Several benchmark mortgage rates were down today. The average rates on 30-year fixed and 15-year fixed mortgages both decreased. Meanwhile, the average rate on 5/1 adjustable-rate mortgages also sunk lower.
Mortgage rates are constantly changing, but they remain much lower overall than they were before the Great Recession. If you’re in the market for a mortgage, it could make sense to go ahead and lock if you see a rate you like. Just be sure to shop around.
Compare mortgage rates in your area now.
30-year fixed mortgages
The average rate you’ll pay for a 30-year fixed mortgage is 3.06 percent, a decrease of 1 basis point since the same time last week. A month ago, the average rate on a 30-year fixed mortgage was higher, at 3.08 percent.
At the current average rate, you’ll pay a combined $424.85 per month in principal and interest for every $100,000 you borrow. That’s $0.54 lower, compared with last week.
You can use Bankrate’s home loan calculator to figure out your monthly payments and see what the effects of making extra payments would be. It will also help you computehow much interest you’ll pay over the life of the loan.
15-year fixed mortgages
The average 15-year fixed-mortgage rate is 2.55 percent, down 5 basis points since the same time last week.
Monthly payments on a 15-year fixed mortgage at that rate will cost around $669 per $100,000 borrowed. That may squeeze your monthly budget than a 30-year mortgage would, but it comes with some big advantages: You’ll come out several thousand dollars ahead over the life of the loan in total interest paid and build equity much more quickly.
The average rate on a 5/1 ARM is 3.32 percent, down 4 basis points over the last week.
These loan types are best for those who expect to refinance or sell before the first or second adjustment. Rates could be materially higher when the loan first adjusts, and thereafter.
Monthly payments on a 5/1 ARM at 3.32 percent would cost about $439 for each $100,000 borrowed over the initial five years, but could increase by hundreds of dollars afterward, depending on the loan’s terms.
Where rates are headed
To see where Bankrate’s panel of experts expect rates to go from here, check out our mortgage rate projections.
Want to see where rates are right now? Lenders across the nation respond to our weekday mortgage rates survey to bring you the most current rates available. Here you can see the latest marketplace average rates for a wide variety of purchase loans:
Updated on September 3, 2020.
Lock your mortgage rate now or wait?
A rate lock guarantees your interest rate for a specified period of time. Lenders often offer 30-day rate locks for a nominal fee or roll the price of the lock into your loan. Some lenders will lock rates for longer periods, sometimes for more than 60 days, but those locks can be pricey. In today’s volatile market, some lenders will lock an interest rate for only two weeks because they don’t want to take on unnecessary risk.
With a rate lock, if interest rates rise, you’re locked into the guaranteed rate. You may be able to find a lender that offers a floating rate lock. A floating rate lock lets you get a lower rate if interest rates decline before closing your loan. It could be worth the cost in a declining rate environment. Because there is no guarantee of where mortgage rates will head in the future, it may be smart to lock in a low rate instead of holding out on rates for potentially decline further.
Remember: During the pandemic, all aspects of real estate and mortgage closings are taking much longer than usual. Expect the closing on a new mortgage to take at least 60 days, and expect refinancing to take at least a month..
What causes mortgage rates to change
Mortgage rates are influenced by a range of economic factors, from inflation to unemployment numbers. Typically, higher inflation means higher interest rates and vice versa. As inflation rises, the dollar loses value, which in turn drives off investors for mortgage-backed securities, causing the prices to fall and yields to climb. When yields climb, rates get more expensive for borrowers.
A strong economy usually means more people buying homes, which drives demand for mortgages. This increased demand can push rates higher. The opposite is also true; less demand can trigger a drop in rates.
Current mortgage rate environment
The current mortgage rate environment has been unstable because of the coronavirus pandemic, but generally rates have been low. For a while, some lenders were increasing rates because they were struggling to deal with the demand. In general, however, rates are consistently below 4 percent and even dipping into the mid to low 3s. This is an especially good time for people with good to excellent credit to lock in a low rate for a purchase loan. However, lenders are also raising credit standards for borrowers and demanding higher down payments as they try to dampen their risks.
Methodology: The rates you see above are Bankrate.com Site Averages. These calculations are run after the close of the previous business day and include rates and/or yields we have collected that day for a specific banking product. Bankrate.com site averages tend to be volatile — they help consumers see the movement of rates day to day. The institutions included in the “Bankrate.com Site Average” tables will be different from one day to the next, depending on which institutions’ rates we gather on a particular day for presentation on the site.
To learn more about the different rate averages Bankrate publishes, see “Bankrate’s Rate Averages Methodology.”
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