Today's Mortgage & Refinance Rates — March 2, 2021

Today's mortgage rates are down, breaking a one-week spree of continuous increases. The average rate on a 30-year fixed-rate mortgage has dropped back below 3.5% and almost all other loan categories are seeing decreases. The only exception to the slide is the 7/1 ARM, which is slightly higher.

Today's drop could be a sign that rates are stabilizing after the fast increases in rates seen last week. With the decreases, borrowers should be able to find favorable rates for either a home purchase or a mortgage refinance.

The average rate on a 30-year fixed-rate mortgage is 3.426% today.
The average rate on a 15-year fixed-rate mortgage is 2.514% today.
The average rate on a 5/1 jumbo ARM is 3.041% today.
The average rate on a 7/1 conforming ARM is 4.444% today.
The average rate on a 10/1 conforming ARM is 4.137% today.

30-year fixed mortgage rates today

Today's 30-year rate is 3.426%.
That's a one-day decrease of 0.146 percentage points.
That's a one-month increase of 0.34 percentage points.

The interest rate on a fixed-rate 30-year loan won't change over the full term of the mortgage. This means that your monthly payment won't change either. If you keep the mortgage for its entire term (versus refinancing or selling the home), you'll pay it off in 360 months.

Compared to a shorter-term loan like a 15-year mortgage, the interest rate will typically be higher on a longer-term loan like a 30-year. Your monthly payment, however, will be lower because you are stretching the payments out. Because you'll be paying a higher interest rate over more months, you will pay more in total interest with a 30-year mortgage.

15-year fixed mortgage rate today

Today's 15-year rate is 2.514%.
That's a one-day decrease of 0.09 percentage points.
That's a one-month increase of 0.184 percentage points.

As with a 30-year loan, a 15-year fixed-rate mortgage will have a consistent interest rate throughout the full term of the loan. Your monthly payments will also be constant unless you refinance.

The interest rate on a 15-year mortgage will generally be lower than on a 30-year loan, but your monthly payments will be higher because you're dividing the balance over a shorter period of time. Shorter-term loans are attractive for many borrowers despite the higher monthly payments because they can save on total interest paid over the life of the loan.

5/1 jumbo adjustable-rate mortgage rates today

Today's 5/1 ARM rate is 3.041%.
That's unchanged from one day ago.
That's a one-month increase of 0.221 percentage points.

The interest rate on an adjustable-rate mortgage will actually be fixed for an initial, predetermined period of time. After that the rate will reset up or down according to market conditions. Your monthly payments will stay the same during the initial fixed-rate period but change along with the interest rate once that period ends.

For example, a 5/1 adjustable-rate mortgage will have a fixed rate for the first five years of the loan and then reset every year afterward. Other common ARM terms include the 7/1 and the 10/1. ARMs will typically be paid off in 30 years.

During the fixed-rate period, short-term ARMs have long had the lowest interest rates in the market making them attractive to borrowers who don't plan on staying in the home for long or who don't understand the risk of an increase. However, with the interest rates on fixed-rate loans near historic lows, well-qualified buyers may be able to find lower rates on 15-year or 30-year loan.

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 3.388%.
The latest rate on a 30-year VA mortgage is 3.422%.
The latest rate on a 30-year jumbo mortgage is 3.602%.

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 3.841%.
The latest refinance rate on a 15-year fixed-rate refinance is 2.826%.
The latest refinance rate on a 5/1 jumbo ARM is 3.397%.
The latest refinance rate on a 7/1 conforming ARM is 4.848%.
The latest refinance rate on a 10/1 conforming ARM is 4.645%.

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 Monday, March 1. 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.

Today's Mortgage Rates Drop | March 2, 2021