Mortgage Rates Today Stabilize | March 6 & 7, 2021
Mortgage rates have taken a break from last week’s uptrend, as rates edged down for most of the week. The rate on a 30-year loan, which had climbed more than 3.5%, has now fallen below 3.4%. The decline occurred on almost all types of loans with a few minor exceptions.
Although rates are above all-time lows set at the start of this year, they are still at historically low levels. For borrowers interested in a purchase loan or one refinance loan the rates are still very advantageous.
- The latest average rate for a 30 year fixed rate mortgage is 3.363%.
- The latest average rate for a 15 year fixed rate mortgage is 2.498%.
- The latest average rate for a 5/1 jumbo ARM is 3.602%.
- The latest average rate for a 7/1 compliant ARM is 4.478%.
- The latest average rate for a 10/1 compliant MRA is 4.187%.
Current 30-year fixed mortgage rates
- The 30-year rate is 3.363%.
- It’s a day infold by 0.009 percentage point.
- It’s a month increase by 0.233 percentage points.
As the name suggests, the interest rate on a 30 year fixed rate loan will not change during the life of the loan. The monthly payment will also remain unchanged for the duration of the mortgage. Unless you pay off the mortgage faster with additional payments or through a move or refinance, the loan will be paid off in 360 months.
Compared to a shorter term loan like a 15 year loan, the interest rate on a 30 year loan will generally be higher. However, the monthly payment will be lower because you are spreading the balance over a longer period of time. Keep in mind, however, that because you are paying a higher rate for a longer period of time, the total interest paid will be higher on a 30-year loan than on a 15-year loan.
Current 15-year fixed mortgage rate
- The 15-year rate is 2.498%.
- It’s a day infold by 0.007 percentage point.
- It’s a month infold by 0.161 percentage point.
Much like a 30 year loan, a 15 year fixed rate mortgage will have an interest rate that will not change during the life of the loan. The monthly payment will not change either. The loan will be paid off in 180 months, unless you pay more than you need each month or refinance the mortgage.
The interest rate on a 15 year loan will generally be lower than that on a 30 year loan. The monthly payment, on the other hand, will be higher because you pay off the loan in a shorter period. However, since you are paying a lower interest rate for fewer months, you will save on the full amount of interest paid.
Therefore, 15-year loans can be attractive to buyers who can afford higher monthly payments and want to either pay off debt faster or save on interest.
Current 5/1 Jumbo Variable Rate Mortgage Rates
- The ARM 5/1 rate is 3.602%.
- It’s a day infold by 0.589 percentage points.
- It’s a month increase by 0.756 percentage points.
Variable rate mortgages will actually begin with a period when the interest rate is fixed. Once this period is over, the rate will reset, usually on an annual basis. Consequently, the monthly payment will be constant during the fixed rate period and can then increase or decrease according to the evolution of the interest rate.
The most common types of variable rate mortgages are the 5/1, where the rate is fixed for the first five years and changes every year. Typical offers also include 7/1 and 10/1.
A 5/1 ARM will typically have a lower interest rate than a 30-year mortgage during the initial five-year fixed rate period. After this term, the rate could be lower or higher. ARMs are generally attractive to borrowers who do not plan to hold the home beyond the fixed rate period or who do not believe rates will rise.
Current rates for VA, FHA and jumbo loans
The average rates for FHA, VA and jumbo loans are:
- The latest rate on a 30 year FHA mortgage is 3.237%.
- The latest rate on a 30-year VA mortgage is 3.359%.
- The latest rate on a 30-year jumbo mortgage is 3.557%.
Current mortgage refinancing rates
The average rates for 30-year, 15-year and 5/1 jumbo ARM loans are:
- The latest refinance rate on a 30 year fixed rate refinance is 3.72%.
- The latest refinance rate on a 15 year fixed rate refinance is 2.793%.
- The latest refinance rate on a Jumbo ARM 5/1 is 3.733%.
- The latest refinance rate on a 7/1 compliant ARM is 4.848%.
- The latest refinance rate on a 10/1 compliant ARM is 4.764%.
Where Are Mortgage Rates Going This Year?
Mortgage rates fell through 2020. Millions of homeowners responded to low mortgage rates by refinancing existing loans and taking out new ones. Many people have bought homes that they might not have been able to afford if the rates were higher.
In January 2021, rates briefly fell to their lowest levels on record, but have tended to rise throughout the month, in February and now in March.
Looking ahead, experts believe that interest rates will rise further in 2021, but modestly. Factors that could influence the rates include how quickly COVID-19 vaccines are distributed and when lawmakers can agree on another cost-effective relief package. More vaccinations and government stimulus could lead to improved economic conditions, which would increase rates.
Although mortgage rates are likely to rise this year, experts say the increase will not happen overnight and it will not be a dramatic jump. Rates are expected to stay near their historically low levels throughout the first half of the year, rising slightly later in the year. Even with rates rising, this will still be a good time to finance a new home or refinance.
Factors that influence mortgage rates include:
- The Federal Reserve. The Fed took swift action when the pandemic hit the United States in March 2020. The Fed announced plans to move money through the economy by lowering the Federal Fund‘s short-term interest rate between 0% and 0.25%, which is as low as they go. The central bank has also committed to buying mortgage-backed securities and treasury bills, thereby supporting the housing finance market. The Fed has reaffirmed its commitment to these policies for the foreseeable future on several occasions, most recently at a policy meeting in late January.
- The 10-year Treasury note. Mortgage rates move at the same pace as the yields on 10-year government treasury bills. Yields fell below 1% for the first time in March and have slowly risen since then. Currently, yields have hovered above 1% year-to-date, pushing interest rates up slightly. On average, there is typically a 1.8 point “spread” between Treasury yields and benchmark mortgage rates.
- The economy in the broad sense. Unemployment rates and changes in gross domestic product are important indicators of the overall health of the economy. When employment and GDP growth are low, it means the economy is weak, which can lower interest rates. Thanks to the pandemic, unemployment levels hit historic highs early last year and have yet to recover. GDP has also been affected, and although it has rebounded somewhat, there is still a lot of room for improvement.
Tips for getting the lowest mortgage rate possible
There is no universal mortgage rate that all borrowers receive. Qualifying for the lowest mortgage rates takes a bit of work and will depend on both personal financial factors and market conditions.
Check your credit score and your credit report. Mistakes or other red flags that can lower your credit score. The borrowers with the highest credit scores will get the best rates, so it’s essential to check your credit report before you begin the home search process. Taking action to correct mistakes will help increase your score. If you have high credit card balances, paying them off can also give you a quick boost.
Save money for a large down payment. This will lower your loan-to-value ratio, which means how much of the home’s price the lender has to finance. A lower LTV usually results in a lower mortgage rate. Lenders also like to see money that has been saved in an account for at least 60 days. It tells the lender that you have the money to finance the purchase of the house.
Shop around for the best rate. Don’t settle for the first interest rate a lender offers you. Check with at least three different lenders to see who is offering the lowest interest rate. Also consider the different types of lenders, such as credit unions and online lenders, in addition to traditional banks.
Also take the time to learn about the different types of loans. While the 30-year fixed-rate mortgage is the most common type of mortgage, consider a shorter-term loan such as a 15-year loan or an adjustable rate mortgage. These types of loans often have a lower rate than a conventional 30-year mortgage. Compare everyone’s costs to see which one best suits your needs and financial situation. Government loans – such as those backed by the Federal Housing Authority, the Department of Veterans Affairs, and the Department of Agriculture – may be more affordable options for those who qualify.
Finally, lock in your rate. Locking in your rate once you’ve found the right rate, the right loan product, and the lender will help ensure that your mortgage rate doesn’t increase until the loan closes.
Our mortgage rate methodology
Money’s Daily Mortgage Rates show the average rate offered by over 8,000 lenders in the United States on the previous business day. Today we’re posting the rates for Thursday, March 4. Our rates reflect what a typical borrower with a credit score of 700 can expect to pay on a home loan right now. These rates were offered to people contributing 20% and include discount points.