Today's Mortgage Rates Creep Lower | March 12, 2021
Today's mortgage rates are down from yesterday, despite a slight increase in Freddie Mac's benchmark average for a 30-year fixed-rate loan. The decrease can be seen across all loan terms, as well as for both purchase loans and refinance loans.
Even though rates have been rising in recent weeks, the increases have mostly been in small increments. With the passage of the American Rescue Plan, which aims to provide a much-needed boost to economic activity, the rate of increase may soon pick up the pace. For any borrower interested in buying a home or refinancing a mortgage, now is still a good time to find favorable rates.
- The average rate on a 30-year fixed-rate mortgage is 3.437% today.
- The average rate on a 15-year fixed-rate mortgage is 2.543% today.
- The average rate on a 5/1 jumbo ARM is 2.979% today.
- The average rate on a 7/1 conforming ARM is 4.522% today.
- The average rate on a 10/1 conforming ARM is 4.234% today.
Current 30-year fixed mortgage rates
- The 30-year rate is 3.437%.
- That's a one-day decrease of 0.025 percentage points.
- That's a one-month increase of 0.326 percentage points.
For most home loan borrowers, a 30-year fixed-rate mortgage is attractive because both the interest rate and the monthly payment will not change over the full term of the loan. If you make the required monthly payments the loan will be paid off in 360 months, unless you sell the home or refinance the loan prior to the end of the term.
The interest rate on a 30-year mortgage will be higher when compared to the rate on a shorter-term loan like a 15-year, but the monthly payment will be lower. This is because you're stretching the payments out over a long period of time. However, you will pay more in overall interest compared to a shorter-term loan precisely because you're paying a higher interest rate over a longer period of time.
Current 15-year fixed mortgage rate
- The 15-year rate is 2.543%.
- That's a one-day decrease of 0.019 percentage points.
- That's a one-month increase of 0.23 percentage points.
The interest rate and monthly payments on a 15-year fixed-rate mortgage also won't change over the full term of the loan. If you pay only the minimum required monthly amount, the loan will be paid off in 180 months unless you sell the home or refinance the mortgage before then.
When compared to a longer-term loan like a 30-year mortgage, the interest rate on a 15-year loan will be lower but the monthly payment will be higher. This is because you're paying the loan balance off in half the time. The advantage of a 15-year loan over a 30-year is that you will end up paying less in total interest because you're paying a lower interest rate over a shorter period of time. Of course, you will also be out of debt faster.
5/1 jumbo adjustable-rate mortgage rates today
- The 5/1 ARM rate is 2.979%.
- That's a one-day decrease of 0.023 percentage points.
- That's a one-month increase of 0.066 percentage points.
An adjustable-rate mortgage will initially have a fixed interest rate. Once that period ends, the rate will fluctuate according to market conditions, usually changing every year. As a result, the monthly payments on an ARM won't change during the fixed-rate period but could either increase or decrease afterward, reacting to changes in the interest rate.
The 5/1 ARM, for example, will have a fixed rate during the first five years of the loan, then reset every year afterward. Other common terms are 7/1 and 10/1 ARMs. All adjustable-rate mortgages are paid off in 360 months.
A 5/1 ARM will often have the lowest interest rate on the market when compared to most fixed-rate loans, making them popular among borrowers who aren't planning on living in the home beyond the initial fixed-rate period or who don't believe interest rates will increase over time.
VA, FHA and jumbo loan rates today
The average rates for FHA, VA and jumbo loans are:
- The rate a 30-year FHA mortgage is 3.357%.
- The rate on a 30-year VA mortgage is 3.454%.
- The rate on a 30-year jumbo mortgage is 3.63%.
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 3.763%.
- The refinance rate on a 15-year fixed-rate refinance is 2.84%.
- The refinance rate on a 5/1 jumbo ARM is 3.439%.
- The refinance rate on a 7/1 conforming ARM is 4.812%.
- The refinance rate on a 10/1 conforming ARM is 4.738%.
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 Thursday, March 11. 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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