Several key mortgage rates declined today. The average rates on 30-year fixed and 15-year fixed mortgages both dropped. On the variable-mortgage side, the average rate on 5/1 adjustable-rate mortgages rose.
Mortgage rates change daily, but they remain much lower overall than they were before the Great Recession. 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 don’t do so without shopping around first.
30-year fixed mortgages
The average rate you’ll pay for a 30-year fixed mortgage is 3.14 percent, a decrease of 7 basis points since the same time last week. This time a month ago, the average rate on a 30-year fixed mortgage was higher, at 3.42 percent.
At the current average rate, you’ll pay a combined $429.19 per month in principal and interest for every $100,000 you borrow. That’s $3.82 lower, compared with last week.
You can use Bankrate’s mortgage calculator to figure out your monthly payments and find out how much you’ll save by adding extra payments. It will also help you computehow much interest you’ll pay over the life of the loan.
15-year fixed mortgages
The average 15-year fixed-mortgage rate is 2.72 percent, down 1 basis point from a week ago.
Monthly payments on a 15-year fixed mortgage at that rate will cost around $677 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 more rapidly.
The average rate on a 5/1 ARM is 3.19 percent, adding 8 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 much higher when the loan first adjusts, and thereafter.
Monthly payments on a 5/1 ARM at 3.19 percent would cost about $432 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 across the nation 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||3.19%||3.27%||-0.08|
|30-year fixed refinance||3.19%||3.28%||-0.09|
Rates as of July 15, 2020.
Lock your mortgage rate now or wait?
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 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, and expect refinancing to take 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.
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. 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.”
Searching for the right mortgage lender? See reviews of lenders nationwide.
|Loan Type||Purchase Rates||Refinance Rates|
|The table above links out to loan-specific pages to help our readers learn more about rates by loan type.|
|30-Year Loan||30 Year Fixed Mortgage Rates||Current 30 Year Refinance Rates|
|20-Year Loan||Current 20 Year Mortgage Rates||Current 20-Year Refinance Rates|
|15-Year Loan||15-Year Mortgage Interest Rates||Current 15-Year Refinance Rates|
|10-Year Loan||Current 10 Year Mortgage Rates||10-Year Mortgage Refinance Rates|
|FHA Loan||Current FHA Mortgage Rates||Current FHA Loan Refinance Rates|
|VA Loan||VA Loan Rates||Current VA Refinance Rates|
|ARM Loan||ARM Mortgage Rates||ARM Refi Mortage Rates|
|Jumbo Loan||Current Jumbo Mortgage Rates||Current Jumbo Refinance Rates|