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Several key mortgage rates fell today. Interest rates on 30-year fixed-rate mortgages fell lower, while rates on 15-year fixed mortgages remained stable on average. We also saw a decline in the average rate on 5/1 Adjustable Rate (ARM) mortgages.
The averages for 30-year fixed, 15-year fixed, and 5/1 are:
What does this mean for borrowers:
Mortgage rates continue to be at record lows, boosting the purchasing power of home buyers who can get a great rate. But at the same time, it also contributes to increased demand and a sharp rise in house prices. Thus, the potential savings from a low interest rate can be offset by having to pay more for the property you want. There are currently not enough homes for sale to meet demand, and supply constraints have driven the price of building materials soaring, and no relief is foreseen for buyers in the near future.
Today’s mortgage refinancing rates
If you’ve been thinking about refinancing, there is good news because the average rates for 15-year and 30-year fixed refinancing loans have dropped. Also terminated mortgage loans with a fixed rate for a shorter term, for a period of 10 years.
Today’s refinancing rates:
30 year fixed rate mortgage
Average interest rate for the standard, 30 year fixed mortgage is 3.04%, which is 3 basis points lower than the previous week.
You can use NextAdvisor mortgage calculator to determine the amount of your monthly payments and calculate how much you will save on additional payments. The mortgage calculator can also show you all the interest you will pay over the life of the loan.
15 year fixed rate mortgage rates
Average rate for Fixed mortgage for 15 years is 2.38%, which corresponds to the level of the same period last week.
The monthly payment on a fixed-rate mortgage is 15 years longer than a 30-year mortgage. But 15-year loans have a number of significant advantages: you will pay thousands of less interest and pay off the loan much earlier.
5/1 ARM Betting
BUT 5/1 ARM the average rate is 2.82%, which is 4 basis points lower than last week.
Adjustable rate mortgages are ideal for households who will sell or refinance prior to the rate change. If this is not the case, their interest rates may turn out to be markedly higher after the rate adjustment.
For the first five years, the 5/1 ARM interest rate is usually lower than that of a 30-year fixed mortgage. Keep in mind that depending on how much the loan rate changes, your payment may increase significantly.
Mortgage Rate Trends
To get an idea of the current trends in mortgage rates, we rely on information collected by Bankrate, which is owned by the same parent company as NextAdvisor. Looking at historical mortgage rates, we are seeing rates low like never before. The table below compares today’s average rates with what they were a week ago and is based on information provided to Bankrate by lenders around the country:
Rates are current as of July 15, 2021.
There are many factors that cause mortgage rates to change. Chief among them are inflation and even the unemployment rate. When you see inflation rising, it usually means that mortgage rates are about to rise. On the other hand, lower inflation is usually accompanied by lower mortgage rates. With higher inflation, the dollar becomes less valuable. This scenario pushes buyers away from mortgage-backed securities, resulting in lower prices and the need for higher yields. Higher yields require borrowers to pay higher interest rates.
While there is no single organization that sets mortgage rates, the policy of the Federal Reserve Bank can affect what happens with interest rates. And he expressed a desire to keep rates low for the foreseeable future to help boost economic recovery. To do this, he kept the federal funds rate (the overnight interest rate for interbank lending) at about zero and commits to buying a large number of mortgage-backed securities every month. Both of these actions will help keep rates low.
Do I have to lock in my mortgage rate now?
Mortgage rates rise and fall daily, and it is impossible to time the market. Therefore, fixing the interest rate right now is a good idea, because in general the rates are extremely low.
When you lock in your rate, ask your lender how long the lock lasts. A speed lock can last for 30 to 60 days, which usually gives you enough time to close before the lock expires. If you would like to extend the rate lock ask for fees, as many lenders charge a fee to extend the rate lock.
Where will mortgage rates go in 2021?
Mortgage rates rose in February and March, surpassing 3% for the first time in more than seven months. Since then, rates have dropped and hovered around 3%, which is still close to historic lows and is great news for borrowers. And by 2021, some experts predict that mortgage rates will not be much higher…
The direction of the rates will depend on the economy. A growing economy is usually accompanied by a rise in mortgage rates. If consumer and government spending increases, this is likely to lead to higher inflation. However, the Federal Reserve believes that the inflation we are seeing is temporary and therefore rates remain low. But it will take us time to recover to pre-pandemic levels. This means that any potential rate hike is likely to be gradual rather than skyrocketing overnight.
Forecasts of mortgage rates for 2021
Any changes in mortgage rates should be minimal in the near future. Thus, the rates should now hover around 3%.
However, the economy still has a long way to go before it returns to pre-pandemic levels. If any bad news surprises us, it could lower rates.
How to qualify for the lowest mortgage rate
To get the best mortgage rate, you should focus on two main factors: your credit rating and your loan to value ratio (LTV).
To get the best interest rate, you will need a credit rating between 700 and 800. A credit rating above 800 is good, but will likely have minimal impact on your rate.
Lenders offer the largest mortgage discounts to those borrowers who are considered less risky. A significant down payment signals lenders that you are more committed and less likely to stop making payments. A down payment of 20% or more will save you money in two ways: with a better mortgage rate and you can avoid paying for private mortgage insurance (PMI).