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A variety of notable mortgage rates slumped 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) had an upturn.
The averages for 30-year fixed, 15-year fixed, and 5/1 ARMs are:
- 30-year fixed mortgage rates are averaging 3.09%
- Today’s 20-year fixed mortgage rate is 2.98%
- 15-year mortgage rate: 2.36%
- 10-year mortgage rate: 2.32%
- 5/1 ARM rate: 3.24%
Looking at Today’s Mortgage Refinance Rates
There’s good news if you’ve been considering a refinance, because the mean rates for 15-year fixed and 30-year fixed refinance loans decreased. Shorter term, 10-year fixed-rate refinance mortgages also declined.
Take a look at today’s refinance rates:
- 30-year fixed refinance rates are averaging: 3.15%
- 20-year refinance rate: 3.04%
- 15-year fixed refinance rates are averaging 2.41%
- 10-year refinance rate: 2.40%
30-Year Fixed-Rate Mortgage Rates
For a 30-year fixed-rate mortgage, the average rate you’ll pay is 3.09%, which is a decline of 1 basis point from seven days ago.
You can use NextAdvisor’s mortgage calculator to work out what your monthly payments would be and see how much you’ll save if you make extra payments. The mortgage calculator can also show you all of the interest you’ll pay over the life of the loan
15-Year Fixed-Rate Mortgage Rates
The median rate for a 15-year fixed mortgage is 2.36%, which is a decrease of 1 basis point from seven days ago.
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 easier. However, 15-year loans have some considerable benefits: You’ll save thousands of dollars in interest and pay off your loan much earlier.
5/1 Adjustable-Rate Mortgage Rates
A 5/1 ARM has an average rate of 3.24%, which is a rise of 8 basis points from seven days ago.
An adjustable-rate mortgage is ideal for individuals who will refinance or sell before the rate changes. If that’s not the case, their interest rates could end up being remarkably 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 depending on how much your loan’s rate adjusts, your payment has the potential to increase by a large amount.
Mortgage Rate Trends
To see where mortgage rates are going rely on information collected by Bankrate, which is owned by the same parent company as NextAdvisor. Looking at mortgage rate history, we’re in the middle of a period of unprecedented low rates. This table has current average rates based on information provided to Bankrate by lenders from across the nation:
|30-year jumbo mortgage rate||3.10%||3.12%||-0.02|
|30-year mortgage refinance rate||3.15%||3.16%||-0.01|
Rates as of June 11, 2021.
There isn’t a single factor that causes mortgage rates to move, but rather there are many. Chief among them are things including inflation and even the unemployment rate. When you see inflation increasing, that usually means mortgage rates are about to climb higher. On the other hand, lower inflation typically accompanies lower mortgage rates. With higher inflation, the dollar becomes less valuable. This scenario pushes buyers away from mortgage-backed securities, which leads to price decreases and the need for increasing yields. And higher yields require borrowers to pay higher interest rates.
The Federal Reserve Bank can also influence rates, although it doesn’t directly set mortgage interest rates. Currently, the Federal Reserve is purchasing billions of dollars in mortgage-backed securities (MBS) each month. This increased demand for MBS has helped to keep rates from increasing and should continue to do so until the Federal Reserve announces it will taper its purchase of MBS.
When Should I Lock in My Mortgage Rate?
Mortgage rates move up and down on a daily basis, and it’s impossible to time the market. So locking in your interest rate right now is a good idea because overall, rates are exceptionally low.
A rate lock will only last for a set amount of time, typically 30-60 days. If you hit a snag during closing and it looks like your rate lock will expire you should talk with your lender. It may offer an extension of the lock, however, you might have to pay a fee for that privilege.
What Does the Future Hold for Mortgage Rates?
To start the year, mortgage rates spiked and crossed 3% for the first time since July 2020. After this dramatic increase, we saw a decline that brought rates back under 3%. With rates hovering around 3%, they are still near or below the levels many experts expected mortgage rates to be at in 2021.
How we have been dealing with coronavirus, and our economic recovery will greatly impact rates. As the economy recovers, we should see inflation rise, which will push interest rates higher. But it will take a while for the us to recover to prepandemic levels. That means rates are likely to gradually increase over time, rather than shoot up overnight.
2021 Mortgage Rate Forecast
Mortgage rates have leveled off a bit after an up and down first few months of the year. As the year progresses, they are likely to remain reasonably flat but could start to trend higher.
While there is nothing this week that should cause a spike or dramatic downturn in rates, the unexpected can happen. And currently, the economy still has a long way to go to return to its pre-pandemic level.
How to Qualify for the Lowest Mortgage Rate
There are three main components to getting the best mortgage interest rate: Debt-to-income ratio (DTI), loan-to-value ratio (LTV), and your credit score.
To get the best rate, it’s best to have a credit score between 700 to 800. Having a credit score above 800 is nice, but will likely have no major impact on your rate.
Having fewer debt payments can make it less expensive for you to buy a house. When you have fewer debt payments to make each month, it lowers your DTI. And a lower DTI will help you get a lower interest rate.
Mortgage providers give the biggest mortgage rate discounts to home buyers that are deemed less risky. One surefire way to signal you’re a less risky borrower is to make a larger down payment. 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).