Mortgage rates have been on a steady rise for the past week. Today's average rate for a 30-year fixed-rate loan edged closer to 3.6% and is now more than 1% higher than a month ago. Rates are also higher for almost all types of purchase loans, with the exceptions being the rates for VA loans and the 10/1 ARM.
Despite the increases, rates are still considered to be low by historic standards. For homeowners considering refinancing their mortgage, it is still a good time to lock in a favorable rate.
- The average rate on a 30-year fixed-rate mortgage is 3.572% today.
- The average rate on a 15-year fixed-rate mortgage is 2.604% today.
- The average rate on a 5/1 jumbo ARM is 3.041% today.
- The average rate on a 7/1 conforming ARM is 4.605% today.
- The average rate on a 10/1 conforming ARM is 4.366% today.
Current 30-year fixed mortgage rates
- Today's 30-year rate is 3.572%.
- That's a one-day increase of 0.081 percentage points.
- That's a one-month increase of 1.242 percentage points.
Fixed-rate mortgages have an interest rate that remains unchanged during the full term of the loan. As a result, the monthly payment will also remain unchanged unless you refinance the loan before the term is up. A 30-year loan means you will pay off the loan in 30 years.
Compared to a shorter fixed-rate loan, such as a 15-year loan, the interest rate on a 30-year mortgage will be higher. Because you're paying the loan off over a longer period of time, the monthly payments will be lower. However, by making lower monthly payments over a longer period of time and at a higher interest rate, you will pay more in total interest on a long-term loan.
Current 15-year fixed mortgage rate
- Today's 15-year rate is 2.604%.
- That's a one-day increase of 0.016 percentage points.
- That's a one-month decrease of 0.482 percentage points.
Just like with a 30-year loan, a 15-year fixed-rate mortgage will have a constant interest rate throughout the life of the loan. Your monthly payment will also remain constant unless you decide to refinance before the end of the loan term.
The interest rate on a 15-year loan is typically lower than that of a 30-year loan. However, because you're paying the loan off in half the time, your monthly payment will be higher. For borrowers who can afford the higher payments, a 15-year loan is attractive because you'll pay less in total interest over the full term of the loan.
Current 5/1 jumbo adjustable-rate mortgage rates
- Today's 5/1 ARM rate is 3.041%.
- That's a one-day decrease of 0.079 percentage points.
- That's a one-month increase of 0.221 percentage points.
As opposed to fixed-rate mortgages, the interest on adjustable-rate mortgages can fluctuate. There will be an initial fixed-rate term during which the interest will be unchanged but after the end of that term, the rate can change according to market conditions. As a result, your monthly payment will be fixed at first but then change along with changes in the interest rate. The full term of an adjustable-rate loan is 30 years.
Common fixed rate terms include the 5/1 ARM, where the rate is fixed for the first 5 years of the mortgage and then reset every year afterward, the 7/1 ARM and the 10/1 ARM.
Typically the interest rate on adjustable-rate loans during the initial fixed period is lower than that of 30-year loans, making them attractive to buyers who don't plan on staying in the home for the full term of the mortgage. However, as the effects of the pandemic sent mortgage rates to new lows, it is possible for borrowers with excellent credit to find lower rates on 30-year mortgages.
Today's 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 3.605%.
- The latest rate on a 30-year VA mortgage is 3.568%.
- The latest rate on a 30-year jumbo mortgage is 3.627%.
Today's 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 3.914%.
- The latest refinance rate on a 15-year fixed-rate refinance is 2.95%.
- The latest refinance rate on a 5/1 jumbo ARM is 3.389%.
- The latest refinance rate on a 7/1 conforming ARM is 4.883%.
- The latest refinance rate on a 10/1 conforming ARM is 4.809%.
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 last Friday, February 26. 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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- Is Now a Good Time to Refinance My Mortgage? A Decision-Making Guide
- What Is an FHA Loan?
- You're Only Ready to Buy a House if You Can Answer 'Yes' to These 7 Questions
- Low Rates Are Putting 15-Year Mortgages — and Big Savings — Within Reach for Millions of Homeowners
Rates are subject to change. All information provided here is accurate as of the publish date.