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By Leslie Cook
February 9, 2021
Money; Getty Images

Mortgage rates continue their steady climb this week. While rates have been slowly rising since early January, historically speaking they are still very low, making it a good time to buy or refinance a home.

  • Today's rate on a 30-year fixed-rate mortgage is 3.141%
  • Today's rate on a 15-year fixed-rate mortgage is 2.33%
  • Today's rate on a 5/1 jumbo ARM is 2.863%

Current 30-year fixed mortgage rates

  • Today’s average is 3.141%, up 0.055 percentage points from last week.

America's most popular home loan is the 30-year fixed-rate mortgage, which accounts for two-thirds of all loan originations. With a fixed-rate mortgage, your monthly payment will be the same for the entire loan term. Interest rates are also fixed and do not change over the life of the loan.

When compared to a 15-year fixed-rate mortgage, your interest rates will generally be higher on 30-year mortgage. However, your monthly payments will be lower because you are repaying the borrowed amount over a longer period of time (360 months for a 30-year and 180 months for a 15). However, you will pay more in interest over the life of the loan.

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Current 15-year fixed mortgage rate

  • Today’s average is 2.33%, unchanged from last week.

For borrowers who can manage a higher monthly payments, a 15-year fixed-rate mortgage can be a great option. Your monthly payments won't change over the full term of the loan and the interest rates are fixed. A 15-year mortgage will typically have a lower interest than a 30-year fixed-rate loan, which results in paying less interest over the full term of the loan. However, because payments are spread over a shorter period of time, your monthly mortgage payments will be higher than with a 30-year loan.

Because this is a fixed-rate mortgage, your interest rate and monthly payment amounts won’t change over the life of the loan.

Current 5/1 jumbo adjustable-rate mortgage rates

  • Today’s average is 2.863%, up 0.043 percentage points from last week

Adjustable-rate mortgages are popular with some buyers because they often offer low initial interest rates. Nowadays, with the rate on conventional 30-year loans so low, an ARM may not offer the best rates.

Adjustable-rate mortgage start with an initial period where the interest rate and monthly payments are fixed. Once that initial period has passed, your interest rate can change every year afterward based on market conditions. As a result, your monthly payment would also change. With a 5/1 ARM, your interest rate will be fixed for the first five years of the loan, then reset every year after that. In addition to a five-year fixed term, ARM's can also be found with 7-year and 10-year initial fixed terms.

VA, FHA, and jumbo loan rates today

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

  • Today’s rate on a 30-year FHA mortgage is 2.985%.
  • Today’s rate on a 30-year VA mortgage is 3.035%.
  • Today’s rate on a 30-year jumbo mortgage is 3.587%.

Mortgage refinance rates today

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

  • Today’s rate on a 30-year fixed-rate refinance is 3.481%.
  • Today’s rate on a 15-year fixed-rate refinance is 2.579%.
  • Today’s rate on a 5/1 jumbo ARM is 3.146%.

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. 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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