Today's Mortgage & Refinance Rates — February 22, 2021

Mortgage rates have ticked up again, continuing an upward trend. Today, all but one loan type is clocking both daily and weekly gains. The average rate for a 5/1 ARM edged is slightly lower than last week.

Although mortgage rates have been rising recently, they are still very low historically speaking. The market remains very favorable for many homeowners interested in refinancing and buyers seeking to purchase a home.

The average rate on a 30-year fixed-rate mortgage is 3.256% today.
The average rate on a 15-year fixed-rate mortgage is 2.433% today.
The average rate on a 5/1 jumbo ARM is 2.927% today.

30-year fixed mortgage rates today

Today's 30-year rate is 3.256%.
That's a one-day increase of 0.009 percentage points.
That's a one-week increase of 0.068 percentage points
That's a one-month increase of 0.168 percentage points.

The most popular mortgage is the 30-year fixed-rate loan, with roughly two-thirds of borrowers opting for this loan type. With a 30-year mortgage, both your interest rate and monthly payment remain unchanged for the entire length of the loan.

When compared to a shorter-term loan, such as a 15-year mortgage, the interest rate tends to be higher. The overall interest paid on the loan will also be higher, as you're paying for the loan for twice the amount of time. However, because the payments are being made for a longer period of time, the monthly payment tends to be lower.

15-year fixed mortgage rate today

Today's 15-year rate is 2.433%.
That's a one-day increase of 0.011 percentage points.
That's a one-week increase of 0.036 percentage points.
That's a one-month increase of 0.111 percentage points.

With a 15-year fixed-rate mortgage, your interest rate and the monthly payment will also remain unchanged throughout the full term of the loan. However, you will pay off the loan in half the time of a 30-year.

As today's rates show, 15-year loans usually have a lower interest rate than 30-year loan. However, a shorter loan will have a higher monthly payment. The 15-year loan is attractive for buyers who can afford higher payments because you will pay less in overall interest on the loan and pay off the debt in half the time.

5/1 jumbo adjustable-rate mortgage rates today

Today's 5/1 ARM rate is 2.927%.
That's a one-day increase of 0.001 percentage points.
That's a one-week decrease of 0.035 percentage points.
That's a one-month increase of 0.109 percentage points.

Adjustable-rate mortgages mean that your interest rate will not stay the same for the full loan term. An ARM will have a fixed interest rate for a specified period of time. Once that fixed period ends, your interest rate will change according to market conditions. As a result, your monthly payments will also change. With a 5/1 ARM, your interest rate and payments will be fixed for the first five years of the loan, then reset every year afterward.

Adjustable-rate mortgages usually feature lower interest rates than 30-year fixed-rate mortgages during the initial fixed-rate period. However, with the effects of the pandemic on the economy still being felt, you can sometimes find a lower rate on a 30-year fixed-rate mortgage.

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 3.211%.
The latest rate on a 30-year VA mortgage is 3.193%.
The latest rate on a 30-year jumbo mortgage is 3.583%.

Current mortgage refinance rates

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

The latest refinance rate on a 30-year fixed-rate refinance is 3.679%.
The latest refinance rate on a 15-year fixed-rate refinance is 2.757%.
The latest refinance rate on a 5/1 jumbo ARM is 3.255%.

Where are mortgage rates heading?

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, 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 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.

Today's Mortgage Rates Tick Up | February 22, 2021