Current Mortgage Rates, October 5, 2020

Mortgage rates moved in different directions today, but one key rate decreased. The average for a 30-year fixed-rate mortgage trended down, but the average rate on a 15-year fixed ticked up. The average rate on 5/1 adjustable-rate mortgages, meanwhile, floated higher.

Mortgage rates change daily, but they continue to represent a bargain compared to rates before the Great Recession. If you’re in the market for a mortgage, it may make sense to go ahead and lock if you see a rate you like. Just be sure to shop around.

Compare mortgage interest rates from lenders across the nation.

30-year fixed mortgages

The average rate for a 30-year fixed mortgage is 3.05 percent, a decrease of 4 basis points over the last seven days. This time a month ago, the average rate on a 30-year fixed mortgage was higher, at 3.06 percent.

At the current average rate, you’ll pay $424.31 per month in principal and interest for every $100,000 you borrow. That’s a decline of $2.16 from 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 calculate how much interest you’ll pay over the life of the loan.

15-year fixed mortgages

The average 15-year fixed-mortgage rate is 2.56 percent, up 1 basis point over the last week.

Monthly payments on a 15-year fixed mortgage at that rate will cost around $670 per $100,000 borrowed. That may put more pressure on 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.

5/1 ARMs

The average rate on a 5/1 adjustable rate mortgageis 3.09 percent, up 18 basis points over the last 7 days.

These types of loans are best for those who expect to sell or refinance before the first or second adjustment. Rates could be much higher when the loan first adjusts, and thereafter.

Monthly payments on a 5/1 ARM at 3.09 percent would cost about $426 for each $100,000 borrowed over the initial five years, but could ratchet higher 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 Bankrate’s 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:

Current average mortgage interest rates

Loan type	Interest rate	A week ago	Change
30-year fixed rate	3.05%	3.09%	-0.04
15-year fixed rate	2.56%	2.55%	-0.01
30-year fixed jumbo rate	3.11%	3.12%	-0.01
30-year fixed refinance rate	3.04%	3.07%	-0.03

Updated on October 5, 2020.

Should you lock a mortgage rate?

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 costly. In today’s volatile market, some lenders will lock an interest rate for only two weeks to avoid unnecessary risk.

The benefit of a rate lock is that if interest rates rise, you’re locked into the guaranteed rate. Some lenders have a floating-rate lock option, which allows you to get a lower rate if interest rates fall before you close your loan. In a falling rate environment, a float-down lock could be worth the cost. 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, with refinancing taking at least a month.

What causes mortgage rates to change

A number of economic factors influence mortgage rates. Among them are inflation and unemployment. Higher inflation typically leads to higher mortgage rates. The opposite is also true; when inflation is low, mortgage rates typically are as well. As inflation increases, the dollar loses value. That drives investors away from mortgage-backed securities (MBS), which causes the prices to decrease and yields to increase. When yields move higher, rates become 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.

Mortgage rate snapshot

Mortgage rates have been volatile because of the COVID-19 pandemic. Generally, though, rates have been low. Mortgage rates are rising and falling from week to week, as lenders are inundated with forbearance and refinance requests. 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 “Understanding Bankrate’s average rates.”

Other daily news articles:

• Current refinance rates
• Today’s 30-year mortgage rates

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