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Published: Mar 05, 2021 12 min read
Money; Getty Images

Interest rates are slightly higher today breaking a three-day trend of declining rates. The increase occurred across almost all loan categories for both purchase mortgages and refinance mortgages. FHA loans are the only exception, seeing a slight decrease from yesterday. The 5/1 ARM saw the biggest increase, jumping nearly .600 percentage points.

The increase comes a day after Freddie Mac's benchmark average rate for a 30-year loan rose above 3% for the first time since July. Even with today's increase, rates are still near historic lows, making it a good time to purchase a home or refinance a mortgage.

  • The average rate on a 30-year fixed-rate mortgage is 3.363% today.
  • The average rate on a 15-year fixed-rate mortgage is 2.498% today.
  • The average rate on a 5/1 jumbo ARM is 3.602% today.
  • The average rate on a 7/1 conforming ARM is 4.478% today.
  • The average rate on a 10/1 conforming ARM is 4.187% today.

Today's 30-year fixed mortgage rates

  • Today's 30-year rate is 3.363%.
  • That's a one-day increase of 0.009 percentage points.
  • That's a one-month increase of 0.233 percentage points.

A 30-year fixed-rate mortgage has a consistent interest rate during the full term of the loan. As a result, the monthly payment on the loan will also be the same through the loan term. The mortgage will be paid off in 360 months unless you pay more than required each month, refinance the loan or sell.

The interest rate on a 30-year loan will generally be higher than the interest on a 15-year loan. Because the balance is stretched out over a longer period of time, however, monthly payments will be lower on a longer-term loan. Still, you'll pay more in overall interest with a 30-year loan compared to a 15-year loan, as you'll be paying a higher rate over a longer period of time.

Lower monthly payments make the 30-year loan the most popular choice for about two-thirds of home loan borrowers.

Today's 15-year fixed mortgage rate

  • Today's 15-year rate is 2.498%.
  • That's a one-day increase of 0.007 percentage points.
  • That's a one-month increase of 0.161 percentage points.

A 15-year fixed-rate mortgage will also have a fixed rate for the full term of the loan. The monthly payments will be constant as well. The loan will be paid off in 180 months unless you pay more than required, refinance the loan or sell.

When compared to a 30-year loan, 15-year mortgages will have a lower interest rate but a higher monthly payment, as you're paying the loan off in half the time. In terms of overall interest, however, you'll pay less as you're paying a lower rate over a shorter period of time.

Borrowers who want to save on interest or eliminate their debt faster will often sometimes choose the 15-year loan over the 30-year.

Today's 5/1 jumbo adjustable-rate mortgage rates

  • Today's 5/1 ARM rate is 3.602%.
  • That's a one-day increase of 0.589 percentage points.
  • That's a one-month increase of 0.756 percentage points.

An adjustable-rate mortgage will have a fixed interest rate for a time, but once that period ends you rate will reset according to market conditions. The monthly payments will be constant during the fixed-rate period but can either increase or decrease every time the interest rate resets.

Common adjustable-rate loans include the 5/1, where the rate is fixed for the first five years and resets every year afterward, the 7/1 and the 10/1. ARMs typically have a full term of 30-years.

The interest rate on a 5/1 ARM will typically be lower than that of a 30-year fixed-rate loan, at least during the initial fixed-rate period. The lower interest rates are attractive to buyers who don't plan on staying in the home for the full term of the loan 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 latest rate on a 30-year FHA mortgage is 3.237%.
  • The latest rate on a 30-year VA mortgage is 3.359%.
  • The latest rate on a 30-year jumbo mortgage is 3.557%.

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 3.72%.
  • The latest refinance rate on a 15-year fixed-rate refinance is 2.793%.
  • The latest refinance rate on a 5/1 jumbo ARM is 3.733%.
  • The latest refinance rate on a 7/1 conforming ARM is 4.848%.
  • The latest refinance rate on a 10/1 conforming ARM is 4.764%.

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 4. 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.