Interest rates rose again today, continuing a bullish climb that appears to be accelerating. The increase has occurred in almost all categories of purchase loans. Refinancing rates, however, were mixed. The average rate for a 30-year fixed-rate mortgage is now close to 3.5%.
Even though rates have been rising steadily over the past few weeks, they are still close to their all-time lows. Qualified borrowers interested in buying a home or refinancing a mortgage may find attractive rates.
- The average rate for a 30-year fixed-rate mortgage today is 3.491%.
- The average rate for a 15-year fixed-rate mortgage is 2.588% today.
- The average rate on a Jumbo ARM 5/1 is 2.962% today.
- The average rate on a 7/1 compliant ARM is 4.273% today.
- The average rate on a 10/1 compliant ARM is 4.436% today.
Today’s 30-year fixed mortgage rates
- The current 30-year rate is 3.491%.
- It’s a day infold by 0.077 percentage point.
- It’s a month to augment by 0.438 percentage points.
A 30 year fixed rate mortgage has a constant interest rate throughout the life of the loan. As a result, your monthly payment will also remain constant. If you don’t refinance or sell, you’ll pay off the loan in 30 years.
Compared to short term loans like a 15 year loan, the 30 year interest rate will generally be higher. However, as you pay off the loan over a longer period, your monthly payments will be lower.
Although the 30-year payments are lower, you’ll pay more overall interest over time than with a 15-year loan, since you’re paying interest over a longer period and at a higher rate.
Today’s 15-year fixed mortgage rate
- The current 15-year rate is 2.588%.
- It’s a day infold by 0.041 percentage point.
- It’s a month to augment by 0.205 percentage point.
With a 15-year fixed rate mortgage, your interest rate will be constant throughout the life of the loan. Your monthly payments will also remain constant and you will repay the loan half as much as a 30-year loan.
Interest rates on 15-year loans are generally lower than on 30-year loans. Due to both a shorter term and a lower interest rate, you will pay less overall interest over the life of the mortgage compared to a longer term mortgage. Your monthly payment, however, will be higher.
Today’s 5/1 Jumbo Variable Rate Mortgage Rates
- Today’s ARM 5/1 rate is 2.962%.
- It’s a day offold by 0.027 percentage point.
- It’s a month to augment by 0.169 percentage points.
Variable rate mortgages start with interest rates that are fixed for a period of time. After this predetermined period has elapsed, the interest rate may change each year depending on market conditions. This means that your interest rate, and therefore your monthly payments, can go up or down.
The most common loan terms are on 5/1, where the interest rate is fixed for the first five years and then reset each year, on 7/1 and 10/1 ARM.
The interest rate for adjustable rate loans is often lower than for fixed rate loans, at least during the initial fixed period. However, due to the pandemic, mortgage rates have plunged to a series of record lows. Meanwhile, borrowers with excellent credit could often find a 30-year fixed rate loan with lower rates than an ARM.
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 3.582%.
- The latest rate on a 30 year VA mortgage is 3.573%.
- The last rate on a 30-year jumbo mortgage is 3.56%.
Mortgage Refinance Rate Today
The average rates for 30-year, 15-year and 5/1 jumbo ARM loans are:
- The latest refinance rate on a 30 year fixed rate refinance is 2.938%.
- The latest refinance rate on a 15 year fixed rate refinance is 3.896%.
- The latest refinance rate on a Jumbo ARM 5/1 is 3.286%.
- The latest refinance rate on a 7/1 compliant ARM is 5.207%.
- The latest refinance rate on a 10/1 compliant ARM is 5.071%.
Where Are Mortgage Rates Going This Year?
Mortgage rates fell through 2020. Millions of homeowners responded to low mortgage rates by refinancing existing loans and taking out new ones. Many people have bought homes that they might not have been able to afford if the rates were higher.
In January 2021, rates briefly fell to all-time low levels, but tended to increase throughout the month and into February.
Looking ahead, experts believe interest rates will rise further in 2021, but modestly. Factors that could influence the rates include how quickly COVID-19 vaccines are distributed and when lawmakers can agree on another cost-effective relief package. More vaccinations and government stimulus could lead to improved economic conditions, which would increase rates.
Although mortgage rates are likely to rise this year, experts say the increase will not happen overnight, and it will not be a dramatic jump. Rates are expected to stay near their historically low levels throughout the first half of the year, rising slightly later in the year. Even with rates rising, this will still be a good 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 2020. The Fed announced plans to move money through the economy by lowering the Federal Fund’s short-term interest rate between 0% and 0.25%, which is as low as they go. The central bank has also committed to buying mortgage-backed securities and treasury bills, thereby supporting the housing finance market. The Fed has reaffirmed its commitment to these policies for the foreseeable future on several occasions, most recently at a policy meeting in late January.
- The 10-year Treasury note. Mortgage rates move at the same pace as the yields on 10-year government treasury bills. Yields fell below 1% for the first time in March and have slowly risen since then. Currently, yields have hovered above 1% year-to-date, pushing interest rates up slightly. On average, there is typically a 1.8 point “spread” between Treasury yields and benchmark mortgage rates.
- The economy in the broad sense. Unemployment rates and changes 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 lower interest rates. Thanks to the pandemic, unemployment levels reached record levels early last year and have yet to recover. GDP has also been affected, and although it has rebounded 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 bit of work and will depend on both personal financial factors and market conditions.
Check your credit score and your credit report. Mistakes or other red flags that can lower your credit score. The borrowers with the highest credit scores will get the best rates, so it’s essential to check your credit report before you begin the home search process. Taking action to correct mistakes will help increase your score. If you have high credit card balances, paying them off can also give you a quick boost.
Save money for a large down payment. This will lower your loan-to-value ratio, or the portion of the house price that the lender has to finance. A lower LTV usually results in 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 that you have the money to finance the purchase of the house.
Shop around for the best rate. Don’t settle for the first interest rate a lender offers you. Check with at least three different lenders to see who is offering the lowest interest rate. Also consider the different types of lenders, such as credit unions and online lenders, in addition to traditional banks.
Also take the time to learn about the different types of loans. While the 30-year fixed-rate mortgage is the most common type of mortgage, consider a shorter-term loan such as a 15-year loan or an adjustable rate mortgage. These types of loans often have a lower rate than a conventional 30-year mortgage. Compare the costs of everyone to see which one best suits your needs and your financial situation. Government loans – such as those backed by the Federal Housing Authority, the Department of Veterans Affairs, and the Department of Agriculture – may be more affordable options for those who qualify.
Finally, lock in your rate. Locking in your rate once you’ve found the right rate, the right loan product, and the lender will help ensure that your mortgage rate doesn’t increase until the loan closes.
Our mortgage rate methodology
Money’s Daily Mortgage Rates show the average rate offered by over 8,000 lenders in the United States on the previous business day. Today we’re posting the rates for Thursday, February 25. Our rates reflect what a typical borrower with a credit score of 700 can expect to pay on a home loan right now. These rates were offered to people with a 20% deposit and include discount points.