Interest rates jumped again today with most loan types seeing increases since yesterday. The only exception are rates offered for adjustable-rate mortgages, which are down slightly from yesterday as well as from this time last week. The average rate on a 30-year fixed-rate mortgage climbed above 3.3% and is now close to 3.4%, the highest it has been since mid-November.
Despite the increase, borrowers can take advantage of what are still historically low rates to either finance a home purchase or refinance an existing mortgage.
- The average rate on a 30-year fixed-rate mortgage is 3.383% today.
- The average rate on a 15-year fixed-rate mortgage is 2.536% today.
- The average rate on a 5/1 jumbo ARM is 2.932% today.
- The average rate on a 7/1 jumbo ARM is 2.918% today.
- The average rate on a 10/1 jumbo ARM is 4.153% today.
30-year fixed mortgage rates today
- Today's 30-year rate is 3.383%.
- That's a one-day increase of 0.084 percentage points.
- That's a one-month increase of 0.292 percentage points.
With a 30-year fixed-rate mortgage your interest rate will remain unchanged for the entire 30-year loan period. Because your rate won't change, your monthly payment will be fixed for the entire term of the loan as well — or until you either refinance the loan or sell your home. The 30-year FRM is the most popular among borrowers, particularly first-time home buyers.
When compared to other loans such as shorter-term fixed-rate loans or adjustable-rate loans, the interest rate on a 30-year loan will typically be higher. However, compared to shorter loans, your monthly mortgage payments will tend to be lower because you're spreading the payments out over a longer period of time. You'll pay more in overall interest, however.
15-year fixed mortgage rate today
- Today's 15-year rate is 2.536%.
- That's a one-day increase of 0.049 percentage points.
- That's a one-month increase of 0.213percentage points.
With a 15-year fixed-rate mortgage, the rate on your loan will remain constant throughout the full 15-year period of the loan. Your monthly payment will also remain constant for the full loan term unless you sell your home or refinance first.
Compared to a 30-year loan, the interest rate on a 15-year loan will typically be lower. However, because you're paying the loan off over a shorter period of time, your monthly payment will be higher.
5/1 jumbo adjustable-rate mortgage rates today
- Today's 5/1 ARM rate is 2.942%.
- That's a one-day decrease of 0.010 percentage points.
- That's a one-month increase of 0.114 percentage points.
With an adjustable-rate mortgage, there will be an initial period during which your interest rate will be fixed. Once that period ends, however, the rate will fluctuate, meaning that your interest rate could increase or decrease in accordance with market conditions. Your monthly payment will also fluctuate once the fixed period ends.
During the initial fixed-rate term, interest rates on adjustable-rate loans tend to be lower than those found on fixed-rate loans. The lowest rates are usually found in the 5/1 ARM, which will have a five-year period of fixed interest before resetting every year. Other common ARM terms include the 7/1 and the 10/1.
With interest rates among the lowest in the market, ARMs are very attractive for some home buyers. However, because of the effects of the pandemic on mortgage rates, borrowers with excellent credit can often find fixed-rate loans with lower interest.
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 3.419%.
- The latest rate on a 30-year VA mortgage is 3.395%.
- The latest rate on a 30-year jumbo mortgage is 3.557%.
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 3.816%.
- The latest refinance rate on a 15-year fixed-rate refinance is 2.876%.
- The latest refinance rate on a 5/1 jumbo ARM is 3.237%.
- The latest refinance rate on a 7/1 jumbo ARM is 3.487%.
- The latest refinance rate on a 10/1 jumbo ARM is 4.639%.
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, 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 Tuesday, February 23. 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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