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A few key mortgage rates went down 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 mortgage rate: 3.07%
- Today’s 15-year fixed mortgage rate is 2.36%
- 5/1 ARM rates are averaging 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 shrank. Shorter term, 10-year fixed-rate refinance mortgages also saw a decrease.
Take a look at today’s refinance rates:
- The average 30-year fixed-rate refinance currently sits at: 3.13%
- 15-year fixed refinance rates are averaging 2.40%
- 10-year fixed-rate refinance: 2.40%
30-Year Fixed-Rate Mortgage Rates
The average 30-year fixed mortgage interest rate is 3.07%, which is a decline of 3 basis points from last week.
You can use NextAdvisor’s home loan calculator to get an idea of what your monthly payments will be and play around with extra mortgage payments to wrap your head around how much you could save. 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 2.36%, which is a decrease of 2 basis points from seven days ago.
A 15-year, fixed-rate mortgage’s monthly payment is larger than what you would pay with a 30-year mortgage. But, 15-year loans have some considerable benefits: You’ll pay thousands less in interest and pay off your loan much faster.
5/1 Adjustable-Rate Mortgage Rates
A 5/1 ARM has an average rate of 3.24%, which is an increase of 9 basis points compared to a week ago.
An ARM is ideal for individuals who will sell or refinance 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 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 historical 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:
|Loan term||Today’s Rate||Last week||Change|
|30-year mortgage rate||3.07%||3.10%||-0.03|
|15-year fixed rate||2.36%||2.38%||-0.02|
|30-year jumbo mortgage rate||3.08%||3.12%||-0.04|
|30-year mortgage refinance rate||3.13%||3.14%||-0.01|
Rates accurate as of June 9, 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.
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 be able to extend the rate 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% – a level we haven’t seen since July 2020. 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 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 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 low rates will help our economy regain its momentum. So it’s unlikely to make moves that could increase rates.
2021 Mortgage Rate Forecast
In the near term, any changes in mortgage rates should be minimal. So rates should hover near 3% at the moment.
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
Your credit score, loan-to-value ratio (LTV), and debt-to-income ratio (DTI), are the most important factors lenders use to determine your mortgage rate.
To get the best interest rate, you’ll need 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.
Having fewer debt payments can make it less expensive for you to purchase a home. When you have fewer debt payments to make each month, it lowers your DTI. And a lower DTI will help you get a better mortgage rate.
Banks provide the largest mortgage rate reductions to borrowers that are deemed less risky. One surefire way to signal you’re more likely to make your monthly payments 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).