The average rate on a 30-year fixed-rate loan is 3.23%, marking the second consecutive day of rate hikes. Other types of loans also start the day with higher rates.
The recent upward movement in rates shouldn’t really affect most qualified buyers who are considering applying for a new mortgage or refinancing their existing home loan. Many will still be able to get great interest rates and attractive monthly payments.
- The last rate on a 30 year fixed rate mortgage is 3.23%.
- The last rate on a 15 year fixed rate mortgage is 2.32%.
- The latest rate on a Jumbo ARM 5/1 is 2.128%.
- The latest rate on a 7/1 compliant ARM is 4.233%.
- The latest rate on a 10/1 compliant ARM is 3.991%.
Current mortgage rates: 30-year fixed rate mortgage rates
- The 30-year rate is 3.23%.
- It’s a day infold by 0.021 percentage point. ⇑
- It’s a month offold by 0.047 percentage point. ⇓
Fixed rate mortgages are popular because the interest rate and monthly payments do not change during the life of the loan. The 30 year fixed rate home loan is the most common home loan because its long repayment term means that the monthly payments will be lower compared to shorter term loans. The downside is that the interest rate is usually higher than that of a shorter loan, so you’ll pay more interest for longer.
Current mortgage rates: 15 years fixed rate mortgage rates
- The 15-year rate is 2.321%.
- It’s a day infold by 0.01 percentage point. ⇑
- It’s a month offold by 0.041 percentage point. ⇓
Compared to a longer loan of the same amount, the shorter payback period of a 15-year fixed rate mortgage results in higher monthly payments. The advantage is that the interest rate is generally lower. This means that you will save money because you will not be paying as much interest over the life of the loan.
Current Mortgage Rates: Jumbo 5/1 Variable Rate Mortgage Rates
- The ARM 5/1 rate is 2.128%.
- It’s a day infold by 0.025 percentage point. ⇑
- It’s a month offold by 0.037 percentage point. ⇓
Another type of loan is variable rate mortgages. There will be a low introductory or “teaser” interest rate for a few years. Thereafter, the rate will become variable, returning regularly to market conditions. The monthly payments will change with the rate.
There are several ARMs to choose from. A 5/1 revisable rate loan, for example, will have a fixed rate for five years, after which it becomes revisable and resets each year. Other common terms include an ARM 7/1 and an ARM 10/1.
Current mortgage rates: VA, FHA and jumbo loan rates
The average rates for FHA, VA and jumbo loans are:
- The rate on a 30-year FHA mortgage is 3.004%. ⇑
- The rate for a 30-year VA mortgage is 3.045%. ⇑
- The rate for a 30-year jumbo mortgage is 3.344%. ⇑
Current mortgage refinancing rates
The average rates for 30-year, 15-year and 5/1 jumbo ARM loans are:
- The refinance rate on a 30 year fixed rate refinance is 3.393%. ⇑
- The refinance rate on a 15 year fixed rate refinance is 2.456%. ⇑
- The refinancing rate on a Jumbo ARM 5/1 is 2.381%. ⇑
- The refinancing rate on a 7/1 compliant ARM is 4.558%. ⇑
- The refinancing rate on a 10/1 compliant ARM is 4.373%. ⇑
Where Are Mortgage Rates Going This Year?
Mortgage rates fell through 2020. Millions of homeowners responded to low mortgage rates by refinancing existing loans and taking out new ones. Many people have bought homes that they might not have been able to afford if the rates were higher.
In January 2021, rates briefly fell to all-time low levels, but tended to rise throughout the month and into February.
Looking ahead, experts believe that interest rates will rise further in 2021, but modestly. Factors that could influence the rates include how quickly COVID-19 vaccines are distributed and when lawmakers can agree on another cost-effective relief package. More vaccinations and government stimulus could lead to improved economic conditions, which would increase rates.
Although mortgage rates are likely to rise this year, experts say the increase will not happen overnight and it will not be a dramatic jump. Rates are expected to stay near their historically low levels throughout the first half of the year, rising slightly later in the year. Even with rates rising, this will still be a good time to finance a new home or refinance a mortgage.
Factors that influence mortgage rates include:
- The Federal Reserve. The Fed took swift action when the pandemic hit the United States in March 2020. The Fed announced its intention to move money through the economy by lowering the Federal Fund’s short-term interest rate between 0% and 0.25%, which is as low as they go. The central bank has also committed to buying mortgage-backed securities and treasury bills, thereby supporting the housing finance market. The Fed has reaffirmed its commitment to these policies for the foreseeable future on several occasions, most recently at a policy meeting in late January.
- The 10-year Treasury note. Mortgage rates move at the same pace as the yields on 10-year government treasury bills. Yields fell below 1% for the first time in March 2020 and have slowly risen since then. Currently, yields have hovered above 1% year-to-date, pushing interest rates up slightly. On average, there is typically a 1.8 point “spread” between Treasury yields and benchmark mortgage rates.
- The economy in the broad sense. Unemployment rates and changes in gross domestic product are important indicators of the overall health of the economy. When employment and GDP growth are low, it means the economy is weak, which can lower interest rates. Thanks to the pandemic, unemployment levels hit historic highs early last year and have yet to recover. GDP has also taken a hit, and although it has rebounded somewhat, there is still a lot of room for improvement.
Tips for getting the lowest possible mortgage rate
There is no universal mortgage rate that all borrowers receive. Qualifying for the lowest mortgage rates takes a bit of work and will depend on both personal financial factors and market conditions.
Check your credit score and your credit report. Mistakes or other red flags that can lower your credit score. The borrowers with the highest credit scores will get the best rates, so it’s essential to check your credit report before you begin the home search process. Taking action to correct mistakes will help increase your score. If you have high credit card balances, paying them off can also give you a quick boost.
Save money for a large down payment. This will lower your loan-to-value ratio, which means how much of the home’s price the lender has to finance. A lower LTV usually results in a lower mortgage rate. Lenders also like to see money that has been saved in an account for at least 60 days. It tells the lender that you have the money to finance the purchase of the house.
Shop around for the best rate. Don’t settle for the first interest rate a lender offers you. Check with at least three different lenders to see who is offering the lowest interest rate. Also consider different types of lenders, such as credit unions and online lenders in addition to traditional banks.
Also take the time to learn about the different types of loans. While the 30-year fixed-rate mortgage is the most common type of mortgage, consider a shorter-term loan such as a 15-year loan or an adjustable rate mortgage. These types of loans often have a lower rate than a conventional 30-year mortgage. Compare everyone’s costs to see which one best suits your needs and financial situation. Government loans – such as those backed by the Federal Housing Authority, the Department of Veterans Affairs, and the Department of Agriculture – may be more affordable options for those who qualify.
Finally, lock in your rate. Locking in your rate once you find the right rate, the right loan product, and the lender will help ensure that your mortgage rate does not increase until the loan closes.
Our mortgage rate methodology
Money’s Daily Mortgage Rates show the average rate offered by over 8,000 lenders in the United States for which the most recent rates are available. Today, we are posting the rates for Thursday, August 5, 2021. Our rates reflect what a typical borrower with a credit score of 700 can expect to pay on a home loan right now. These rates were offered to people contributing 20% and include discount points.