What we are seeing today is, a handful of important mortgage rates have dropped off. Both 30-year fixed and 15-year fixed mortgage rates slumped. The most common type of variable-rate mortgage is the 5/1 adjustable-rate mortgage, also sunk lower.
Take a look at today’s rates:
- 30-year fixed mortgage rates are averaging 2.88%
- Today’s average 15-year fixed mortgage rate is 2.36%
- 5/1 ARM rate: 2.98%
Looking at Today’s Mortgage Refinance Rates
There’s good news if you’ve been considering a refinance, 15-year fixed and 30-year fixed refinance loans saw their mean rates decrease. Shorter term 10-year fixed-rate refinance mortgages also trailed off.
The refinance averages for 30-year, 15-year, and 10-year loans are:
- 30-year refinance rate: 2.89%
- 15-year refinance rate: 2.41%
- Today’s average 10-year fixed-rate refinance is: 2.45%
30-Year Fixed-Rate Mortgages
The 30-year fixed-mortgage rate average is 2.88%, which is a decrease of 1 basis point from the previous week.
You can use NextAdvisor’s home loan calculator to get an idea of what your monthly payments will be and see how much you’ll save if you make extra payments. The mortgage calculator can also show you how much interest you’ll owe over the life of the loan
15-Year Fixed-Rate Mortgages
The median rate for a 15-year, fixed mortgage is 2.36%, which is a decrease of 1 basis point from the same time last week.
A 15-year, fixed-rate mortgage’s monthly payment will be much bigger. So finding room in your budget for a 30-year loan’s monthly payment would be more simple. However, 15-year loans have some considerable benefits: You’ll pay thousands less in interest and pay off your loan much sooner.
5/1 Adjustable-Rate Mortgages
A 5/1 ARM has an average rate of 2.98%, a downtick of 1 basis point compared to last week.
An adjustable-rate mortgage is ideal for individuals that will refinance or sell before the rate changes. If that’s not the case, their interest rates could end up being noticeably higher after a rate adjusts.
For the first five years, a 5/1 ARM will typically have a lower interest rate compared to a 30-year fixed mortgage. Keep in mind, depending on how much your loan’s rate adjusts, your payment has the potential to increase by a large amount.
Where Rates Are Trending
To see where mortgage rates are headed, we rely on information collected by Bankrate, which is owned by the same parent company as NextAdvisor. Looking at mortgage rate history, we are seeing low rates like never before. This table has current average rates based on information provided to Bankrate by lenders from across the nation:
Updated on January 25, 2021.
A number of factors can influence mortgage rates, including everything from inflation to unemployment. In general, inflation leads to higher interest rates and vice versa. The dollar loses value with increased inflation, and this causes mortgage-backed securities to become less enticing for investors, which leads to falling prices and higher yields. And if yields increase, interest rates become more expensive for borrowers.
A strong economy has historically increased demand for homes. When more homes are sold, the demand for mortgages also increases, which can cause rates to go up. But the flip side is also true: A drop in demand for mortgages could signal a coming downturn in mortgage rates.
What Does the Future Hold for Mortgage Rates?
In recent months, we’ve seen mortgage interest rates linger near all-time lows. And for 2021, some experts predict mortgage rates will stay that way. Although, toward the end of the year we could see rates start to gradually rise.
Where rates go is largely dependent on what happens with the economy. How effective we are in dealing with the impacts of the coronavirus pandemic is key to our economic recovery. As the economy recovers, we should see inflation rise, which will put upward pressure on mortgage rates. Conversely, mortgage rates are likely to stay low if the coronavirus continues to cause economic hardship. The Federal Reserve could also choose to increase its purchasing of mortgage-backed securities, which would put downward pressure on mortgage rates.
What Impacts the Current Mortgage Rates?
Everything from the direction of the economy to your individual financial situation can affect mortgage rates. Not only that, but the type of mortgage and the property itself also make a difference.
- Overall health of the economy
- Federal Reserve policy decisions
- Spending in the private and public sectors
- U.S. Treasury bond Yields
- Inflation
- Individual circumstances: Loan-to-value ratio, credit history, and type of mortgage
Is Now a Good Time to Buy a Home?
There’s no “right time” to buy a house — the decision is a highly personal one. Keep in mind, when you purchase a home the monthly payment won’t be your only cost. You’ll also need enough money saved up for upfront closing costs and a down payment. And you’ll get a better deal if you have a higher credit score and lower debt-to-income ratio.
However, the pandemic has exacerbated a shortage of homes, leading to bidding wars and rising prices. Those trends mean it can be a frustrating market for buyers.
How We Got These Rates
The rates we have included are averages provided by Bankrate.com Site Averages and are calculated after the close of the previous business day. The lenders that the “Bankrate.com Site Average” tables include are not the same every day.
National lenders provide this mortgage rate information to Bankrate.com. It is possible the mortgage rates we reference has changed since this was published.
Mortgage Interest Rates by Loan Type
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