Several closely watched mortgage rates dropped today. The average for a 30-year fixed-rate mortgage decreased, but the average rate on a 15-year fixed were unchanged. The average rate on 5/1 adjustable-rate mortgages, or ARMs, the most popular type of variable rate mortgage, decreased.
Mortgage rates are in a constant state of flux, 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 3.04 percent, a decrease of 2 basis points over the last week. This time a month ago, the average rate on a 30-year fixed mortgage was lower, at 3.01 percent.
At the current average rate, you’ll pay $423.76 per month in principal and interest for every $100,000 you borrow. That’s down $1.09 from what it would have been last week.
You can use Bankrate’s mortgage payment calculator to get a handle on what your monthly payments would be and see the effect of 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 2.57 percent, unchanged over the last seven days.
Monthly payments on a 15-year fixed mortgage at that rate will cost around $670 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 save thousands of dollars over the life of the loan in total interest paid and build equity much faster.
The average rate on a 5/1 ARM is 3.07 percent, falling 4 basis points over the last week.
These types of loans 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 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 interest rates forecast.
Want to see where rates are currently? Lenders across the nation 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:
|30-year fixed jumbo||3.10%||3.11%||-0.01|
|30-year fixed refinance||3.17%||3.19%||-0.02|
Rates as of October 20, 2020.
Should you lock a 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, 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 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. 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.
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, and expect refinancing to take at least a month.
What causes mortgage rates to move
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.
Current mortgage rate landscape
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 “Understanding Bankrate’s average rates.”
Read about other loan terms:
Searching for the right mortgage lender?
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|Loan term||Purchase Rates||Refinance Rates|
|The chart above links out to loan-specific pages to help you learn more about rates by mortgage type.|
|30-Year Loan||30-Year Interest Rates||30-Year Refinance Interest Rates|
|20-Year Loan||20-Year Fixed Mortgage Rates||20-Year Refinance Rates|
|15-Year Loan||Today’s 15-Year Mortgage Rates||15-Year Refi Interest Rates|
|10-Year Loan||10-Year Fixed Mortgage Rates||10-Year Refinance Rates|
|FHA Loan||FHA Mortgage Interest Rates||FHA Refinance Interest Rates|
|VA Loan||VA Mortgage Interest Rates||VA Refinance Loan Rates|
|ARM Loan||ARM Mortgage Rates||ARM Refi Mortage Rates|
|Jumbo Loan||Jumbo Loan Rates||Jumbo Loan Refinance Rates|