Current Mortgage Rates Trends
Updated May 05, 2020
- 30-Year Fixed Rate 3.540%; APR of 3.760%.
- 15-Year Fixed Rate 3.140%; APR of 3.360%.
- 5/1 Adjustable-Rate Mortgage Rate 3.330%; APR of 3.890%.
National Average Mortgage Rates
The Coronavirus pandemic has caused market volatility throughout the beginning of 2020. On March 15, 2020, rates reached a historic low after the Federal Reserve reduced interest rates to 0%. While lower rates entice homeowners to refinance their mortgages, the home buying season has slowed while residents are sheltering in place throughout the country. Heading into April, mortgage rates have reached a steady average, though some experts expect the rates to fall again as the federal government continues to provide money for the mortgage-backed securities (MBS) market.
Mortgage Rates Trends
In this graph:
On , the APR was for the 30-year fixed rate, for the 15-year fixed rate, and for the 5/1 adjustable-rate mortgage rate. These rates are updated almost every day based on Bankrate’s national survey of mortgage lenders. Toggle between the three rates on the graph and compare today’s rates to what they looked like in the past days.
Current Mortgage Rates
|30-Year Fixed Rate||3.540%||3.760%|
|20-Year Fixed Rate||3.510%||3.700%|
|15-Year Fixed Rate||3.140%||3.360%|
|10/1 ARM Rate||3.580%||3.830%|
|7/1 ARM Rate||3.370%||3.820%|
|5/1 ARM Rate||3.330%||3.890%|
|30-Year VA Rate||3.380%||3.570%|
|30-Year FHA Rate||3.320%||3.820%|
|30-Year Fixed Jumbo Rate||3.660%||3.720%|
|15-Year Fixed Jumbo Rate||3.330%||3.360%|
|7/1 ARM Jumbo Rate||3.330%||3.740%|
|5/1 ARM Jumbo Rate||3.240%||3.700%|
Rates data as of 5/5/2020
Top Mortgage Lenders
|Lender||Best For||Min. Credit Score||Min. Down Payment||States Served|
|Citizens Bank||Online tools||620||3.5%||12|
|TD Bank||Government loans||620||3%||16|
|Bank of America||Discounts for existing customers||620||3% – 5%*||50|
|Quicken Loans||Flexible terms||580||3%||50|
|New American Funding||No minimum payment||620||0%||48|
|J.G. Wentworth||Low-income options||580||3%||45|
|USAA Mortgage||Customer service||620||0%||50|
|SunTrust Mortgage||Diverse loan types||620||3%||46|
|Chase||Online mortgage tracking||620||3%||22|
*3% if you qualify for its Affordable Loan Solution, but otherwise 5%.
What is a Mortgage?
A mortgage is a loan given to a homebuyer in order to purchase a new home or refinance an existing home loan. Homebuyers must apply for a mortgage with a bank or government organization, and the annual percentage rate (APR) they receive depends on individual factors like their credit score. If the homebuyer can’t pay his or her mortgage before the balance is settled, the lender will repossess the home. Mortgage payments are typically due once a month over a series of years, known as the loan term, until the loan balance and accrued interest is paid in full or until the home is resold.
Conventional mortgages include any home loan that isn’t backed by a government organization. These loans tend to require higher credit scores and larger down payments since the lender risks losing money if the buyer defaults on the loan. A fixed-rate mortgage has a locked in interest rate, while adjustable-rate loans (ARM) may change over a set period of time. ARM loans usually start with a lower interest rate, so they may be more attractive for first-time homeowners or homebuyers who are looking to buy and sell in the short term.
A government-issued mortgage provides security to lenders and makes mortgages more accessible to low-income buyers. If the borrower defaults on their loan, the government is responsible for covering the costs to the lender. Unlike conventional mortgages, homebuyers will be required to pay for mortgage insurance throughout the duration of their loan. Government-insured mortgages are usually available through traditional lenders as FHA, VA and USDA loans.
FHA loans assist buyers with lower credit scores, though they have a higher insurance rate. USDA loans don’t require down payments, but they’re only available to specific buyers in low-income, rural areas. The VA offers its loans with no down payment or mortgage insurance required, though they’re only available to homebuyers who can obtain a certificate of eligibility from the U.S Department of Veterans Affairs.
Non-conforming mortgages or jumbo loans don’t abide by the guidelines set by the Federal Housing Finance Agency. Because they don’t meet these guidelines, lenders can’t resell them to Freddie Mae and Fannie Mac, which are the governmental agencies that provide a secondary mortgage market for lenders. Because they can’t be resold, non-conforming mortgages are more difficult to qualify for and require higher credit and higher down payment. The benefit of non-conforming mortgages is that you can receive a bigger loan if you’re looking at buying a more expensive home.
15-year fixed rate vs 30-year fixed rate mortgages
Choosing between a 15-year mortgage and a 30-year mortgage is usually a question of what loan amount you can afford. Obviously, a 15-year loan lets you pay off your loan faster at a lower interest rate. However, your monthly mortgage payment will be significantly higher. With a 30-year mortgage, you’ll pay a lot more money in the long run thanks to interest, but your monthly payments will be lower. If you can afford a 15-year mortgage, it’s usually the better option. Ask potential lenders for 15-year and 30-year quotes, compare the differences and calculate what you’ll be able to pay.
5/1 ARM vs 30-year fixed rate mortgage
A 5/1 adjustable-rate mortgage has a fixed interest rate for the first five years, followed by an adjustable-rate for the remaining 25 years. That makes 5/1 mortgages a little more attractive than regular ARMs, since you know your rate won’t increase for at least five years. But it’s still risky since your rate could still skyrocket after the initial rate period ends. Of course, if you only plan to live in a home for five years or less, a 5/1 might be a good option. Meanwhile, 30-year fixed-rate mortgages won’t fluctuate at all. Bottom line, 5/1 ARMs are best suited for times when interest rates are expected to drop, or you don’t intend to stay in your home for more than five years.
10/1 ARM vs 5/1 ARM
The 10/1 adjustable-rate mortgage is just like a 5/1 ARM, but the fixed-rate extends to the first 10 years instead of five. That means your rate will fluctuate during the final 20 years of your 30-year mortgage. A 10/1 ARM is good if rates are high when you buy a home (and you expect them to go down after your fixed-rate expires), or if you know you’ll live in the home for less than 10 years. If you’re confident you’ll move in less than five years, a 5/1 ARM will usually mean a better rate in the short-term.
A refinance is a loan that pays off the existing mortgage balance, then resumes payment under the new amount, term, and conditions. Refinancing can be an advantageous option for homeowners looking to save money by lowering their existing interest rate or monthly payments. It is crucial for homeowners to understand the details of their primary mortgage as well as the refinance terms, plus any associated costs or fees, to make sure the decision makes financial sense.
How are mortgage rates determined?
Mortgage rates are determined based on your credit score, the loan-to-value ratio of the home and the type of loan you’re applying for. In general, homebuyers with good credit scores of 740 or higher can expect lower interest rates and more options, including jumbo loans. Your rate will also be calculated based on the loan-to-value ratio, which considers the percentage of the home’s value that you’re paying through the loan. A loan-to-value ratio higher than 80% could be considered risky for lenders and lead to higher interest rates for the home buyer.
A good mortgage rate should fall within the industry benchmarks developed by Freddie Mae and Fannie Mac. However, keep in mind that these interest rates are an average based on users with high credit scores. Currently, a good interest rate will be about 3% to 3.5%, though these rates are historically low.
The Federal Reserve affects mortgage rates by raising and lowering the federal funds rate. Currently, the federal funds rate is low and the Federal Reserve has also injected more money into the MBS market, making mortgage rates lower for the average consumer.
How long should my mortgage be?
When applying for a mortgage, the type of loan will usually determine how long you’ll have your mortgage. For instance, you can choose from conventional mortgages on 15-year and 30-year terms. With a shorter term, you’ll pay a higher monthly rate, though your total interest will be lower than a 30-year loan. If you have a high monthly income as well as long-term stability for the foreseeable future, a 15-year loan would make sense to save money in the long-term. However, a 30-year term would be better for someone who needs to make lower monthly payments.
How much can I borrow?
The amount you can borrow for your mortgage should depend on your annual income, lending terms, interest rate, and monthly debt. By good rule of thumb, you should only be spending 25% to 30% of your monthly income on housing each month.
The Federal Housing Administration and Fannie Mae set loan limits for conventional loans. By law, all mortgage loans have a maximum limit of 115% of median home prices. Currently, the loan limit for a single unit within the United States is $510,400. For high-cost areas, the limit is increased to $765,600 for a single unit.
Government-insured loans such as FHA have similar limits based on current housing prices. At the end of 2019, the FHA limit was increased to $331,760 in most parts of the country. VA loan limits were eliminated in early 2020.
The impact of a 0.1% change in your mortgage rate
You already know that choosing the right kind of mortgage is crucial to your financial future. What may not be readily apparent, though, is how fluctuations in your rate can make a major impact. Let’s take a look at what would happen if a 30-year fixed-rate mortgage of $350,000 went up by just 0.1%.
Using a mortgage rate calculator, you can see your monthly mortgage payment would increase from $1,773 to $1,794 if your rate increased from 4.5% to 4.6%. That doesn’t seem so bad, right?
However, look at the total interest you’ll accrue and pay during the life of the 30-year mortgage. That tiny 0.1% increase in your rate is the difference between $288,422 in interest payments and $295,929. And if your fixed-rate mortgage was an ARM instead, that gap could be significantly higher — tens of thousands higher. No matter what kind of mortgage you get, or which lender you choose, finding the best possible rate is key to figuring out how much house you can afford.
State Mortgage Rates