Rates Drop for All Loan Types

Borrowers will be happy to see rates have dropped for all loan types today, making purchasing or refinancing even more affordable.

Mortgage rates have stayed near record lows in recent weeks and today is no exception. In fact, rates dropped slightly on 30-, 20-, and 15-year fixed-rate loans as well as on 5/1 ARMs. Borrowers seeking the predictability and affordability of a 30-year fixed-rate mortgage will once again find rates below 3.00% while those aiming to become debt-free ASAP will see average 15-year loan rates well below 2.50%.

Here’s what you need to know about today’s mortgage rates so you can determine if now is the right time for you to borrow.

Data source: The Ascent’s national mortgage interest rate tracking.

30-year mortgage rates

The average 30-year mortgage rate today is 2.899%, down .009% from Friday’s average rate of 2.908%. This drop means that rates are still very low by historical standards, giving homebuyers the opportunity to enjoy substantial savings.

At today’s average rate, you would owe a monthly principal and interest payment totaling $416 per $100,000 in mortgage debt. Total interest costs over the life of the loan would add up to $49,824 per $100,000 borrowed.

Check out The Ascent’s mortgage calculator to see what your monthly payment might be and how much your loan will ultimately cost. Also learn how much money you’d save by snagging a lower interest rate, making a larger down payment, or choosing a shorter loan term.

20-year mortgage rates

The average 20-year mortgage rate today is 2.748%, down .032% from Friday’s average rate of 2.780%. The monthly principal and interest payment at today’s average rate equals $542 per $100,000 borrowed while total interest costs add up to $30,096 for each $100,000 over the life of the loan.

You’ll notice the monthly payment on the 20-year fixed-rate mortgage is well above the payment on a 30-year fixed-rate loan even though the interest rate is just slightly below the rate on the longer-term loan. That’s because you’ll have a decade less to pay off the debt, so your total interest costs will be lower but monthly payments higher.

15-year mortgage rates

The average 15-year mortgage rate today is 2.380%, down .024% from Friday’s average rate of 2.404%. At this low average interest rate, your monthly payment for principal and interest would be $661 and you would pay $19,008 in interest per $100,000 in mortgage debt over the loan’s term.

The monthly payment here is, of course, above the amount you’d pay per month with either a 30-year or 20-year loan — again because you are cutting down the amount of time you have to pay off your debt. Your total interest costs are substantially lower, though, since you’ll pay off your loan in far less time.

5/1 ARMs

The average 5/1 ARM rate is 3.460%, down .156% from Friday’s average rate of 3.616%. Traditionally, ARMs have starting interest rates below 30-year fixed-rate loans. This is what makes them attractive to borrowers, as the low starting rate can make the loan more affordable at the beginning

Now, however, the ARM’s starting rate is actually above the interest rate on a 30-year fixed-rate loan. Since the initial rate is only locked in for the first five years on a 5/1 ARM and can then adjust annually, borrowers will be taking a big risk of rates rising. There’s no reason to take this chance when the ARM’s starting rate is currently above what you’d pay on a 30-year fixed-rate loan.

Should I lock my mortgage rate now?

A mortgage rate lock guarantees you a certain interest rate for a specified period of time — usually 30 days, but you may be able to secure your rate for up to 60 days. You’ll generally pay a fee to lock in your mortgage rate, but that way, you’re protected in case rates climb between now and when you actually close on your mortgage.

If you plan to close on your home within the next 30 days, then it pays to lock in your mortgage rate based on today’s rates — especially since they’re so competitive. But if your closing is more than 30 days away, you may want to choose a floating rate lock instead for what will usually be a higher fee, but one that could save you money in the long run. A floating rate lock lets you secure a lower rate on your mortgage if rates fall prior to your closing, and while today’s rates are still quite low, we don’t know if rates will go up or down over the next few months. As such, it pays to:

• LOCK if closing in 7 days
• LOCK if closing in 15 days
• LOCK if closing in 30 days
• FLOAT if closing in 45 days
• FLOAT if closing in 60 days

Today’s current low rates present an unprecedented chance to secure an affordable home loan, but before you lock in you’ll want to shop around among the best mortgage lenders to find the best rates and terms for your financial situation. Start shopping for your home loan today while rates remain below 3.00% on a 30-year fixed-rate loan.

Methodology

The Ascent team partners with market-leading data provider Optimal Blue to track the seven-day average of daily mortgage rates that actual borrowers are locking in nationwide. Learn more about our mortgage rates tracking methodology.