Multiple key mortgage rates trended down today. The average rates on 30-year fixed and 15-year fixed mortgages both tapered off. Meanwhile, the average rate on 5/1 adjustable-rate mortgages also declined.
Mortgage rates are in a constant state of flux, but they remain much lower overall than they were before the Great Recession. If you’re in the market for a mortgage, it could be a great time to lock in a rate. Just don’t do so without shopping around first.
30-year fixed mortgages
The average rate for the benchmark 30-year fixed mortgage is 3.02 percent, down 12 basis points from a week ago. This time a month ago, the average rate on a 30-year fixed mortgage was higher, at 3.14 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 down $6.51 from what it would have been last week.
You can use Bankrate’s mortgage loan calculator to estimate your monthly payments and see what the effects of making extra payments would be. 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 2.62 percent, down 4 basis points over the last seven days.
Monthly payments on a 15-year fixed mortgage at that rate will cost around $672 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 more rapidly.
The average rate on a 5/1 ARM is 3.31 percent, falling 6 basis points over the last 7 days.
These types of loans are best for those who expect to refinance or sell before the first or second adjustment. Rates could be materially higher when the loan first adjusts, and thereafter.
Monthly payments on a 5/1 ARM at 3.31 percent would cost about $439 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 mortgage rate projections.
Want to see where rates are at this moment? Lenders nationwide respond to Bankrate.com’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:
|Loan term||Today’s Rate||Last week||Change|
|30-year mortgage rate||3.02%||3.14%||-0.12|
|15-year mortgage rate||2.62%||2.66%||-0.04|
|30-year jumbo mortgage rate||3.04%||3.19%||-0.15|
|30-year mortgage refinance rate||3.22%||3.37%||-0.15|
Rates accurate as of August 24, 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, sometimes for more than 60 days, but those locks can be costly. In today’s volatile market, some lenders will lock an interest rate for only two weeks to avoid 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, with refinancing taking at least a month.
What causes mortgage rates to 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.
Current mortgage rate environment
The current mortgage rate environment has been unstable because of the coronavirus pandemic, but generally 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 “Bankrate’s Rate Averages Methodology.”
Shopping for the right mortgage lender? See reviews of top lenders.
|Product||Purchase Rates||Refinance Rates|
|The index above links out to loan-specific pages to help you learn more about rates by loan type.|
|30-Year Loan||30-Year Interest Rates||30-Year Mortgage Refinance Rates|
|20-Year Loan||20-Year Mortgage Interest Rates||20-Year Mortgage Refinance Rates|
|15-Year Loan||15-Year Mortgage Rates||15-Year Refi Interest Rates|
|10-Year Loan||Current 10 Year Mortgage Rates||10-Year Mortgage Refinance Rates|
|FHA Loan||FHA Loan Interest Rates||FHA Mortgage Refi Rates|
|VA Loan||Current VA Mortgage Rates||VA Refinance Rates|
|ARM Loan||ARM Loan Rates||ARM Refinance Interest Rates|
|Jumbo Loan||Current Jumbo Mortgage Rates||Jumbo Refi Interest Rates|