We want to help you make more informed decisions. Some links on this page — clearly marked — may take you to a partner website and may result in us earning a referral commission. For more information, see How We Make Money.
Today, a number of important mortgage rates crept upward. Both 30-year fixed and 15-year fixed mortgage rates inched upward. At the same time, average rates for 5/1 adjustable-rate mortgages dropped lower .
Interest rates for mortgages are in a constant state of transition. But the good news is, they are currently historically low. If you’re looking for a mortgage, now might be an excellent time to secure a fixed rate. But don’t forget to take the time to compare rates from various lenders first.
30-Year Fixed-Rate Mortgages
The median interest rate for a standard 30-year fixed mortgage is 3.06%, which is a growth of 5 basis points from seven days ago.
You can use NextAdvisor’s home loan payment calculator to get an idea of what your monthly payments will be and see how much you’ll save if you make extra 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 2.62%, which is an increase of 4 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. 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 adjustable-rate mortgage has an average rate of 3.03%, a downtick of 1 basis point 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 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, your rate could climb higher and your payment might grow by hundreds of dollars a month.
Where Rates Are Moving
To see where mortgage rates are moving 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 from across the nation:
|Loan type||Interest rate||A week ago||Change|
|30-year fixed rate||3.06%||3.01%||+0.05|
|15-year fixed rate||2.62%||2.58%||-0.04|
|30-year jumbo mortgage rate||2.98%||3.05%||-0.07|
|30-year mortgage refinance rate||3.07%||3.12%||-0.05|
Updated on November 6, 2020.
When Should I Lock my Rate?
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 because it wants to avoid the risk of a big jump in rates.
If mortgage rates rise, the rate lock kicks in to protect you. When interest rates are declining you may be concerned about a rate lock; you don’t want to lock into a higher rate after all. One way to protect yourself in this scenario is to ask if your lender offers a floating rate lock. This allows you to get a lower rate if interest rates drop before you close your loan. When it comes to mortgage rates, there are no guarantees for what direction they will head down the road. So it’s often a prudent move to secure a low rate rather than holding out hope for a significant rate drop in the future.
One thing to consider is 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 you should also expect a refinance to take longer than normal.
Why Mortgage Rates Change
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.
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. demand for mortgages, that can cause a decline in mortgage rates. high after a rate adjusts.
Where Are Mortgage Rates Going?
In recent months, mortgage rates fell to new all-time lows. But what the future holds isn’t easy to predict. The economy will play a big factor, and so will how well the coronavirus can be contained. When the economy recovers, rates will rise. But this could be largely dependent on the development of a coronavirus vaccine. Conversely, mortgage rates are likely to stay low if the coronavirus continues to cause economic hardship.
Current Mortgage Rate Conditions
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.
Suppose the price of the same property jumps to $380,000, while the mortgage rate drops to 3%. If you can still manage a down payment of 20% the monthly payment on a 30-year loan would be $1,451, an increase of only $115 a month. But the down payment goes up by another $6,000, and some of your closing costs are also likely to rise.
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.