Today's Mortgage Rates Are Down Again | March 10, 2021
Today's average rate for a 30-year fixed-rate purchase loan are below 3.4%. Interest rates are also down today for conforming 15-year mortgages. However, rates for adjustable-rate loans and refinance mortgages are mixed.
Rates have been trending down so far this week, which is good news for borrowers interested in either buying a home or refinancing a mortgage.
- The average rate on a 30-year fixed-rate mortgage is 3.398% today.
- The average rate on a 15-year fixed-rate mortgage is 2.528% today.
- The average rate on a 5/1 jumbo ARM is 3.018% today.
- The average rate on a 7/1 conforming ARM is 4.505% today.
- The average rate on a 10/1 conforming ARM is 4.301% today.
Current 30-year fixed mortgage rates
- The 30-year rate is 3.398%.
- That's a one-day decrease of 0.067 percentage points.
- That's a one-month increase of 0.289 percentage points.
A 30-year fixed-rate mortgage will have a consistent rate for the full term of the loan and the required monthly payment will also remain the same. This type of mortgage will be paid off in 360 months unless you pay more than required or refinance at some point.
The interest rate on a 30-year loan is higher than the rate on a shorter-term loan like a 15-year. The monthly payment on a comparable sized loan, on the other hand, will be lower because you're paying it off over a longer period of time. However, you will pay more in total interest on a 30-year than a 15-year because you're paying a higher rate over a longer term.
The 30-year loan is the most popular type of mortgage because of its lower payment and is favored by 75% of all mortgage borrowers.
Current 15-year fixed mortgage rate
- The 15-year rate is 2.564%.
- That's a one-day decrease of 0.036 percentage points.
- That's a one-month increase of 0.262 percentage points.
Just like the 30-year fixed, a 15-year fixed-rate mortgage will have a fixed rate through the full term of the loan. The monthly payments won't change over time either. The mortgage will be paid off in 180 months unless you pay more than the required monthly payment or refinance the loan.
The interest rate on a 15-year loan will be lower than that on a 30-year loan. However, the monthly payment will be higher because you're spreading the balance over half the time. Still, because the loan is at a lower interest rate over a shorter period of time, you'll pay less in total interest.
Borrowers who can afford the higher payments may be attracted to the 15-year mortgage because they want pay the debt off faster or save on overall interest.
Current 5/1 jumbo adjustable-rate mortgage rates
- The 5/1 ARM rate is 3.018%.
- That's a one-day decrease of 0.008 percentage points.
- That's a one-month increase of 0.160 percentage points.
An adjustable-rate mortgage will have a fixed rate for a time. Once that fixed period is up, the rate will reset, usually on an annual basis. Consequently, the monthly payment will be fixed during the initial fixed-rate period but can change every year afterward in response to changes in the interest rate. An ARM will have a full term of 30 years.
A 5/1 ARM, for example, will have a fixed rate during the first five years of the loan, then reset every year. As a result, the monthly payment will be fixed during the first five years as well, then reset. Other common terms are the 7/1 and the 10/1.
The initial interest rate on a 5/1 ARM is lower than some fixed-rate loans. The low interest rate may be attractive for borrowers who don't plan on staying in the home beyond the fixed-rate period or don't believe rates will increase.
Today's VA, FHA and jumbo loan rates
The average rates for FHA, VA and jumbo loans are:
- The rate a 30-year FHA mortgage is 3.251%.
- The rate on a 30-year VA mortgage is 3.348%.
- The rate on a 30-year jumbo mortgage is 3.665%.
Today's mortgage refinance rates
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 3.731%.
- The refinance rate on a 15-year fixed-rate refinance is 2.821%.
- The refinance rate on a 5/1 jumbo ARM is 3.443%.
- The refinance rate on a 7/1 conforming ARM is 4.815%.
- The refinance rate on a 10/1 conforming ARM is 4.779%.
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, 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 previous business day. Today, we are showing rates for Tuesday, March 9. 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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