Multiple benchmark mortgage rates dropped today. The average rates on 30-year fixed and 15-year fixed mortgages both fell. On the variable-mortgage side, the average rate on 5/1 adjustable-rate mortgages also dropped.
Rates for mortgages change daily, but they have remained in a historically low range for quite some time. If you’re in the market for a mortgage, it could make sense to 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 3.45 percent, a decrease of 12 basis points over the last seven days. A month ago, the average rate on a 30-year fixed mortgage was higher, at 3.54 percent.
At the current average rate, you’ll pay a combined $446.26 per month in principal and interest for every $100,000 you borrow. That’s $6.70 lower, compared with 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 determinehow much interest you’ll pay over the life of the loan.
15-year fixed mortgages
The average 15-year fixed-mortgage rate is 2.82 percent, down 6 basis points over the last week.
Monthly payments on a 15-year fixed mortgage at that rate will cost around $682 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 ARM is 3.18 percent, sliding 9 basis points over the last 7 days.
These types of loans are best for people who expect to sell or refinance 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 3.18 percent would cost about $431 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 rate trends page.
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||3.53%||3.70%||-0.17|
|30-year fixed refinance||3.54%||3.67%||-0.13|
Rates as of June 4, 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 expensive. 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 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
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.
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.
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 on-site rate averages.”
Shopping for the right lender? See Bankrate’s lender reviews here.
|Product||Purchase Rates||Refinance Rates|
|The index above links out to loan-specific pages to help our readers learn more about rates by loan type.|
|30-Year Loan||Today’s 30-Year Mortgage Rates||30-Year Refinance Interest Rates|
|20-Year Loan||20-Year Mortgage Rates||Current 20-Year Refinance Rates|
|15-Year Loan||15-Year Mortgage Rates||15-Year Refi Interest Rates|
|10-Year Loan||10-Year Mortgage Rates||10-Year Refi Interest Rates|
|FHA Loan||FHA Mortgage Loan Rates||Current FHA Loan Refinance Rates|
|VA Loan||VA Mortgage Interest Rates||Current VA Refinance Rates|
|ARM Loan||ARM Interest Rates||ARM Refinance Interest Rates|
|Jumbo Loan||Current Jumbo Mortgage Rates||Jumbo Refi Interest Rates|