Several benchmark mortgage rates ticked up today. The average rates on 30-year fixed and 15-year fixed mortgages both moved higher. The average rate on 5/1 adjustable-rate mortgages, meanwhile, ticked downward.
Mortgage rates are in a constant state of flux, but they have remained in a historically low range for quite some time. If you’re in the market for a mortgage, it may make sense to go ahead and lock if you see a rate you like. Just make sure you shop around first.
30-year fixed mortgages
The average rate for the benchmark 30-year fixed mortgage is 3.02 percent, an increase of 4 basis points over the last seven days. Last month on the 25th, the average rate on a 30-year fixed mortgage was higher, at 3.12 percent.
At the current average rate, you’ll pay a combined $422.68 per month in principal and interest for every $100,000 you borrow. That’s up $2.15 from what it would have been last week.
You can use Bankrate’s mortgage calculator to estimate your monthly payments and see how much you’ll save by adding extra payments. It will also help you computehow much interest you’ll pay over the life of the loan.
15-year fixed mortgages
The average 15-year fixed-mortgage rate is 2.48 percent, up 3 basis points since the same time last week.
Monthly payments on a 15-year fixed mortgage at that rate will cost around $666 per $100,000 borrowed. The bigger payment may be a little tougher to find room for in your monthly budget than a 30-year mortgage payment would, but it comes with some big advantages: You’ll save thousands of dollars over the life of the loan in total interest paid and build equity much faster.
The average rate on a 5/1 ARM is 2.90 percent, down 14 basis points since the same time last week.
These loan types are best for people who expect to refinance or sell before the first or second adjustment. Rates could be considerably higher when the loan first adjusts, and thereafter.
Monthly payments on a 5/1 ARM at 2.90 percent would cost about $416 for each $100,000 borrowed over the initial five years, but could ratchet higher 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 rate trends page.
Want to see where rates are right now? Lenders across the nation respond to Bankrate’s 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%||3.00%||N/C|
|30-year fixed refinance||2.92%||2.93%||-0.01|
Rates as of September 25, 2020.
Rate lock advice and recommendations
A rate lock guarantees your interest rate for a specified period of time. Lenders often offer 30-day rate locks for a nominal fee or roll the price of the lock into your loan. Some lenders will lock rates for longer periods, even exceeding 60 days, but those locks can be costly. 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 there is no guarantee of where mortgage rates will head in the future, it may be smart to lock in a low rate instead of holding out on rates for potentially decline further.
It’s important to keep in mind: 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, and expect refinancing to take at least a month..
Why mortgage rates change
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.
A strong economy usually means more people buying homes, which drives demand for mortgages. This increased demand can push rates higher. The opposite is also true; less demand can trigger a drop in rates.
Mortgage rate snapshot
The current mortgage rate environment has been unstable because of the coronavirus pandemic, but generally rates have been low. For a while, some lenders were increasing rates because they were struggling to deal with the demand. 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 Rate Averages.”
Other daily news articles:
Shopping for a mortgage lender?
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|Loan term||Purchase Rates||Refinance Rates|
|The chart above links out to loan-specific pages to help you learn more about rates by loan type.|
|30-Year Loan||30 Year Fixed Mortgage Rates||30-Year Refinance Interest Rates|
|20-Year Loan||20-Year Mortgage Interest Rates||20-Year Mortgage Refinance Rates|
|15-Year Loan||15 Year Fixed Mortgage Rates||15-Year Mortgage Refinance Rates|
|10-Year Loan||10-Year Mortgage Rates||10-Year Mortgage Refinance Rates|
|FHA Loan||FHA Mortgage Rates||FHA Mortgage Refi Rates|
|VA Loan||Current VA Mortgage Rates||VA Refinance Loan Rates|
|ARM Loan||Adjustable Rate Mortgage Rates||ARM Refi Mortage Rates|
|Jumbo Loan||Jumbo Mortgage Rates||Jumbo Loan Refinance Rates|