Several closely watched mortgage rates declined today. The average rates on 30-year fixed and 15-year fixed mortgages both receded. The average rate on 5/1 adjustable-rate mortgages, meanwhile, also were down.
Rates for mortgages are constantly changing, but overall, they are very low by historical standards. 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 you’ll pay for a 30-year fixed mortgage is 3.25 percent, down 5 basis points over the last seven days. A month ago, the average rate on a 30-year fixed mortgage was higher, at 3.52 percent.
At the current average rate, you’ll pay principal and interest of $435.21 for every $100,000 you borrow. That’s lower by $2.75 than it would have been last week.
You can use Bankrate’s mortgage loan calculator to figure out your monthly payments and find out how much you’ll save by adding extra payments. It will also help you calculate how much interest you’ll pay over the life of the loan.
15-year fixed mortgages
The average 15-year fixed-mortgage rate is 2.75 percent, down 4 basis points over the last seven days.
Monthly payments on a 15-year fixed mortgage at that rate will cost around $679 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 adjustable rate mortgageis 3.12 percent, down 1 basis point over the last 7 days.
These loan types are best for people who expect to sell or refinance 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 3.12 percent would cost about $428 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 currently? Lenders nationwide 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||3.33%||3.36%||-0.03|
|30-year fixed refinance||3.36%||3.33%||+0.03|
Rates as of July 6, 2020.
When to lock your mortgage rate
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 pricey. In today’s volatile market, some lenders will lock an interest rate for only two weeks to avoid unnecessary risk.
The benefit of a rate lock is that 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
Mortgage rates are influenced by a range of economic factors, from inflation to unemployment numbers. Typically, higher inflation means higher interest rates and vice versa. As inflation rises, the dollar loses value, which in turn drives off investors for mortgage-backed securities, causing the prices to fall and yields to climb. When yields climb, rates get 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
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.”
Shopping for a mortgage lender? See reviews of top lenders.
|Loan Type||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||Today’s 30-Year Mortgage Rates||30-Year Mortgage Refinance Rates|
|20-Year Loan||20-Year Mortgage Rates||20-Year Refinance Interest Rates|
|15-Year Loan||15 Year Fixed Mortgage Rates||15-Year Mortgage Refinance Rates|
|10-Year Loan||10-Year Mortgage Interest Rates||Current 10-Year Refinance Rates|
|FHA Loan||FHA Loan Interest Rates||FHA Mortgage Refi Rates|
|VA Loan||VA Mortgage Rates||Current VA Refinance Rates|
|ARM Loan||ARM Interest Rates||ARM Refi Mortage Rates|
|Jumbo Loan||Jumbo Loan Interest Rates||Jumbo Refi Interest Rates|