Mortgage rates were mixed today, but one key rate declined. The average for a 30-year fixed-rate mortgage slid down, but the average rate on a 15-year fixed climbed. The average rate on 5/1 adjustable-rate mortgages, or ARMs, the most popular type of variable rate mortgage, cruised higher.
Rates for mortgages 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 make sense to lock if you see a rate you like. Just be sure to shop around.
30-year fixed mortgages
The average rate you’ll pay for a 30-year fixed mortgage is 3.09 percent, down 4 basis points over the last seven days. A month ago, the average rate on a 30-year fixed mortgage was higher, at 3.26 percent.
At the current average rate, you’ll pay $426.47 per month in principal and interest for every $100,000 you borrow. Compared with last week, that’s $2.18 lower.
You can use Bankrate’s home 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 2.74 percent, up 2 basis points over the last week.
Monthly payments on a 15-year fixed mortgage at that rate will cost around $678 per $100,000 borrowed. That may squeeze your monthly budget than a 30-year mortgage would, 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 3.30 percent, up 11 basis points from a week ago.
These types of loans 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 3.30 percent would cost about $438 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 rate projections.
Want to see where rates are at this moment? 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||3.12%||3.18%||-0.06|
|30-year fixed refinance||3.19%||3.17%||+0.02|
Rates as of July 30, 2020.
When to lock your mortgage rate
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 costly. 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. 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 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.
Factors that influence mortgage rates
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 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 Bankrate’s mortgage lender reviews.
|Loan Type||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 Fixed Mortgage Rates||30-Year Refinance Rates|
|20-Year Loan||Current 20 Year Mortgage Rates||20-Year Refi Rates|
|15-Year Loan||15-Year Mortgage Rates||Current 15-Year Refinance Rates|
|10-Year Loan||10-Year Fixed Mortgage Rates||10-Year Refi Interest Rates|
|FHA Loan||FHA Mortgage Loan Rates||Current FHA Loan Refinance Rates|
|VA Loan||Current VA Mortgage Rates||Current VA Refinance Rates|
|ARM Loan||ARM Interest Rates||Current ARM Refinance Rates|
|Jumbo Loan||Current Jumbo Mortgage Rates||Jumbo Mortgage Refinance Rates|