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A few benchmark mortgage rates decreased today. The averages for both 30-year fixed and 15-year fixed mortgages had a downswing. At the same time, average rates for 5/1 adjustable-rate mortgages remained firm.
Interest rates for mortgages change constantly. However, for months they have hovered near historic lows. If you’re looking for a mortgage, now it can be a good idea to pick up a low fixed rate. But you’ll want to be sure to find the best rate before committing.
30-Year Fixed-Rate Mortgages
The average 30-year fixed mortgage interest rate is 3.04%, which is a decrease of 3 basis points from the previous week .
You can use NextAdvisor’s mortgage loan 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 owe over the life of the loan.
15-Year Fixed-Rate Mortgages
The median rate for a 15-year, fixed mortgage is 2.51%, which is a decrease of 11 basis points from the same time last week.
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 Mortgages
A 5/1 ARM has an average rate of 3.04%, the same rate compared to last week.
An ARM 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 noticeably 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. Keep in mind, depending on how much your loan’s rate adjusts your payment has the potential to increase by a large amount.
Where Rates Are Moving
To see where mortgage rates are headed we rely on information collected by Bankrate, which is owned by the same parent company as NextAdvisor. This table has current average rates based on information provide to Bankrate by lenders nationwide:
|Loan term||Today’s Rate||Last week||Change|
|30-year mortgage rate||3.04%||3.07%||-0.03|
|15-year fixed rate||2.51%||2.62%||-0.11|
|30-year jumbo mortgage rate||3.10%||3.00%||+0.10|
|30-year mortgage refinance rate||3.21%||3.11%||+0.10|
Rates accurate as of November 10, 2020.
What to Know About a Rate Lock
When you lock a rate it freezes the interest rate for a set amount of time. If your lender offers a rate lock, be sure to ask about fees. There may be a fee to lock your rate, but it’s typically not very large or it can be added into the cost of your loan. In general, the longer the interest rate lock period, the more costly it will be. You may even run into a lender that will lock a rate for a shorter period of time so it can minimize the risk of a big jump in rates.
If mortgage rates rise, a rate lock will guarantee your original rate. You may even come across what is known as a floating-rate lock. This enables you to take advantage of lower rates if they drop before closing. If interest rates are declining, a floating-rate lock could be a great option to consider. Mortgage rates can be extremely unpredictable, so no one knows how they will change from day-to-day. That’s why it’s usually the right move to lock in a low rate, rather than betting on mortgage rates taking a tumble.
It’s important to know that during the pandemic, mortgage professionals have been extremely busy and it’s taking longer to close on a home. In some cases, it can take up to 60 days to close a mortgage loan — and there are also delays with mortgage refinancing.
What Influences Mortgage Rates?
There isn’t a single factor that causes mortgage rates to move, but rather there are many. Chief among them are things like 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 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.
Where Are Mortgage Rates Going?
In recent months, we’ve seen mortgage interest rates linger near all-time lows. But it’s difficult to determine where they will go from here. The economy will play a big factor, and so will how well the coronavirus can be contained. A vaccine could help boost the economy and lead to an increase in mortgage rates. However, if the economic recovery continues to be slow and the pandemic drags on, it’s likely we’ll see low rates for the foreseeable future.
Current Mortgage Rates
Mortgage rates were a bit unstable thanks to the pandemic and shutdown, but overall they have been remarkably low. In fact, mortgage rates set a record low, dipping under 3% for the first time. The problem for some people is you need excellent credit to qualify for these exceptionally-low rates. Not only that, but mortgage lenders are becoming more risk averse and requiring more sizable down payments while also closely scrutinizing borrowers’ employment.
Mortgage Rates’ Impact on Borrowers
When the real estate market is hot, extremely cheap mortgage rates can be good and bad in different ways for homebuyers. One good thing is that low-cost interest rates give borrowers the capacity to afford a home they might not have been able to in the past. For example, a 30-year, $350,000 loan with a 4% interest rate would have a monthly mortgage and interest payment of $1,670. A payment on the exact same loan would drop to $1,475 if the mortgage rate was reduced to 3%.
What we’ve seen happen in today’s market is a rise in home prices, which has been driven, at least in part, by the extraordinarily low mortgage rates.
Let’s say you were going to purchase a home for $350,000 with a 4% mortgage rate. A 20% down payment would cost you $70,000, and with a 30-year loan term the monthly payment would be $1,336.
If the price jumps to $380,000 with a reduced rate of 3% the numbers change a bit. A monthly mortgage and interest payment on a 30-year loan climbs to $1,451. But, your down payment would cost you $6,000 more if you wanted to keep the same 20% down.
Is Now a Good Time to Buy a Home?
There’s no “right time” to buy a house — the decision is a highly personal one. Keep in mind, when you purchase a home the monthly payment won’t be your only cost. You’ll also need enough money saved up for upfront closing costs and a down payment. And you’ll get a better deal if you have a higher credit score and lower debt-to-income ratio.
However, the pandemic has exacerbated a shortage of homes, leading to bidding wars and rising prices. Those trends mean 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 every day.
National lenders provide this mortgage rate information to Bankrate.com. It is possible the mortgage rates we reference has changed since this was published.