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Looking at today’s mortgage rates a few notable rates increased. The averages for both 30-year fixed and 15-year fixed mortgages both made gains. At the same time, average rates for 5/1 adjustable-rate mortgages (ARM) also took an upturn.
Refinancing became a bit more expensive today as 30-year fixed and 15-year fixed refinance mortgages saw their mean rates climb. If you’ve been considering a 10-year refinance loan, average rates also increased.
The median interest rate for a standard, 30-year, fixed mortgage is 3.04%, which is a growth of 18 basis points from seven days ago.
You can use NextAdvisor’s home loan payment calculator to work out what your monthly payments would be and see how much you’ll save if you make extra payments. The mortgage calculator can also show you the total interest you’ll pay over the life of the loan
The median rate for a 15-year fixed mortgage is 2.43%, which is an increase of 9 basis points from seven days ago.
A 15-year, fixed-rate mortgage’s monthly payment is larger and will take up a bigger chunk of your monthly budget than a 30-year mortgage would. However, 15-year loans have some considerable benefits: You’ll pay thousands less in interest and pay off your loan much faster.
A 5/1 ARM has an average rate of 2.95%, a climb of 1 basis point from seven days ago.
An ARM is ideal for borrowers who will sell or refinance before the rate changes. If that’s not the case, their interest rates could end up being markedly higher after a rate adjusts.
For the first five years, a 5/1 ARM will typically have a lower interest rate compared to a 30-year fixed mortgage. Just keep in mind that your rate could climb higher and your payment might grow by hundreds of dollars a month.
To see where mortgage rates are going we rely on information collected by Bankrate, which is owned by the same parent company as NextAdvisor. Looking at the history of mortgage rates, we’re in an exceptionally low rate environment. This table has current average rates based on information provided to Bankrate by lenders from across the nation:
A number of factors can influence mortgage rates, including everything from inflation to unemployment. In general, inflation leads to higher interest rates and vice versa. The dollar loses value with increased inflation, and this causes mortgage-backed securities to become less enticing for investors, which leads to falling prices and higher yields. And if yields increase, interest rates become more expensive for borrowers.
The demand for housing can also impact mortgage rates. If more people are buying homes, there is a greater need for mortgages. This type of demand can drive interest rates up. And if there is less demand for mortgages, that can cause a decline in mortgage rates.
In recent months, mortgage rates fell to new all-time lows. Since there’s not much room for rates to decline further, many experts predict mortgage rates will remain flat or increase just slightly in 2021.
The economy will play a big factor, which is tied to how well the coronavirus can be contained. As the economy recovers, we should see inflation rise, which will put upward pressure on mortgage rates. However, if the economic recovery is slower than expected and the pandemic drags on, it’s likely we’ll see low rates for the foreseeable future. And the Federal Reserve could also act to limit the increase of mortgage rates if it feels the economy cannot support them
Everything from the direction of the economy to your individual financial situation can influence mortgage rates. Not only that, but the type of mortgage and the property itself also factor into the equation.
Shopping around for a home loan is a great way to secure the lowest mortgage interest rate.
The mortgage rate you get depends on a number of factors lenders consider when assessing how risky it is to give you a mortgage. Your credit score and debt-to-income ratio (DTI) impact your mortgage rate. And your loan-to-value (LTV) ratio matters, so having a more substantial down payment is better for your mortgage rate.
But, banks will consider your circumstances differently. So you can give the same documentation to three different banks, and find that none of the mortgage rates and fees you are offered are the same.
Deciding when to buy a home is a highly personal choice. Your financial situation will play a big role in your decision. Before you buy a home, you’ll want to have a secure source of income, enough saved for closing costs, and a high credit score.
However, the pandemic has exacerbated a shortage of homes, leading to bidding wars and rising prices. Those trends mean it can be a frustrating market for buyers.
The rates we have included are averages provided by Bankrate.com Site Averages and are calculated after the close of the previous business day. The lenders that the “Bankrate.com Site Average” tables include are not the same from day to day.
National lenders provide this mortgage rate information to Bankrate.com. It is possible the mortgage rates we reference has changed since this was published.
At NextAdvisor we’re firm believers in transparency and editorial independence. Editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by our partners. We do not cover every offer on the market. Editorial content from NextAdvisor is separate from TIME editorial content and is created by a different team of writers and editors.
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