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Today mortgage rates went in a mixture of directions. Average 30-year fixed mortgage rates were flat, but average 15-year fixed mortgage rates moved downwards. For variable rates, the 5/1 adjustable-rate mortgage receded.
Interest rates for mortgages change constantly. But the good news is, they are currently historically low. If you’re looking for a mortgage, now it may be a good time to get a guaranteed low rate for the life of the loan. Just keep in mind you still need to compare offers from different lenders.
30-Year Fixed-Rate Mortgages
The median interest rate for a standard 30-year fixed mortgage is 3.06%, which is unchanged from last week.
You can use NextAdvisor’s mortgage 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 all of the 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 a decrease of 1 basis point compared to a week ago.
A 15-year, fixed-rate mortgage’s monthly payment will be much bigger. So finding room in your budget for a 30-year loan’s monthly payment would be easier. 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 Mortgages
A 5/1 adjustable-rate mortgage has an average rate of 3.03%, a decrease of 1 basis point compared to last week.
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 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 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 country:
|Loan term||Today’s Rate||Last week||Change|
|30-year mortgage rate||3.06%||3.06%||N/C|
|15-year fixed rate||2.62%||2.63%||-0.01|
|30-year jumbo mortgage rate||3.01%||3.04%||-0.03|
|30-year mortgage refinance rate||3.07%||3.12%||-0.05|
Rates accurate as of November 7, 2020.
Is a Rate Lock Important?
When you lock a rate it freezes the interest rate for a set amount of time. It’s not unheard of for lenders to offer rate locks for a fee, which could be included in the price of the loan. In general, the longer the interest rate lock period, the more expensive 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. 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.
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 do Mortgage Rates Fluctuate?
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. demand for mortgages, that can cause a decline in mortgage rates. high after a rate adjusts.
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. 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 haven’t been as stable as usual because of the COVID-19 pandemic and what it has done to the economy. But in general, rates have been depressed. 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
The rock-bottom mortgage rates we’ve seen have distinct advantages and disadvantages for homebuyers. For starters, buyers have the ability to borrow larger amounts now than when rates were higher. 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 take a look at how lower mortgage rates and rising prices can impact a homebuyer. A $350,000 home purchase with a 4% interest rate would have a monthly payment of $1,336 with a 30-year loan. At 20% down that’s a $70,000 down payment.
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?
Whether or not you buy a home is a highly personal choice. Your financial situation will play a big role in your decision. Before you buy a home, you’ll want to have a secure source of income, enough saved for closing costs, and a high credit score.
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.