Jessie Roberts / Unsplash
Several closely watched mortgage rates declined today. Average 30-year fixed and 15-year mortgage rates declined. Meanwhile, the average rate on 5/1 adjustable-rate mortgages also declined.
Mortgage rates are constantly changing, but generally very low by historical standards. If you are looking for a mortgage on the market, it may make sense to go ahead and lock if you see a rate you like. Just be sure to shop around first.
See mortgage rates for a variety of rate terms.
Fixed 30-year mortgages
The average rate you will pay on a 30-year fixed mortgage is 3.25 percent, 5 basis points less in the last seven days. A month ago, the average rate on a 30-year fixed-rate mortgage was higher, at 3.52 percent.
At the current average rate, you will pay principal and interest of $ 435.21 for every $ 100,000 you borrow. That’s lower at $ 2.75 than it would have been last week.
You can use Bankrate’s home loan calculator to calculate your monthly payments and find out how much you will save by adding additional payments. It will also help you calculate how much interest you will pay over the life of the loan.
Fixed 15-year mortgages
The average 15-year fixed mortgage rate is 2.75 percent, 4 basis points lower in the last seven days.
Monthly payments on a 15-year fixed mortgage at that rate will cost about $ 679 for every $ 100,000 borrowed. That is clearly much higher than the monthly payment on a 30-year mortgage at that rate, but it comes with some great advantages: You will get several thousand dollars ahead of you over the life of the loan in full interest paid, and you will accumulate principal much faster.
5/1 ARMS
The average interest rate on a 5/1 adjustable rate mortgage is 3.12 percent, 1 basis point in the last 7 days.
These types of loans are best for people who expect to sell or refinance before the first or second adjustment. The rates could be significantly higher when the loan is first adjusted, and thereafter.
Monthly payments in an ARM of 5/1 at 3.12 percent would cost about $ 428 for every $ 100,000 borrowed during the first five years, but could increase more by hundreds of dollars later, depending on the terms of the loan.
Where are the rates going?
To see where the Bankrate panel of experts waits for rates from here, check out our mortgage rate projections.
Do you want to see where the rates are currently? Lenders nationwide respond to Bankrate’s mortgage rate survey to obtain the most current rates available. Here you can see the latest market average rates for a wide variety of purchase loans:
Rates as of July 6, 2020.
When to lock your mortgage rate
A rate lock guarantees your interest rate for a specific period of time. Lenders often offer 30-day rate locks for a nominal fee or transfer the price of the lock to your loan. Some lenders will lock rates for longer periods, even longer than 60 days, but those locks can be expensive. In today’s volatile market, some lenders will set an interest rate for just two weeks to avoid unnecessary risk.
The benefit of a rate lock is that if interest rates rise, you are locked at the guaranteed rate. You may be able to find a lender that offers a floating rate lock. A floating rate lock allows you to get a lower rate if interest rates drop before you close your loan. It could be worth the cost in a declining rate environment. Since there is no guarantee of where mortgage rates will go in the future, it may be wise to set a low rate instead of holding rates for a possible further decrease.
It is important to note: During the pandemic, all aspects of closing real estate and mortgages take much longer than usual. Expect the closing of a new mortgage to take at least 60 days, and expect the refinancing to take at least a month.
Why Mortgage Rates Change
Mortgage rates are influenced by a variety 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 drives investors away from mortgage-backed securities, causing prices to fall and yields to rise. When yields rise, rates become more expensive for borrowers.
A strong economy generally means that more people buy houses, driving demand for mortgages. This increase in demand can raise rates. The opposite is also true; Less demand can trigger a drop in rates.
Current mortgage environment
Mortgage rates have been volatile due to the COVID-19 pandemic. Overall, however, rates have been low. Mortgage rates are rising and falling from week to week as lenders are inundated with requests for leniency and refinancing. Overall, however, rates are consistently below 4 percent and even fall to medium and low levels. This is an especially good time for people with good to excellent credit to ensure a low rate on a purchase loan. However, lenders are also raising credit standards for borrowers and demanding higher down payments as they try to reduce their risks.
Methodology: The rates you see above are averages from the Bankrate.com site. These calculations are executed after the close of the previous business day and include rates and / or returns that we have collected that day for a specific bank product. Bankrate.com’s site averages tend to be volatile – they help consumers see the movement of rates from day to day. The institutions included in the “Bankrate.com Site Average” tables will be different from one day to the next, depending on the rates of the institutions that we meet on a particular day for presentation on the site.
For more information about the different rate averages that Bankrate publishes, see “Understanding Bankrate On-Site Rate Averages.”
Shopping for a mortgage lender? See comments from major lenders.
