Mortgage Rates Today, October 5, 2021 | Prices drop off
What we are seeing today is a handful of closely tracked mortgage rates have come down. Both 30-year and 15-year fixed mortgage rates fell. With variable rates, the 5/1 variable rate (ARM) mortgage climbed higher.
The averages for 30-year-old, fixed 15-year-old, and 5/1 ARMs are:
This means for borrowers:
Today’s mortgage rates are still near all-time lows, increasing borrowing for homebuyers. The downside of this is that home demand has remained strong and property values are rising. In this way, the potential savings of a low interest rate can be offset by higher home prices. At the moment there aren’t enough houses for sale to meet demand and supply constraints have pushed up building materials prices so there doesn’t seem to be any relief for buyers in the near future.
Today’s Mortgage Refinancing Rates
If you are in the 15 year fixed rate refinancing market, you should know that these statewide interest rate averages will remain unchanged. However, we have seen a decrease in 30 year fixed refinance loan rates. When you consider a 10 year refinance loan, all you know is that the average interest rates have come down.
The refinancing averages for 30-year, 15-year and 10-year loans are:
Compare national mortgage rates from different lenders.
30 year mortgage interest
The 30-year average fixed mortgage rate is 3.11%, a 2 basis point decrease from the previous week.
You can use NextAdvisor’s mortgage loan calculator to get an idea of your monthly payments and understand how adding extra payments will affect your loan. The mortgage calculator can also show you all the interest that you will pay over the life of the loan.
15 year fixed rate mortgages
The median rate for a 15-year fixed-rate mortgage is 2.37%, which is a decrease of 3 basis points from the same point in time last week.
The monthly payment on a 15 year fixed rate mortgage is undeniably a much higher monthly payment than a 30 year mortgage with the same interest rate. But 15 year loans have some significant advantages: You pay thousands less interest and you pay back your loan much sooner.
5/1 ARM rates
A 5/1 ARM has an average rate of 2.80%, which is an increase of 1 basis point over the same point in time last week.
An ARM is ideal for households that are selling or refinancing before the interest rate changes. If not, their interest rates could be significantly higher after an interest rate adjustment.
For the first five years, a 5/1 ARM typically has a lower interest rate than a 30-year fixed-rate mortgage. Remember that depending on how much the interest rate on your loan changes, your payment has the potential to go up by a large amount.
Mortgage rate trends
A number of factors can affect mortgage rates, including everything from inflation to unemployment. In general, more inflation leads to higher interest rates and vice versa. The dollar depreciates in value as inflation rises, making mortgage-backed securities less attractive to investors, leading to falling prices and higher yields. And when yields rise, interest rates become more expensive for borrowers.
While there is no single company that sets mortgage rates, Federal Reserve Bank policies can affect interest rates. However, recently it has shown that we could see a change in policy this year. The Federal Reserve is committed to buying large numbers of mortgage-backed securities (MBS) each month, which helps keep interest rates low. But it could announce a reduction in its MBS purchases as early as the fall.
This is how we determine mortgage interest rates
To get an idea of current trends in mortgage rates, we rely on information collected by Bankrate, which is owned by the same parent company as NextAdvisor. The daily interest rate collection focuses on home loans where the borrower has a credit score greater than 740, an LTV of 80% or less, and the home is a primary residence.
This table shows the current average rates based on information provided by Bankrate from lenders across the country:
Updated October 5, 2021.
Should I set my mortgage rate now?
It is impossible to know which way mortgage rates will go from day to day. This is why a mortgage locker is such a useful tool because it protects you when interest rates go up. And since interest rates are so low right now, you should set your interest rate as soon as possible.
A rate lock only applies for a certain period of time, usually 30-60 days. If you come across a hook in the deal and it looks like your interest freeze period is about to expire, you should speak to your lender. They may offer an extension of the lock, but you may have to pay a fee for this privilege.
Where will mortgage rates develop in 2021?
This summer mortgage rates have been extremely cheap for borrowers, rarely exceeding 3%. Inflation and the economy both look stronger, which would normally drive interest rates higher. But the uncertainty surrounding the delta variant acted as a counterweight. However, some experts predict that mortgage rates won’t be much higher by the end of 2021.
Looking ahead to early autumn, the uncertainty is still too great to reasonably expect interest rates to rise. But if the inflation rate seems more than temporary and the economy really gets going, then the Federal Reserve will likely take action. In this scenario, we could see interest rates rising.
Mortgage rate forecasts for 2021
After a period of fluctuation, the rates stabilized in the first few months of the year. They are expected to remain relatively stable over the coming weeks but could start an uptrend towards the end of the year.
The economy still has a bumpy path to return to pre-pandemic levels. So if we see mortgage rate hikes this year, they will likely come slowly over time.
How to get the lowest mortgage rate
Getting loan offers from two or three lenders is a great way to secure the lowest interest rate.
The mortgage rate you qualify for depends on a variety of factors that lenders consider when assessing the likelihood that you will be able to make your mortgage payments over the long term. Your credit score affects your mortgage rate. And your mortgage lending value (LTV) is important too, so a higher down payment is better for your mortgage interest.
However, banks will see your situation differently. So you can provide the same documentation to three different banks and receive offers with three different mortgage rates and fees that are just as different.