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Published: Mar 03, 2021 12 min read
Money; Getty Images

Mortgage rates dropped again today across all loan categories. It's the second day in a row that rates have declined. The average rate on a 30-year fixed-rate mortgage is now back below 3.4%.

It seems rates are settling back down after last week's upward sprint. With lower interest rates, many borrowers will be able to lock in favorable rates for either a home purchase or a mortgage refinance.

  • The average rate on a 30-year fixed-rate mortgage is 3.383% today.
  • The average rate on a 15-year fixed-rate mortgage is 2.492% today.
  • The average rate on a 5/1 jumbo ARM is 2.9% today.
  • The average rate on a 7/1 conforming ARM is 4.324% today.
  • The average rate on a 10/1 conforming ARM is 4.031% today.

30-year fixed mortgage rates today

  • Today's 30-year rate is 3.383%.
  • That's a one-day decrease of 0.043 percentage points.
  • That's a one-month increase of 0.281percentage points.

A 30-year fixed-rate mortgage will have an interest rate that won't change over the full term of the loan. As a result, your monthly payment will also be constant. The loan will be paid off in 360 months unless you pay more than your monthly payment, sell the home or refinance the mortgage.

When compared to a shorter-term loan such as a 15-year mortgage, the interest rate will usually be higher. On the other hand, your monthly payments will be lowest with a 30-year loan because you're spreading the payment out over a longer period of time. This makes the 30-year term the most popular type of mortgage, making up 75% of the mortgage market.

While a 30-year loan is attractive because of its lower monthly payments, you pay more in overall interest compared to a 15-year mortgage, as you are paying a higher interest rate over a longer period of time.

15-year fixed mortgage rate today

  • Today's 15-year rate is 2.492%.
  • That's a one-day decrease of 0.022 percentage points.
  • That's a one-month increase of 0.153 percentage points.

A 15-year fixed-rate loan will also have a constant interest rate for the full term of the mortgage. The monthly payments will also remain constant, unless you refinance. If you keep the loan for its entire term, you will pay off the debt in 180 months.

The interest rate on a 15-year loan will be lower than on a longer-term loan such as a 30-year. However, because you're paying the balance off over a shorter period, the monthly payments will be higher than on the longer mortgage.

Shorter-term loans are attractive for some buyers and refinancers because they will pay less in overall interest over the full term of the loan than they would with a longer-term mortgage.

5/1 jumbo adjustable-rate mortgage rates today

  • Today's 5/1 ARM rate is 2.9%.
  • That's a one-day decrease of 0.141 percentage points.
  • That's a one-month increase of 0.086 percentage points.

Adjustable-rate mortgages will have an initial fixed-rate period during which the interest on the loan will not change. Once that fixed-rate period ends, the interest rate can change, usually on a yearly basis, and can either increase or decrease according to market conditions. As a result, your monthly payment will be steady during the fixed-rate period but then change according to changes in the interest rate.

Common ARM terms include the 5/1, where the interest is fixed during the first five years of the loan and then resets every year, the 7/1 and the 10/1.

Often 5/1 ARMs will have the lowest interest rates on the market during the initial fixed-rate period. The low interest makes these loans attractive to buyers who don't plan on staying in the home for the full term of the loan or who don't believe rates will increase. However, interest rates on fixed-rate hit all-time lows as a result of the pandemic. As a result, well-qualified borrowers can sometimes find lower rates on a longer-term 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 3.302%.
  • The latest rate on a 30-year VA mortgage is 3.313%.
  • The latest rate on a 30-year jumbo mortgage is 3.564%.

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 3.771%.
  • The latest refinance rate on a 15-year fixed-rate refinance is 2.794%.
  • The latest refinance rate on a 5/1 jumbo ARM is 3.361%.
  • The latest refinance rate on a 7/1 conforming ARM is 4.683%.
  • The latest refinance rate on a 10/1 conforming ARM is 4.571%.

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 Tuesday, March 2. 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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Rates are subject to change. All information provided here is accurate as of the publish date.