Several benchmark mortgage rates slid lower today. The average rates on 30-year fixed and 15-year fixed mortgages both were down. The average rate on 5/1 adjustable-rate mortgages, or ARMs, the most popular type of variable rate mortgage, also trended down.
Rates for mortgages change daily, but they continue to represent a bargain compared to rates before the Great Recession. If you’re in the market for a mortgage, it may make sense to lock if you see a rate you like. Just be sure to shop around.
30-year fixed mortgages
The average rate for the benchmark 30-year fixed mortgage is 2.98 percent, down 7 basis points from a week ago. This time a month ago, the average rate on a 30-year fixed mortgage was higher, at 3.02 percent.
At the current average rate, you’ll pay principal and interest of $420.53 for every $100,000 you borrow. That’s a decline of $3.78 from last week.
You can use Bankrate’s home loan calculator to figure out your monthly payments and see the effect of adding extra payments. It will also help you determinehow much interest you’ll pay over the life of the loan.
15-year fixed mortgages
The average 15-year fixed-mortgage rate is 2.45 percent, down 11 basis points from a week ago.
Monthly payments on a 15-year fixed mortgage at that rate will cost around $664 per $100,000 borrowed. That’s clearly much higher than the monthly payment would be on a 30-year mortgage at that rate, but it comes with some big advantages: You’ll come out several thousand dollars ahead over the life of the loan in total interest paid and build equity much faster.
The average rate on a 5/1 ARM is 3.04 percent, down 30 basis points over the last 7 days.
These types of loans are best for people who expect to sell or refinance before the first or second adjustment. Rates could be substantially higher when the loan first adjusts, and thereafter.
Monthly payments on a 5/1 ARM at 3.04 percent would cost about $424 for each $100,000 borrowed over the initial five years, but could increase by hundreds of dollars afterward, depending on the loan’s terms.
Where rates are headed
To see where Bankrate’s panel of experts expect rates to go from here, check out our mortgage interest rates forecast.
Want to see where rates are right now? Lenders across the nation respond to our weekday mortgage rates survey to bring you the most current rates available. Here you can see the latest marketplace average rates for a wide variety of purchase loans:
|30-year fixed jumbo||3.00%||3.10%||-0.10|
|30-year fixed refinance||2.93%||3.10%||-0.17|
Rates as of September 18, 2020.
Rate lock advice and recommendations
A rate lock guarantees your interest rate for a specified period of time. It’s common for lenders to offer 30-day rate locks for a fee or to include the price of the rate lock into your loan. Some lenders will lock rates for longer periods, even exceeding 60 days, but those locks can be expensive. In today’s volatile market, some lenders will lock an interest rate for only two weeks because they don’t want to take on unnecessary risk.
With a rate lock, if interest rates rise, you’re locked into the guaranteed rate. You may be able to find a lender that offers a floating rate lock. A floating rate lock lets you get a lower rate if interest rates decline before closing your loan. It could be worth the cost in a declining rate environment. Because mortgage rates are not predictable, there’s no guarantee that rates will stay where they are from week to week or even day to day. So, if you can lock in a low rate, then you should do so rather than gamble on interest rates falling even lower.
Remember: During the pandemic, all aspects of real estate and mortgage closings are taking much longer than usual. Expect the closing on a new mortgage to take at least 60 days, with refinancing taking at least a month.
What causes mortgage rates to move
A number of economic factors influence mortgage rates. Among them are inflation and unemployment. Higher inflation typically leads to higher mortgage rates. The opposite is also true; when inflation is low, mortgage rates typically are as well. As inflation increases, the dollar loses value. That drives investors away from mortgage-backed securities (MBS), which causes the prices to decrease and yields to increase. When yields move higher, rates become more expensive for borrowers.
Generally speaking, when the economy is strong, more people buy homes. That drives demand for mortgages. Increased demand for mortgages can cause rates to increase. The opposite is also true; less demand can lead to lower rates.
Current mortgage rate landscape
Mortgage rates have been volatile because of the COVID-19 pandemic. Generally, though, rates have been low. Mortgage rates are rising and falling from week to week, as lenders are inundated with forbearance and refinance requests. In general, however, rates are consistently below 4 percent and even dipping into the mid to low 3s. This is an especially good time for people with good to excellent credit to lock in a low rate for a purchase loan. However, lenders are also raising credit standards for borrowers and demanding higher down payments as they try to dampen their risks.
Methodology: The rates you see above are Bankrate.com Site Averages. These calculations are run after the close of the previous business day and include rates and/or yields we have collected that day for a specific banking product. Bankrate.com site averages tend to be volatile — they help consumers see the movement of rates day to day. The institutions included in the “Bankrate.com Site Average” tables will be different from one day to the next, depending on which institutions’ rates we gather on a particular day for presentation on the site.
To learn more about the different rate averages Bankrate publishes, see “Understanding Bankrate’s on-site rate averages.”
Read about other loan terms:
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|Product||Purchase Rates||Refinance Rates|
|The index above links out to loan-specific content to help you learn more about rates by loan type.|
|30-Year Loan||30-Year Mortgage Rates||Current 30 Year Refinance Rates|
|20-Year Loan||20-Year Fixed Mortgage Rates||20-Year Mortgage Refinance Rates|
|15-Year Loan||Today’s 15-Year Mortgage Rates||15-Year Refi Interest Rates|
|10-Year Loan||10-Year Fixed Mortgage Rates||10-Year Refinance Rates|
|FHA Loan||Current FHA Mortgage Rates||FHA Refinance Interest Rates|
|VA Loan||VA Loan Interest Rates||Current VA Refinance Rates|
|ARM Loan||ARM Loan Rates||Current ARM Refinance Rates|
|Jumbo Loan||Jumbo Loan Interest Rates||Jumbo Refinance Rates|