Current mortgage rate as of August 6, 2021: rate cut

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Deborah Jaffe / Getty

Some closely watched mortgage rates have dropped today. Mortgage rates for 15 years and 30 years fell. At the same time, the average rates on mortgage loans with an adjustable interest rate of 5/1 were reduced. Mortgage interest rates are never set in stone, but interest rates are the lowest in years. If you are planning to finance a home, now may be the best time to secure a flat rate. Before buying a home, be sure to consider your personal needs and financial situation and talk to several lenders to find the best one for you.

Take a look at mortgage rates for different types of loans

30 year fixed rate mortgage

The average 30-year fixed mortgage rate is 2.96%, down 5 basis points from a week ago. (The base point is equivalent to 0.01%.) The most common loan term is a fixed mortgage for 30 years. A 30-year fixed-rate mortgage usually has a lower monthly payment than a 15-year, but usually a higher interest rate. Although you will pay more interest over time – you pay off the loan over a longer period – if you are looking for a lower monthly payment, a 30-year fixed mortgage may be a good option.

Mortgage with a fixed interest rate for 15 years

The average rate on a fixed mortgage for 15 years is 2.25%, which is 5 basis points less than seven days ago. You will definitely have a larger monthly payment with a 15-year fixed mortgage compared to a 30-year fixed mortgage, even if the interest rate and loan amount are the same. But a 15 year loan will usually be a better deal if you can afford the monthly payments. You usually get a lower interest rate and you will pay less interest overall because you pay off your mortgage much faster.

5/1 Adjustable Rate Mortgage

The 5/1 adjustable rate mortgage has an average rate of 2.97%, which is 5 basis points lower than seven days ago. With an adjustable rate mortgage, you usually get a lower interest rate than a fixed rate mortgage for 30 years for the first five years. But since the rate adjusts to the market rate, you may end up paying more after that time, as described in your loan terms. For this reason, ARM can be a good option if you plan to sell or refinance your home prior to the rate change. But if this is not the case, you could be on the hook for a much higher interest rate if market rates change.

Dynamics of mortgage rates

We use information collected by Bankrate, which is owned by the same parent company as CNET, to track changes in these daily rates. This table shows the average rates offered by US lenders:

Today’s mortgage interest rates
Credit term Today’s rate Last week Change
30 year mortgage rate 2.96% 3.01% -0.05
15 year flat rate 2.25% 2.30% -0.05
30 year giant mortgage rate 2.80% 2.78% +0.02
30 year mortgage refinancing rate 2.94% 3.00% -0.06

Rates are as of August 6, 2021.

How to shop at the best mortgage rate

You can get a customized mortgage rate by contacting your local mortgage broker or using an online calculator. Be sure to consider your current finances and your goals when looking for a mortgage. Specific mortgage rates will vary depending on factors including credit rating, down payment, debt-to-income ratio, and loan-to-value ratio. Typically, you need a good credit rating, a larger down payment, a lower DTI, and a lower LTV in order to get a lower interest rate. In addition to the mortgage interest rate, the value of your home can also be influenced by factors including closing costs, fees, discount points, and taxes. Be sure to buy from multiple lenders – such as credit unions and online lenders in addition to local and national banks – to get the mortgage that works best for you.

What is a good loan term?

When choosing a mortgage, it is important to consider the loan term or payment schedule. The most commonly offered loan terms are 15 and 30 years, although you can also find mortgages for 10, 20 and 40 years. Another important difference is between fixed and adjustable rate mortgages. Interest rates on fixed rate mortgages are fixed for the entire life of the loan. For adjustable rate mortgages, interest rates are the same for a certain number of years (usually five, seven, or 10 years), then the rate fluctuates annually depending on the market interest rate. When choosing a mortgage with a fixed or an adjustable rate, you must consider the length of your stay in the home. For those planning a long-term stay in a new home, a fixed rate mortgage may be the best option. A fixed rate mortgage offers greater stability over time compared to an adjustable rate mortgage, but an adjustable rate mortgage may offer lower interest rates up front. However, if you don’t plan on keeping your new home for more than three to ten years, an adjustable rate mortgage can give you a better deal. The best loan term depends entirely on your situation and goals, so be sure to think about what is important to you when choosing a mortgage.

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