Several closely watched mortgage rates decreased today. The average rates on 30-year fixed and 15-year fixed mortgages both slid down. The average rate on 5/1 adjustable-rate mortgages, or ARMs, the most popular type of variable rate mortgage, trended upward.
Mortgage rates are constantly changing, but they continue to represent a bargain compared to rates before the Great Recession. If you’re in the market for a mortgage, it could make sense to go ahead and lock if you see a rate you like. Just make sure you’ve looked around for the best rate first.
See mortgage rates for a variety of loan types.
30-year fixed mortgages
The average rate you’ll pay for a 30-year fixed mortgage is 3.04 percent, down 4 basis points since the same time last week. Last month on the 9th, the average rate on a 30-year fixed mortgage was higher, at 3.05 percent.
At the current average rate, you’ll pay $423.76 per month in principal and interest for every $100,000 you borrow. That’s $2.17 lower, compared with last week.
You can use Bankrate’s mortgage rate calculator to figure out your monthly payments and see the effect of adding extra payments. It will also help you calculate how much interest you’ll pay over the life of the loan.
15-year fixed mortgages
The average 15-year fixed-mortgage rate is 2.55 percent, down 4 basis points from a week ago.
Monthly payments on a 15-year fixed mortgage at that rate will cost around $669 per $100,000 borrowed. That’s obviously much higher than the monthly payment would be on a 30-year mortgage at that rate, but it comes with some big advantages: You’ll save thousands of dollars over the life of the loan in total interest paid and build equity much more quickly.
The average rate on a 5/1 ARM is 3.11 percent, climbing 1 basis point from a week ago.
These loan types are best for those who expect to refinance or sell before the first or second adjustment. Rates could be substantially higher when the loan first adjusts, and thereafter.
Monthly payments on a 5/1 ARM at 3.11 percent would cost about $428 for each $100,000 borrowed over the initial five years, but could climb hundreds of dollars higher afterward, depending on the loan’s terms.
Where rates are headed
To see where Bankrate’s panel of experts expect rates to go from here, check out our Rate Trend Index.
Want to see where rates are currently? Lenders across the nation respond to Bankrate.com’s weekday mortgage rates survey to bring you the most current rates available. Here you can see the latest marketplace average rates for a wide variety of purchase loans:
Average mortgage interest rates
Product Rate Last week Change
30-year fixed 3.04% 3.08% -0.04
15-year fixed 2.55% 2.59% -0.04
30-year fixed jumbo 3.08% 3.11% -0.03
30-year fixed refinance 3.13% 3.08% +0.05
Rates as of October 9, 2020.
Should you lock a mortgage rate?
A rate lock guarantees your interest rate for a specified period of time. Lenders often offer 30-day rate locks for a nominal fee or roll the price of the lock into your loan. Some lenders will lock rates for longer periods, even exceeding 60 days, but those locks can be pricey. In today’s volatile market, some lenders will lock an interest rate for only two weeks because they don’t want to take on unnecessary risk.
The benefit of a rate lock is that if interest rates rise, you’re locked into the guaranteed rate. You may be able to find a lender that offers a floating rate lock. A floating rate lock lets you get a lower rate if interest rates decline before closing your loan. It could be worth the cost in a declining rate environment. Because mortgage rates are not predictable, there’s no guarantee that rates will stay where they are from week to week or even day to day. So, if you can lock in a low rate, then you should do so rather than gamble on interest rates falling even lower.
Remember: During the pandemic, all aspects of real estate and mortgage closings are taking much longer than usual. Expect the closing on a new mortgage to take at least 60 days, with refinancing taking at least a month.
What causes mortgage rates to move
A number of economic factors influence mortgage rates. Among them are inflation and unemployment. Higher inflation typically leads to higher mortgage rates. The opposite is also true; when inflation is low, mortgage rates typically are as well. As inflation increases, the dollar loses value. That drives investors away from mortgage-backed securities (MBS), which causes the prices to decrease and yields to increase. When yields move higher, rates become more expensive for borrowers.
A strong economy usually means more people buying homes, which drives demand for mortgages. This increased demand can push rates higher. The opposite is also true; less demand can trigger a drop in rates.
Methodology: The rates you see above are Bankrate.com Site Averages. These calculations are run after the close of the previous business day and include rates and/or yields we have collected that day for a specific banking product. Bankrate.com site averages tend to be volatile — they help consumers see the movement of rates day to day. The institutions included in the “Bankrate.com Site Average” tables will be different from one day to the next, depending on which institutions’ rates we gather on a particular day for presentation on the site.
To learn more about the different rate averages Bankrate publishes, see “Understanding Bankrate’s on-site rate averages.”
Read about other loan terms:
Current mortgage refinance rates
30-Year interest rates
Shopping for the right lender?
Ally Bank Mortgage Review
Bethpage Federal Credit Union Mortgage Review
BB&T Mortgage Review
CFBank Mortgage Review
See rates for a variety of loan types
LOAN TYPE PURCHASE RATES REFINANCE RATES
The index above links out to loan-specific pages to help our readers learn more about rates by product type.
30-Year Loan 30-Year Interest Rates 30-Year Mortgage Refinance Rates
20-Year Loan 20-Year Fixed Mortgage Rates 20-Year Refinance Interest Rates
15-Year Loan 15-Year Mortgage Rates 15-Year Refinance Rates
10-Year Loan 10-Year Mortgage Interest Rates Current 10-Year Refinance Rates
FHA Loan FHA Mortgage Loan Rates FHA Mortgage Refi Rates
VA Loan VA Mortgage Rates Current VA Refinance Rates
ARM Loan ARM Loan Rates ARM Refi Mortage Rates
Jumbo Loan Jumbo Mortgage Rates Jumbo Refi Interest Rates