TMortgage Rates Are Going Down Today | August 25, 2021
A two-day uptrend in mortgage rates is over. The average rate on a 30-year fixed rate loan dropped to 3.252% today, a 0.045 percentage point decrease from yesterday’s average. The rate for a 15-year fixed rate is also lower, at 2.374%, a decrease of 0.032 percentage points.
Variable rate mortgages are again experiencing the greatest changes. The 5/1 ARM decreased 0.904 percentage points to 2.155%. The 7/1 ARM gave up all of yesterday’s gain and some more, dropping 1.608 percentage points to today’s average of 3.268%.
With today’s lower rates, well-qualified buyers looking to buy a new home or refinance their existing mortgage should save money with an attractive interest rate and low monthly payment.
- The most recent interest rate on a 30-year fixed-rate mortgage is 3.252%.
- The most recent interest rate on a 15-year fixed-rate mortgage is 2.374%.
- The latest rate on a 5/1 Jumbo ARM is 2.155%.
- The latest rate on a 7/1 compliant ARM is 3.268%.
- The latest rate on a 10/1 compliant ARM is 3.745%.
Current mortgage rates: 30-year fixed rate mortgages
- The 30-year rate is 3.252%.
- This is a day dewrinkle of 0.045 percentage points. ⇓
- That’s a month dewrinkle of 0.008 percentage points. ⇓
The constant interest rate and monthly rates that fixed-rate mortgages offer make them the most common type of home loan. The 30 year loan is the most popular of them all as its long payback time results in relatively low monthly payments. On the flip side, the interest rate is usually higher than a shorter-term loan, so you pay more interest over the life of the mortgage.
Current mortgage rates: 15 years fixed rate Mortgage rates
- The 15 year rate is 2.374%.
- This is a day dewrinkle of 0.032 percentage points. ⇓
- That’s a month inwrinkle of 0.061 percentage points. ⇑
A shorter term mortgage like a 15 year loan has a higher monthly payment than a 30 year loan of the same amount. This is because the payback period is shorter, so you have less time to pay off the debt. The advantage of a 15 year loan is that the interest rate tends to be lower than the interest rate on a longer term loan. So even though you pay more each month, you actually pay less interest over time, which makes this loan more economical if you can afford the payments.
Current Mortgage Rates: 5/1 jumbo floating rate mortgage rate
- The 5/1 ARM rate is 2.155%.
- This is a day dewrinkle of 0.904 percentage points. ⇓
- That’s a month dewrinkle of 0.035 percentage points. ⇓
Instead of a fixed rate loan, you can opt for a variable rate mortgage. With an ARM, you have a low, fixed introductory rate and constant monthly payments for the first few years of the loan. The rate is eventually adjusted and reset regularly, so your monthly payments change too.
An example of how an ARM works is a 5/1 floating rate loan. The interest rate is fixed for five years, then it becomes variable and is reset every year until the loan is paid off. You can also find 7/1 ARMs and 10/1 ARMs.
Current mortgage rates: VA, FHA, and jumbo loan rates
The average interest rates on FHA, VA, and Jumbo loans are:
- The interest rate on a 30 year FHA mortgage is 2.942%. ⇓
- The interest rate on a 30 year VA mortgage is 2.963%. ⇓
- The interest rate on a 30 year jumbo mortgage is 3.352%. ⇓
Current mortgage lending rates
The average interest rates for 30 year loans, 15 year loans, and 5/1 jumbo ARMs are:
- The refinancing rate for a 30-year fixed-rate refinancing is 3.402%. ⇓
- The refinancing rate for a 15-year fixed-rate refinancing is 2.491%. ⇓
- The refinancing rate for a 5/1 Jumbo ARM is 2.411%. ⇓
- The refinancing rate for a 7/1 compliant ARM is 4.234%. ⇓
- The refinancing rate on a 10/1 compliant ARM is 4.268%. ⇓
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 bought houses that they might not have been able to afford at higher prices.
In January 2021, rates briefly fell to their lowest level on record, but trended higher over the month and into February.
Looking ahead, experts assume that interest rates will continue to rise in 2021, but modestly. Factors that could affect rates include how quickly the COVID-19 vaccines will be distributed and when lawmakers can agree on another economic aid package. More vaccinations and government incentives could lead to improved economic conditions, which would raise rates.
While mortgage rates are likely to rise this year, experts say the rise won’t come overnight and won’t be a dramatic jump. Interest rates should stay near historically low levels in the first half of the year and rise slightly later in the year. Even when interest rates rise, it’s still a good time to buy a new home or refinance a mortgage.
Some of the factors that affect mortgage rates include:
- The Federal Reserve. When the pandemic hit the United States in March 2020, the Fed took swift action. The Fed announced plans to keep money flowing through the economy by lowering the Federal Fund’s short-term interest rate to 0% to 0.25%, which is as low as they go. The central bank also promised to buy mortgage-backed securities and government bonds to prop up the real estate finance market. The Fed has confirmed its commitment to this policy several times for the foreseeable future, most recently at a monetary policy meeting at the end of January.
- The 10-year treasury note. Mortgage rates are moving in lockstep with the yields on the government’s 10-year government bond. Yields fell below 1% for the first time in March 2020 and have been rising slowly since then. Yields are currently above 1% since the beginning of the year, which is driving interest rates up slightly. On average, there is typically a 1.8 point spread between Treasury yields and benchmark mortgage rates.
- The wider economy. Unemployment rates and changes in gross domestic product are important indicators of the overall health of the economy. Low employment and GDP growth means the economy is weak, which can drive interest rates down. Thanks to the pandemic, unemployment hit an all-time high early last year and has not yet recovered. GDP also fell, and although it has recovered somewhat, there is still plenty of room for improvement.
Tips for the lowest possible mortgage rate
There is no one universal mortgage rate that all borrowers get. Qualifying for the lowest mortgage rates takes a bit of work and depends on both personal financial factors and market conditions.
Check your credit history and credit report. Mistakes or other warning signs that can drag your credit score down. Borrowers with the highest creditworthiness get the best interest rates. Therefore, it is important to check your credit report before you start looking for a home. Taking steps to fix bugs can increase your score. If you have a high credit card balance, paying off can be a quick boost too.
Save money on a sizeable down payment. This will lower your loan-to-value ratio, ie how much of the house price the lender has to finance. A lower LTV usually means a lower mortgage rate. Lenders also want to see money that has been stored in an account for at least 60 days. It tells the lender that you have the money to finance the home purchase.
Shop around for the best price. Don’t settle for the first rate a lender offers you. Check with at least three different lenders to see who offers the lowest interest rates. In addition to traditional banks, consider different types of lenders, such as credit unions and online lenders.
Also, take the time to read up on the different types of credit. While the 30 year fixed rate mortgage is the most common mortgage, you should consider a shorter term loan such as a 15 year loan or an adjustable rate mortgage. These types of loans often have a lower interest rate than a traditional 30 year mortgage. Compare the cost of each to see which one best fits your needs and financial situation. Government loans – such as those supported by the Federal Housing Authority, the Department of Veterans Affairs, and the Department of Agriculture – can be cheaper options for those who qualify.
Finally, secure your tariff. Locking your interest rate once you find the right interest rate, loan product, and lender will ensure that your mortgage rate does not go up before you take out the loan.
Our mortgage rate method
Money Daily Mortgage Rate shows the average rate offered by over 8,000 lenders in the United States for which the latest business daily rates are available. Today we are showing prices for Tuesday, August 24th, 2021. Our interest rates reflect what a typical borrower with a credit score of 700 currently expects to pay for a home loan. These prices were offered to people off 20% and include discount points.