Mortgage rates did not show a clear direction today, but a key rate has increased. The average for a 30-year fixed rate mortgage has increased, but the average rate for a 15-year fixed mortgage has declined. On the variable rate mortgage side, the average rate for 5/1 variable rate mortgages has fallen.
Mortgage rates are constantly changing, but overall they are very low by historical standards. If you are looking for a mortgage, now might be a great time to set a rate. Just be sure to shop around.
Check out mortgage rates for a variety of loan types.
30 Year Fixed Mortgages
The average rate for a 30-year fixed mortgage is 3.12%, an increase of 10 basis points from the same time last week. Last month, the 28th, the average rate on a 30-year fixed mortgage was lower, at 3.09%.
At the current average rate, you’ll pay $ 428.10 per month in principal and interest for every $ 100,000 borrowed. That’s up $ 5.42 from what it would have been last week.
You can use Bankrate’s mortgage calculator to get an idea of what your monthly payments would be and see the effect of adding additional payments. It will also help you calculate the amount of interest you will pay over the life of the loan.
15 year fixed mortgages
The 15-year average fixed mortgage rate is 2.60%, down 3 basis points over the past seven days.
Monthly payments on a 15-year fixed mortgage at this rate will cost around $ 672 per $ 100,000 borrowed. This can lower your monthly budget compared to a 30-year mortgage, but it has big benefits – you’ll save thousands of dollars over the life of the loan in total interest paid, and build equity much faster.
The average rate on a 5/1 ARM is 3.36%, down 1 basis point over the past week.
These types of loans are best for people who plan to refinance or sell before the first or second adjustment. The rates could be significantly higher when the loan is adjusted for the first time, and afterwards.
Monthly payments on a 5/1 ARM at 3.36% would cost about $ 441 for every $ 100,000 borrowed in the first five years, but could increase by hundreds of dollars thereafter, depending on loan terms.
Where are the rates going
To see where Bankrate’s expert panel expects rates to move from here, check out our mortgage rate forecast for this week.
Want to see where the rates are right now? Lenders across the country respond to Bankrate’s Weekly Mortgage Rates Survey to bring you the most recent rates available. Here you can check out the latest mid-market rates for a wide variety of purchase loans:
Prices exact as of August 28, 2020.
When to lock in your mortgage rate
A rate lock secures your interest rate for a specified period of time. It is common for lenders to offer 30 day rate locks for a fee or to include the price of the rate lock in your loan. Some lenders lock rates for longer periods, sometimes for more than 60 days, but these locks can be expensive. In today’s volatile market, some lenders lock in an interest rate for only two weeks because they don’t want to take unnecessary risks.
With a rate lock-in, if interest rates go up, you’re stuck in the guaranteed rate. Some lenders have a variable rate foreclosure option, which allows you to get a lower rate if interest rates drop before your loan closes. In a declining rate environment, a float lock might be worth the cost. Since mortgage rates are unpredictable, there is no guarantee that rates will stay where they are week to week or even day to day. So if you can lock in a low rate, you should rather than bet on even lower interest rates.
Keep in mind that during the pandemic, all aspects of real estate and mortgage fencing are taking much longer than usual. Expect a new mortgage closing to take at least 60 days, with refinancing taking at least a month.
Why mortgage rates are changing
Mortgage rates are influenced by a range of economic factors, from inflation to unemployment figures. Typically, higher inflation means higher interest rates and vice versa. As inflation rises, the dollar loses value, which in turn dissuades investors from buying mortgage-backed securities, leading to lower prices and higher yields. When yields go up, rates become more expensive for borrowers.
A strong economy generally means more people buying homes, which in turn drives demand for mortgages. This increased demand can drive up prices. The opposite is also true; less demand can trigger lower prices.
Current mortgage rate landscape
The current mortgage rate environment has been volatile due to the coronavirus pandemic, but rates have generally been low. Mortgage rates rise and fall week to week, with lenders inundated with forbearance and refinancing requests. In general, however, rates are consistently below 4 percent and even go down between the mid to low 3s. This is a particularly good time for people with good to excellent credit to lock in a low rate on a purchase loan. However, lenders are also raising borrowers’ credit standards and demanding higher down payments while trying to mitigate their risk.
Methodology: The rates you see above are the averages from the Bankrate.com site. These calculations are performed after the close of the previous business day and include the rates and / or returns that we have collected on that day for a specific banking product. Bankrate.com site averages tend to be volatile – they help consumers see day-to-day rate movement. The establishments included in the “Bankrate.com Site Average” tables will differ from day to day, depending on the establishment prices that we collect on a given day for presentation on the site.
To learn more about the different rate averages published by Bankrate, see the “Understanding Bank Rate Averages” section.
Are you looking for a mortgage lender? See reviews from top lenders.
Learn more about the other loan conditions: