Mortgage Interest Rates Today, May 5, 2021 | Rates Diminished

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What we’re seeing today is a handful of important mortgage rates have tailed off. Both 30-year fixed and 15-year fixed mortgage rates moved down. We also saw a downward trend in the average rate of 5/1 adjustable-rate mortgages (ARM).

The averages for 30-year fixed, 15-year fixed, and 5/1 ARMs are:

Looking at 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 declined. If you’ve been considering a 10-year refinance loan, just know average rates also saw a decrease.

The average refinance rates are as follows:

Check out mortgage rates that meet your distinct needs.

30-Year Fixed-Rate Mortgages

The average 30-year fixed mortgage interest rate is 3.06%, which is a decline of 5 basis points from the previous week.

You can use NextAdvisor’s home loan calculator to get an idea of what your monthly payments will be and calculate what you’ll save with additional 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 Mortgages

The median rate for a 15-year fixed mortgage is 2.34%, which is a decrease of 6 basis points compared to a week ago.

A 15-year, fixed-rate mortgage’s monthly payment is, without a doubt, a much bigger monthly payment than what you’d get with a 30-year mortgage offering the same interest rate. But, 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 Mortgages

A 5/1 ARM has an average rate of 3.25%, a downtick of 1 basis point from seven days ago.

An ARM is ideal for borrowers who 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 rate could climb higher and your payment might grow by hundreds of dollars a month.

Recent Mortgage Rate Movement

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 the middle of a period of unprecedented low rates. This table has current average rates based on information provided to Bankrate by lenders nationwide:

Current average mortgage interest rates
Loan typeInterest rateA week agoChange
30-year fixed rate3.06%3.11%-0.05
15-year fixed rate2.34%2.40%-0.06
30-year jumbo mortgage rate3.07%3.12%-0.05
30-year mortgage refinance rate3.11%3.16%-0.05

Updated on May 5, 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?

Recently, mortgage rates spiked and crossed 3% for the first time since July 2020. Even with this dramatic increase, rates are near or still 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 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 economic recovery. So it’s unlikely to make moves that could increase rates.

This Month’s Mortgage Predictions

Some experts forecast that this month mortgage rates will stabilize following weeks of strong growth.

The economy is beginning to show signs of life and investors are expecting increased inflation. This has driven 10-year Treasury bond yields up, which is a key indicator for mortgage rates. But, the Federal Reserve has expressed a desire to keep rates low. Also, some in the industry believe that fears of inflation are somewhat overblown. So don’t expect to see a massive surge in rates this month.

This Week’s Mortgage Predictions

A modest rise is what some experts are forecasting for mortgage rates this week. This would be a bit of a leveling off from previous weeks.

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.

Factors Behind Today’s Mortgage Rates

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

  • Overall strength of the economy
  • Federal Reserve policies
  • Consumer and government spending
  • 10-year U.S. Treasury yields
  • Inflation rates
  • Personal finances: Credit score, down payment, and debt-to-income ratio

How to Get the Best Mortgage Rate

Shopping around for a mortgage is one of the best ways to get the lowest interest rate.

The mortgage rate you’ll qualify for depends on a variety of factors lenders consider when assessing how the likelihood that you’ll be able to make your mortgage payments for the long term. Your credit score and debt-to-income ratio (DTI) factor into the decision. And your loan-to-value (LTV) ratio matters, so having a bigger down payment is better for your mortgage rate.

But lenders will look at your situation differently. So you can provide the same documentation to three different mortgage providers, and get offers with three different mortgage rates and fees that vary just as much.

What to Know About Recent Rate Hikes

Since we saw an all-time low 30-year fixed rate average of 2.65% this January, rates have jumped 0.44%. While this rate growth isn’t unexpected, many experts believed it would be later 2021 before we saw rates rise to this level.

Rising rates can have a significant impact on your homebuying budget. The 0.44% increase we’ve experienced has increased the monthly payment on a 30-year $300,000 loan by $71 a month. But don’t expect current rates to cool off the red hot real estate market.

There is still a severe shortage of homes for sale. So as we enter peak buying season, expect to continue seeing bidding wars and rising prices. Those trends can make 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 can change daily.

National lenders provide this mortgage rate information to Bankrate.com. It is possible the mortgage rates we reference has changed since this was published.

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