Today’s 30 Year Mortgage Rates, January 8, 2021 | Benchmark rate increases

30 year mortgage blog

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30-year fixed mortgage rates

The average rate for a 30-year fixed-rate mortgage is 2.88 percent, climbing 1 basis point over the past seven days. This time last month, the average interest rate on a 30-year loan was higher, at 2.92 percent.

At the current average rate, you’ll pay principal and interest of $415.16 for every $100k you borrow. Compared to this time last week, that’s $0.53 higher.

Learn more about 30-year fixed mortgage rates, and compare to a variety of other loan types.

30-year refinance rates

The average rate to refinance a 30-year fixed-rate mortgage is 2.94 percent, rising 3 basis points over the past seven days. This time last month, the average rate on a 30-year mortgage was 2.94 percent.

At the current average rate, you’ll pay principal and interest of $418.37 for every $100,000 you borrow. Compared to last week, that’s $1.60 higher.

Pros and cons of a 30-year fixed mortgage

The 30-year mortgage is the most popular home loan, and it has a number of advantages. Among them:

  • Lower monthly payment. Compared to a shorter term, such as 15 years, the 30-year mortgage offers lower, more affordable payments spread over time.
  • Stability. With the 30-year, you lock in a consistent principal and interest payment. That predictability lets you plan your housing expenses for the long term. Remember: Your monthly housing payment can change if your homeowners insurance and property taxes go up or, less likely, down.
  • Buying power. Because you have lower payments, you can qualify for a bigger loan and a more expensive house.
  • Flexibility. Lower monthly payments can free up some of your monthly budget for other goals, like building an emergency fund, contributing to retirement or college tuition, or saving for home repairs and maintenance.
  • Strategic use of debt. Some argue that Americans focus too much on paying down their mortgages rather than adding to their retirement accounts. A 30-year fixed mortgage with a lower monthly payment can allow you to save more for retirement.

As with any financial product, the 30-year mortgage does have some negatives, including:

  • More total interest paid. A 30-year term means you’ll pay more overall in interest compared with what you’d pay with a shorter-term loan.
  • Higher mortgage rates. Lenders charge higher interest rates for 30-year mortgages compared to 15-year loans. That’s because they’re taking on the risk of not being repaid for a longer time span.
  • Slower equity growth. The amortization table for a 30-year mortgage reveals a harsh reality: In the early years, almost all of your payments go to interest rather than principal. A 15-year loan brings a higher monthly payment but much faster retirement of the loan amount.
  • Buying more house than you should. Just because you might be able to afford more house with a 30-year loan doesn’t mean you should stretch your budget to the breaking point. Give yourself some breathing room for other financial goals and unexpected expenses. Use Bankrate’s home affordability calculator to determine how much house you can afford.
  • 30-year fixed mortgage vs. 15-year fixed mortgage

    The most significant drawback of a 30-year fixed-rate mortgage is the amount of interest you’ll pay. Mortgage rates are typically higher for 30-year loans than 15-year loans. Although your monthly payments will be lower for a 30-year loan, you’ll pay much more interest over the life of the loan.

    For example, with a 15-year fixed loan, you’ll cut your repayment time in half and save significantly on interest in the process. Compare how much interest you’ll pay on 15-year and 30-year loans with Bankrate’s 15-year or 30-year fixed mortgage calculator.

    Mortgage lock recommendations

    A rate lock guarantees a lender will honor a specified interest rate at a specific cost for a set period. The benefit of a mortgage rate lock is that it protects you from market fluctuations. It also puts pressure on borrowers to make sure they close on homes before the rate-lock period expires. For example, if your lender locks in your rate at 3.75 percent for 45 days and rates jump up to 4 percent within that period, you’ll still get your loan at the lesser rate.

    If they choose not to lock in your rate, you’ll have a “floating” rate. That’s not a bad strategy when interest rates are generally falling, but it could be costly in a rising rate environment. A rate lock is a must for risk-averse people who are seeking a mortgage. It’s a good idea to ask for a 45-day lock at a minimum; 60 days is even better.

    Where rates are headed

    Every week, Bankrate’s editorial team asks a group of mortgage experts where they think mortgage rates will go over the next week. See Bankrate’s Rate Trends Page for weekly predictions.

    In order to provide the latest rates, lenders across the nation respond to Bankrate’s weekday mortgage rates survey to bring you the most current rates available. Here you can see our latest marketplace average rates and an up to date analysis on current interest rates..

    Shopping for a mortgage lender? See reviews of top lenders.

    Read about today’s rates for a variety of loan terms:

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