Mortgage rates showed no clear direction today. The average for a 30-year fixed-rate mortgage held steady, but the average rate on a 15-year fixed saw an increase. The average rate on 5/1 adjustable-rate mortgages, meanwhile, ticked up.
Mortgage rates are in a constant state of flux, but they remain 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 for the benchmark 30-year fixed mortgage is 3.06 percent, unchanged over the last week. A month ago, the average rate on a 30-year fixed mortgage was higher, at 3.15 percent.
At the current average rate, you’ll pay $424.85 per month in principal and interest for every $100,000 you borrow.
You can use Bankrate’s mortgage payment 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 2.64 percent, up 5 basis points over the last week.
Monthly payments on a 15-year fixed mortgage at that rate will cost around $673 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 save thousands of dollars 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 3.36 percent, climbing 6 basis points from a week ago.
These loan types are best for people who expect to refinance or sell before the first or second adjustment. Rates could be substantially higher when the loan first adjusts, and thereafter.
Monthly payments on a 5/1 ARM at 3.36 percent would cost about $441 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 Trend Index.
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:
|Loan term||Today’s Rate||Last week||Change|
|30-year mortgage rate||3.06%||3.06%||N/C|
|15-year mortgage rate||2.64%||2.59%||-0.05|
|30-year jumbo mortgage rate||3.08%||3.10%||-0.02|
|30-year mortgage refinance rate||3.27%||3.11%||+0.16|
Rates accurate as of August 19, 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 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. 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.
Keep in mind that 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
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.
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
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 average rates.”
Shopping for the right mortgage lender? Check out reviews of top lenders.
|Loan term||Purchase Rates||Refinance Rates|
|The chart above links out to loan-specific content to help our readers learn more about rates by mortgage type.|
|30-Year Loan||30-Year Mortgage Rates||30-Year Mortgage Refinance Rates|
|20-Year Loan||Current 20 Year Mortgage Rates||20-Year Refi Rates|
|15-Year Loan||Today’s 15-Year Mortgage Rates||15-Year Mortgage Refinance Rates|
|10-Year Loan||10-Year Mortgage Rates||Current 10-Year Refinance Rates|
|FHA Loan||FHA Mortgage Loan Rates||Current FHA Loan Refinance Rates|
|VA Loan||VA Mortgage Interest Rates||VA Refinance Rates|
|ARM Loan||ARM Mortgage Rates||ARM Refinance Interest Rates|
|Jumbo Loan||Current Jumbo Mortgage Rates||Jumbo Loan Refinance Rates|