The latest average is 2.905%, up 0.42 percentage points from last week

Adjustable-rate mortgages will have an initial fixed-rate period during which your interest rate will remain unchanged. After that initial period, the rate will reset according to market conditions. With a 5/1 mortgage, your rate will be fixed for the first five years of the loan, then reset every year, meaning your monthly payment could either increase or decrease. There are also 7/1 and 10/1 ARMs.

When compared to fixed-rate mortgages, an adjustable-rate mortgage normally has a lower initial interest rate. However, due to the pandemic's effect on the economy, the interest on fixed-rate loans, particularly the 30-year loan, is lower than on an ARM.

Current VA, FHA, and jumbo loan rates

The average rates for FHA, VA and jumbo loans are:

  • The latest rate on a 30-year FHA mortgage is 2.94%.
  • The latest rate on a 30-year VA mortgage is 2.994%.
  • The latest rate on a 30-year jumbo mortgage is 3.564%.

Current mortgage refinance rates

The average rates for 30-year loans, 15- year loans and 5/1 jumbo ARMs are:

  • The latest rate on a 30-year fixed-rate refinance is 3.453%.
  • The latest rate on a 15-year fixed-rate refinance is 2.582%.
  • The latest rate on a 5/1 jumbo ARM is 3.138%.

Where are mortgage rates heading?

Mortgage interest rates dropped throughout 2020, as policy makers and investors adjusted to the economic fallout from the COVID-19 pandemic. To start 2021, rates briefly dropped to the lowest levels on record (2.65%, according to Freddie Mac, which tracks weekly rates for the most qualified borrowers). Rates have trended higher in the weeks since.

Millions of homeowners responded to low mortgage rates by refinancing existing loans and taking out new ones, often on homes they may not have been able to afford if rates were higher. Lately the trend has been for larger, more spacious homes away from urban centers.

Looking ahead, experts believe interest rates will rise in 2021, but modestly. Factors that could influence rates include how quickly the COVID-19 vaccines are distributed and quickly Congress and Biden administration can agree on an economic package. More vaccinations and stimulus from the government could all lead to improved economic conditions and 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.

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 of 2020. The Fed announced plans to maintain liquidity by dropping the short-term Federal Fund interest rate to between 0% and 0.25%. The central bank also pledged to buy mortgage-backed securities and treasuries. As recently as late January, the Fed has reaffirmed its commitment to these policies for the foreseeable future.
  • 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 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 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, or 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 previous business day. Today, we are showing rates for Friday, February 12. Rates are not available for Monday, February 15 due to Presidents Day. 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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Rates are subject to change. All information provided here is accurate as of the publish date.