- The average 30-year fixed mortgage rate spiked by 0.12% to 3.1% this week
- The 0.12% increase is the largest weekly jump in nearly nine months
- Even with this weekly increase, rates are still exceptionally low compared to pre-pandemic levels
- There are meaningful steps you can take right now to help offset rising interest rates
Other mortgage rate surveys tracked similar movements this week. Bankrate’s mortgage rate survey showed a jump to 3.22%, an increase of 0.07%. However, even with the significant rise in mortgage and refinance rates, today’s interest rates remain historically low.
Mortgage rates can be volatile with up and down blips from week to week, but many experts expect mortgage rates to rise towards the end of 2021. Rates are widely anticipated to increase to around 3.4% by the end of the second quarter of 2022, says Odeta Kushi, deputy chief economist at First American, a financial services firm. So over the long term, we aren’t likely to see rates go much lower than their current levels.
When you’re taking out a home loan, you aren’t entirely at the mercy of the mortgage rate markets. You can take steps in the long term and short term to ensure you have access to the lowest possible rate and best overall deal.
What Influences Your Rate
Outside of market rate conditions, here the factors that influence what interest rate you get:
- Varies by lender
- Loan type
- Loan amount
- Credit score
- Size of your down payment (for purchase)
- Amount of home equity (for a refinance)
Two Things You Can Do Right Now to Combat Rising Rates
You can’t increase your credit score or build up your down payment savings overnight. But if you’re in the market to buy or refinance now, there are things you can do in the short term to increase your odds of getting the best deal possible.
1. Get Quotes From Multiple Lenders
Mortgage rates aren’t set by a single entity. That means five different lenders could quote you five different rates. So it’s a good idea to compare loan offers from at least two or three mortgage lenders.
A recent study from the fintech startup Haus found that the difference between the highest and lowest quoted rates between lenders was 0.75% for borrowers with similar downpayments, debt, and credit scores. Getting at least two to three mortgage quotes could offset some of the expected rate increases in the coming months.
2. Pay Attention to All of the Costs of Getting a Mortgage
Low advertised interest rates are attractive because it appears to save you money. But interest isn’t the only cost associated with getting a mortgage. There are hefty upfront fees known as closing costs, and just like rates, they vary widely by lender and loan type. Closing costs usually range from 3% to 6% of the loan amount, which can add thousands of dollars for a typical mortgage. By finding a loan with lower fees, you may be able to offset some of the cost of a higher interest rate.
After you submit an application, the lender will give you a Loan Estimate form. This is a standardized form, which makes it easy to compare the fees each lender is charging. One lender may offer you an exceptionally low rate only to tack on discount points, which is an extra closing cost you can pay in exchange for a lower rate. By comparing Loan Estimates, you can look at the overall offer to ensure you’re getting the best deal for you.