Current Mortgage Rates, March 8, 2021 | Rates Diminished - NextAdvisor

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A few key mortgage rates sunk lower today. The averages for both 30-year fixed and 15-year fixed mortgages were slashed. At the same time, average rates for 5/1 adjustable-rate mortgages (ARM) also dropped lower .

Take a look at today’s rates:

Current Mortgage Refinance Rates

Today’s decline in rates for 15-year fixed refinance loans was not matched by 30-year fixed refinance rates, which saw average rates not change. Shorter term, 10-year fixed-rate refinance mortgages shrank.

Take a look at today’s refinance rates:

Find current mortgage rates for today.

30-Year Fixed-Rate Mortgages

The 30-year fixed-mortgage rate average is 3.23%, which is a decrease of 2 basis points from seven days ago.

You can use NextAdvisor’s mortgage calculator to work out what your monthly payments would be and understand how adding extra payments will impact your loan. The mortgage calculator can also show you the total interest you’ll pay over the life of the loan

15-Year Fixed-Rate Mortgages

The median rate for a 15-year fixed mortgage is 2.51%, which is a decrease of 2 basis points compared to a week ago.

A 15-year, fixed-rate mortgage’s monthly payment is larger and will put more stress on your monthly budget than a 30-year mortgage would. But, 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 decrease of 2 basis points compared to last week.

An adjustable-rate mortgage is ideal for borrowers that will refinance or sell before the rate changes. If that’s not the case, their interest rates could end up being markedly 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. Just keep in mind that your payment could end up being hundreds of dollars higher after a rate adjustment, depending on the terms of your loan.

How Mortgage Rates Have Changed

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 the history of mortgage rates, we’re in an exceptionally low rate environment. The table below compares today’s average rates to what they were a week ago, and is based on information provided to Bankrate by lenders nationwide:

Rates as of March 8, 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 February, we saw mortgage interest rates gain steam, moving well above their previous all-time lows to over 3%. However, rates are still near all-time lows, which is great news for borrowers. And for 2021, some experts see mortgage rates continuing to stay low. Although we could see rates start to gradually rise again as the year progresses .

The direction rates go will depend on the economy. And effectively dealing with the impacts of the coronavirus pandemic is key to our recovery. As the economy recovers, we should see inflation rise, which will put upward pressure on mortgage rates. But in spite of the potential for rising inflation, mortgage rates are likely to stay low this year. One reason for this: the Federal Reserve believes that low interest rates will help the economy rebound. So it’s unlikely to make moves that could increase rates.

What Impacts the Current Mortgage Rates?

There is a wide range of factors that affect mortgage rates. Some are broader economic factors, and others are related to your individual circumstances.

Condition of the economy
Federal Reserve policies
Consumer and government spending
Yields for 10-year Treasury bonds
Inflation rates
Personal situation: Loan term, type and location of the property, and credit score

How to Qualify for the Lowest Mortgage Rate

Your credit score, loan-to-value ratio (LTV), and debt-to-income ratio (DTI), are the most important factors in determining your mortgage rate.

To get the best rate, you’ll need a credit score between 700 to 800. Having a credit score above 800 is nice, but will likely have a minimal impact on your rate.

When you’re looking to buy a house, the less debt you have the better. Your DTI will drop when you have fewer monthly debt obligations. And a lower DTI will help you get a smaller interest rate.

Banks provide the most substantial mortgage rate reductions to home buyers that are deemed less risky. A bigger down payment is a signal to lenders that you have more skin in the game and are less likely to default on your loan. A down payment of 20% or more will save you money in two ways; with a more favorable mortgage rate, and you’ll be able to avoid paying for private mortgage insurance (PMI).

Is Now a Good Time to Buy a Home?

Deciding when to buy a home is a highly personal choice. Your financial situation will play a big role in your decision. Before you buy a home, you’ll want to have a secure source of income, enough saved for closing costs, and a high credit score.

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.