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What we’re seeing today is a handful of principal mortgage rates have decreased. Both 30-year fixed and 15-year fixed mortgage rates moved down. For variable rates, the 5/1 adjustable-rate mortgage (ARM) increased.
The averages for 30-year fixed, 15-year fixed, and 5/1 ARMs are:
- 30-year fixed mortgage rates are averaging 3.08%
- Today’s 15-year fixed mortgage rate is 2.35%
- 5/1 ARM rate: 3.24%
Today’s Mortgage Refinance Rates
There’s good news if you’ve been considering a refinance, because the average rates for 15-year fixed and 30-year fixed refinance loans slumped. If you’ve been considering a 10-year refinance loan, just know average rates also decreased.
Today’s refinance rates are:
- The average 30-year fixed-rate refinance currently sits at: 3.12%
- 15-year fixed-rate refinance: 2.40%
- 10-year refinance rate: 2.38%
30-Year Fixed-Rate Mortgage Rates
The average 30-year fixed mortgage interest rate is 3.08%, which is a decrease of 2 basis points from last week.
You can use NextAdvisor’s home loan payment 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 how much 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 2.35%, which is a decrease of 3 basis points compared to a week ago.
A 15-year, fixed-rate mortgage’s monthly payment is larger and will take up a bigger chunk of your monthly budget than a 30-year mortgage would. However, 15-year loans have some considerable benefits: You’ll save thousands of dollars in interest and pay off your loan much sooner.
5/1 Adjustable-Rate Mortgage Rates
A 5/1 ARM has an average rate of 3.24%, which is an addition of 9 basis points compared to a week ago.
An adjustable-rate mortgage is ideal for borrowers who will sell or refinance 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 your payment could end up being hundreds of dollars higher after a rate adjustment, depending on the terms of your loan.
Mortgage Rate Trends
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 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 from across the nation:
|Loan term||Today’s Rate||Last week||Change|
|30-year mortgage rate||3.08%||3.10%||-0.02|
|15-year fixed rate||2.35%||2.38%||-0.03|
|30-year jumbo mortgage rate||3.08%||3.12%||-0.04|
|30-year mortgage refinance rate||3.12%||3.14%||-0.02|
Rates accurate as of June 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.
The demand for housing can also impact mortgage rates. If more people are buying homes, there is a greater need for mortgages. This type of demand can drive interest rates up. And if there is less demand for mortgages, that can cause a decline in mortgage rates.
Should I Lock in My Mortgage Rate Now?
It’s impossible to know what direction mortgage rates will go from day to day. That’s why a mortgage rate lock is such a useful tool, because it protects you if rates go up. And with interest rates so low right now, you should lock in your rate as soon as you can.
When you lock in your rate, ask your lender how long the lock is valid for. A rate lock can be good for anywhere from 30 to 60 days, which typically will give you enough time to close before the lock expires. If you want to extend the rate lock, ask about fees as many lenders charge a fee for extending a rate lock.
What Does the Future Hold for Mortgage Rates?
To start the year, mortgage rates spiked and crossed 3% for the first time since last summer. After this dramatic increase, we saw a fall that brought rates back under 3%. With rates hovering around 3%, they are still near or below the levels many experts predicted they would hit in 2021.
The direction rates go will depend on the economy. And effectively dealing with the impacts of the coronavirus pandemic should boost our economic recovery. If consumer and government spending increases, that’s likely to drive inflation higher. And higher inflation usually leads to rising mortgage rates. But the road to a full recovery will be a longer one. So the growth we expect to see in mortgage rates is more likely to happen over time, not all at once.
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 Get the Best Mortgage Rate
To get the the absolute best interest rate you should focus on three considerations: Credit score, loan-to-value ratio (LTV), and debt-to-income ratio (DTI).
To get the lowest interest rate, you’ll need a credit score somewhere between 700-800. Having a credit score above 800 is nice, but will likely have a minimal impact on your rate.
Your debt will impact not only the price of the house you can purchase, but also your interest rate. The maximum DTI for most mortgages is 43%. So If you make $3,000 a month you’d be allowed to have up to $1,290 in monthly bills. To get a better mortgage rate, aim for a DTI ratio of 28% or less.
Mortgage providers give the biggest mortgage rate reductions to home buyers that are deemed less risky. A large down payment is a signal to lenders that you have more skin in the game and are less likely to stop making payments. 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).