Mortgage rates are starting the week on an upswing. The average rate on a 30-year fixed-rate mortgage is back over 3.5%. The increases affected almost all loan types for both purchase mortgages and refinance mortgages. The 5/1 adjustable-rate mortgage was the only loan type to decrease, dropping .550 percentage points.
With the economy showing signs of improvement rates have been trending higher for the past few weeks. However current mortgage rates are still are very favorable for borrowers interested in buying a home and most people looking to refinance a mortgage.
- The average rate on a 30-year fixed-rate mortgage is 3.52% today.
- The average rate on a 15-year fixed-rate mortgage is 2.572% today.
- The average rate on a 5/1 jumbo ARM is 3.043% today.
- The average rate on a 7/1 conforming ARM is 4.521% today.
- The average rate on a 10/1 conforming ARM is 4.325% today.
Today's 30-year fixed mortgage rates
- The 30-year rate is 3.52%.
- That's a one-day increase of 0.157 percentage points.
- That's a one-month increase of 0.383 percentage points.
With a 30-year fixed-rate mortgage, you'll have a fixed rate for the entire term of the loan. Consequently, your monthly payment will be fixed as well. You'll pay off the loan in 360 months, unless you pay more than the required monthly payment, refinance or move.
Compared to a 15-year mortgage, the average interest rate on a 30-year loan is higher. However, the monthly mortgage payments will be lower than on a shorter-term loan since you'll be paying over a longer period. Lower payments make the 30-year the most popular loan to get. Keep in mind that paying a higher interest over a longer period of time means paying more interest over the life of the loan.
Today's 15-year fixed mortgage rate
- The 15-year rate is 2.572%.
- That's a one-day increase of 0.074 percentage points.
- That's a one-month increase of 0.238 percentage points.
Just like with a 30-year fixed-rate loan, a 15-year fixed-rate mortgage will have a constant interest rate and monthly payment throughout the life of the mortgage. It will take you 180 months to pay off the loan unless you pay more than required each month, move or refinance.
The interest rate on a 15-year loan will be lower than that of a 30-year loan. However, because you're paying the loan off in half the time, the monthly payments on a 15-year mortgage will be higher than those on a 30-year loan. You'll pay less in total interest because you're paying a lower rate over a shorter period of time.
The 15-year loan is a popular choice among borrowers who can afford the higher monthly payments and want to either pay the debt off faster or save on overall interest.
Today's 5/1 jumbo adjustable-rate mortgage rates
- The 5/1 ARM rate is 3.043%.
- That's a one-day decrease of 0.559 percentage points.
- That's a one-month increase of 0.198 percentage points.
With an adjustable-rate mortgage, your rate is fixed for a predetermined period of time. Once that period ends, the rate will change according to market conditions. As a result, the monthly payment will be fixed during the fixed-rate period and can either increase or decrease according to changes in the interest rate. ARMs' will have a full term of 30 years.
A 5/1 adjustable-rate loan will have a fixed interest rate for the first five years of the loan, then reset every year. The initial rate on a 5/1 ARM will often be the lowest on the market.
The initial low rate makes the 5/1 ARM an attractive option for borrowers who don't plan on staying in the home beyond five years or who don't believe interest rates will increase in the long run. Other common ARM terms are the 7/1 and the 10/1.
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 3.478%.
- The rate on a 30-year VA mortgage is 3.587%.
- The rate on a 30-year jumbo mortgage is 3.67%.
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 3.844%.
- The refinance rate on a 15-year fixed-rate refinance is 2.893%.
- The refinance rate on a 5/1 jumbo ARM is 3.483%.
- The refinance rate on a 7/1 conforming ARM is 4.856%.
- The refinance rate on a 10/1 conforming ARM is 4.75%.
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 last Friday, March 5. 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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- How to Get Preapproved for a Mortgage: A Step-by-Step Guide for Homebuyers
- Is Now a Good Time to Refinance My Mortgage? A Decision-Making Guide
- What Is an FHA Loan?
- You're Only Ready to Buy a House if You Can Answer 'Yes' to These 7 Questions
- Low Rates Are Putting 15-Year Mortgages — and Big Savings — Within Reach for Millions of Homeowners
Rates are subject to change. All information provided here is accurate as of the publish date.