Mortgage Rates Start the Day Higher | July 23, 2021

Mortgage rates are up again today. The average rate for a 30-year fixed-rate loan is 3.304%, up 0.035 percentage points from Thursday. There are rate increases across the board for almost all other loan types, with the biggest movement occurring on 7/1 and 10/1 adjustable-rate mortgages.

Even with today's increase, rates are very low historically speaking. Well-qualified buyers can still get favorable rates on a new mortgage or a mortgage refinance.

The latest rate on a 30-year fixed-rate mortgage is 3.304%
The latest rate on a 15-year fixed-rate mortgage is 2.378%.
The latest rate on a 5/1 jumbo ARM is 2.216%.
The latest rate on a 7/1 conforming ARM is 4.392%.
The latest rate on a 10/1 conforming ARM is 4.5%.

Mortgage rates today: 30-year fixed-rate mortgage rates

The 30-year rate is 3.304%.
That's a one-day increase of 0.035 percentage points. ⇑
That's a one-month decrease of 0.121 percentage points. ⇓

Fixed-rate loans are the most widely used type of mortgage. The interest rate and monthly payments are predictable and won't change. A 30-year fixed-rate mortgage is the go-to loan for most borrowers thanks to its long payback time and low monthly payments compared to a shorter-term loan. The interest rate, however, is usually higher meaning you'll pay more interest with a longer-term loan.

Mortgage rates today: 15-year fixed-rate mortgage rates

The 15-year rate is 2.378%.
That's a one-day increase of 0.008 percentage points. ⇑
That's a one-month decrease of 0.143 percentage points. ⇓

If you prefer a shorter-term loan, a 15-year mortgage could be a good option. The interest rate is usually lower as well. However, because the payback time is half that of a 30-year, the monthly payments will be higher. If you can afford the higher payments, you'll save money by not paying as much in interest.

Mortgage rates today: 5/1 jumbo adjustable-rate mortgage rates

The 5/1 ARM rate is 2.216%.
That's a one-day increase of 0.04 percentage points. ⇑
That's a one-month decrease of 0.042 percentage points. ⇓

An alternative to a fixed-rate loan is an adjustable-rate mortgage. An ARM will start with a fixed introductory rate and consistent payments. However, the rate and payments will become variable after a specific number of years. A 5/1 ARM, for example, will have a fixed rate for the first five years, after which it will become variable and adjust on a yearly basis. There are a number of different terms, including a 7/1 and a 10/1. ARMs will have a full term of 30 years.

Mortgage rates today: 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 3.068%. ⇑
The rate on a 30-year VA mortgage is 3.14%. ⇑
The rate on a 30-year jumbo mortgage is 3.452%. ⇑

Mortgage refinance rates today

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 3.571%. ⇑
The refinance rate on a 15-year fixed-rate refinance is 2.53%. ⇓
The refinance rate on a 5/1 jumbo ARM is 2.496%. ⇑
The refinance rate on a 7/1 conforming ARM is 4.73%. ⇑
The refinance rate on a 10/1 conforming ARM is 4.798%. ⇑

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 2020 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 changes 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 Thursday, July 22, 2021. 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.