Several key mortgage rates slid lower today. The average for a 30-year fixed-rate mortgage slid down, but the average rate on a 15-year fixed moved higher. The average rate on 5/1 adjustable-rate mortgages, meanwhile, ticked downward.
|30-year fixed jumbo||3.10%||3.11%||-0.01|
|30-year fixed refinance||3.23%||3.16%||+0.07|
Rates as of October 26, 2020.
Mortgage rates 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 could 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 a 30-year fixed mortgage is 3.03 percent, a decrease of 1 basis point since the same time last week. Last month on the 26th, the average rate on a 30-year fixed mortgage was higher, at 3.09 percent.
At the current average rate, you’ll pay a combined $423.22 per month in principal and interest for every $100,000 you borrow. That represents a decline of $0.54 over what it would have been last week.
You can use Bankrate’s home 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 determinehow much interest you’ll pay over the life of the loan.
15-year fixed mortgages
The average 15-year fixed-mortgage rate is 2.58 percent, up 1 basis point over the last seven days.
Monthly payments on a 15-year fixed mortgage at that rate will cost around $671 per $100,000 borrowed. Yes, that payment is much bigger than it would be on a 30-year mortgage, 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 adjustable rate mortgageis 3.07 percent, down 1 basis point from a week ago.
These loan types are best for those 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 3.07 percent would cost about $425 for each $100,000 borrowed over the initial five years, but could climb hundreds of dollars higher 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 at this moment? Lenders nationwide 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:
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 because they don’t want to take on unnecessary risk.
The benefit of a rate lock is that if interest rates rise, you’re locked into the guaranteed rate. Some lenders have a floating-rate lock option, which allows you to get a lower rate if interest rates fall before you close your loan. In a falling rate environment, a float-down lock could be worth the cost. 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
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 landscape
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.
Are mortgage rates rising or falling?
Mortgage rates have fallen to record lows in recent months. Where they’ll go from here is nearly impossible to predict. Much depends on the direction of the economy, and how well public health officials can contain the coronavirus pandemic. Most experts predict that if the economy continues to bounce back and drugmakers develop a successful vaccine, mortgage rates will increase. However, if the economy suffers pandemic-related setbacks, rates will stay low or even fall further.
How do mortgage rates affect homebuyers?
In this housing boom, mortgage rates have been a mixed bag for buyers. Low rates give borrowers more buying power. A $300,000 loan at 4 percent equates to a monthly payment of $1,432. If rates fall to 3 percent, the payment plunges to $1,265.
One downside, however, is that a significant decline in mortgage rates can help push up home prices. Indeed, home values have increased in recent months.
Here’s one way to see the offsetting effects of soaring home prices and plunging mortgage rates. Say you decided not to buy a $300,000 home a year ago, when the 30-year mortgage rate was at about 3.75 percent. Your down payment at 20 percent would have been $60,000, and your monthly payment would have been $1,111.
Today, the price of the same home has jumped to $335,000, but you can land a 30-year loan at 3 percent. As a result, your monthly payment rises only slightly, to $1,130. However, you’ll have to come up with an extra $7,000 to make a 20 percent down payment.
Is now a good time to buy a house?
There’s never a straightforward answer to this question. It always depends. Do you have a reliable income, a good credit score and money saved for a down payment and repairs? If you can answer all of those questions affirmatively, you’re ready to buy.
However, the pandemic has exacerbated a shortage of homes, leading to bidding wars and rising prices. Those trends mean it can be a frustrating market for buyers.
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:
Shopping for the right lender?
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|Loan term||Purchase Rates||Refinance Rates|
|The table above links out to loan-specific pages to help you learn more about rates by mortgage type.|
|30-Year Loan||Today’s 30-Year Mortgage Rates||30-Year Refinance Rates|
|20-Year Loan||20-Year Mortgage Interest Rates||20-Year Mortgage Refinance Rates|
|15-Year Loan||15-Year Mortgage Interest Rates||15-Year Mortgage Refinance Rates|
|10-Year Loan||10-Year Fixed Mortgage Rates||10-Year Refinance Rates|
|FHA Loan||FHA Mortgage Loan Rates||FHA Refinance Interest Rates|
|VA Loan||VA Loan Rates||VA Refi Interest Rates|
|ARM Loan||Adjustable Rate Mortgage Rates||Current ARM Refinance Rates|
|Jumbo Loan||Jumbo Loan Rates||Jumbo Loan Refinance Rates|