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Looking at today’s mortgage rates a few notable rates inched up. Interest rates on 30-year, fixed-rate mortgages increased, while 15-year fixed mortgage rates were the same. At the same time, average rates for 5/1 adjustable-rate mortgages (ARM) were raised.
The average mortgage rates are as follows:
- 30-year mortgage rate: 3.10%
- Today’s 15-year fixed mortgage rate is 2.37%
- Today’s average 5/1 adjustable-mortgage rate is 3.16%
Current Mortgage Refinance Rates
Interestingly, 30-year fixed refinance rates increased, when at the same time national rate averages for a 15-year fixed refinance remained the same. If you’ve been considering a 10-year refinance loan, just know average rates stayed the same.
Take a look at today’s refinance rates:
- 30 Year Fixed Refinance Rates: 3.16%
- 15-year fixed-rate refinance: 2.42%
- 10-year fixed-rate refinance: 2.43%
30-Year Fixed-Rate Mortgage Rates
The 30-year fixed-mortgage rate average is 3.10%, which is a growth of 2 basis points from the previous week.
You can use NextAdvisor’s mortgage calculator to work out what your monthly payments would be and calculate what you’ll save with additional payments. The mortgage calculator can also show you the total 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 2.37%, which is the same rate compared to a week ago.
A 15-year, fixed-rate mortgage’s monthly payment is larger than what you would pay with a 30-year mortgage. However, 15-year loans have some considerable benefits: You’ll save thousands of dollars in interest and pay off your loan much faster.
5/1 Adjustable-Rate Mortgage Rates
A 5/1 ARM has an average rate of 3.16%, which is a climb of 2 basis points from the same time last week.
An ARM is ideal for households who will refinance or sell before the rate changes. If that’s not the case, their interest rates could end up being significantly 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 we rely on information collected by Bankrate, which is owned by the same parent company as NextAdvisor. Looking at historical mortgage rates, we’re seeing low rates like never before. 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:
|Loan term||Today’s Rate||Last week||Change|
|30-year mortgage rate||3.10%||3.08%||+0.02|
|15-year fixed rate||2.37%||2.37%||N/C|
|30-year jumbo mortgage rate||3.12%||3.10%||+0.02|
|30-year mortgage refinance rate||3.16%||3.13%||+0.03|
Rates accurate as of June 4, 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.
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.
Should I Lock in My Mortgage Rate Now?
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 jumped 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 have a big impact on rates. If spending increases, from the government and consumers, that’s likely to drive inflation higher. In this scenario, we’ll most likely see mortgage rates begin to climb upward. But in spite of the potential for rising inflation, it’s unlikely that we’ll see skyrocketing mortgage rates in 2021. One reason for this: the Federal Reserve believes that low interest rates will help the economy rebound. So it’s likely to make policy decisions in favor of keeping rates low.
2021 Mortgage Rate Forecast
Mortgage rates have stabilized somewhat after a volatile first few months of the year. As the year progresses, they are likely to remain reasonably flat but could start to trend higher.
However, the economy still has a long way to go before it recovers to pre-pandemic levels. If we get surprised by any bad news, that could put a damper on rates.
How to Get the Best Mortgage Rate
As you work to secure the absolute best mortgage rate you should focus on three considerations: Credit score, loan-to-value ratio (LTV), and debt-to-income ratio (DTI).
To get the lowest mortgage rate, it’s best to have a credit score somewhere between 700-800. Having a credit score above 800 is nice, but will likely have no major impact on your rate.
How much debt you have will affect not only the price of the house you can afford, but also your mortgage rate. The maximum DTI for most mortgage loans is 43%. So If you make $3,000 a month you’d be allowed to have up to $1,290 in monthly bills. Although, having a DTI under 28% is more likely to get you a reduction in your interest rate..
Mortgage providers offer the largest mortgage rate reductions to home buyers that are seen as less risky. One surefire way to show you’re a less risky borrower is to have a bigger 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).