What Are Today’s Loan Rates?
The average 30-year fixed mortgage rate rose to 3.22 percent, up 1 basis point from a week ago.
The 15-year fixed mortgage rate rose to 2.45 percent, up 2 basis points from a week ago.
To compare today’s customized rates from a variety of trusted lenders, use ACFA’s mortgage rates comparison tool.
What is a mortgage interest rate?
Loan interest rates reflect lenders’ cost of money, a cost that they pass on to you in the form of an interest rate. Your rate sets the amount of interest you pay over the life of your mortgage.
Even though nearly all mortgages come with fixed rates these days, small differences in interest rates can drive your monthly payments up or down. Over a 30-year term, that difference can add up. Just $50 a month equals more than $18,000 over the loan’s term. Knowing how interest rates factor into your loan pricing, as well as how your rate is determined, will help you evaluate your options and make the best decision for your situation.
What factors determine my mortgage rate?
Lenders consider these factors when pricing your interest rate:
- Credit score
- Down payment
- Property location
- Loan amount/closing costs
- Loan type
- Loan term
- Interest rate type
Your credit score is the most important driver of your mortgage rate. Lenders have settled on this three-digit score as the most reliable predictor of whether you’ll make prompt payments. The higher your score, the less risk you pose — and the lower rate you’ll pay.
Lenders also look at the amount of your down payment. For instance, if you put 20 percent down, you’re viewed as a lower risk, and you might get a lower rate than someone who’s financing nearly all of their home purchase. From the lender’s viewpoint, the more skin the borrower has in the game, the more likely the mortgage will be repaid on time and in full. (That’s also why lenders require you to pay private mortgage insurance with less than 20 percent down.)
Rolling additional closing costs into the loan affects your mortgage rate as well. With these costs added to what you owe, you’ll typically pay a higher interest rate than someone who pays those fees upfront. Borrowers might also pay higher rates for jumbo loans — mortgages above the limits for conforming mortgages.
The type of mortgage you choose including the loan term and the interest type may also affect your rate. You’ll pay lower interest rates for 15-year mortgages than for 30-year loans because of the shorter time horizon–paying off the loan faster means less risk for the lender.. Adjustable-rate mortgages, which have largely disappeared as fixed rates have plumbed new lows, come with lower initial rates, but when the loan resets, usually annually or every six months, rates can fluctuate with the market for the remainder of the loan term.
Use our mortgage calculator to see how different interest rates, down payments, loan amounts and loan terms would affect your monthly mortgage payments.
What is the best credit score to get a loan?
Lenders reserve their most competitive rates to borrowers with excellent credit scores — usually 740 or higher. However, you don’t need spotless credit to qualify for a mortgage. Loans insured by the Federal Housing Administration, or FHA, have a minimum credit score requirement of 580, although you’ll probably need a score of 620 or higher to qualify. (While FHA loans offer competitive rates, the fees are steep.)
To score the best deal, work to boost your credit score above 740. While you can get a mortgage with poor or bad credit, your interest rate and terms may not be as favorable.
What is the APR on a Loan?
The APR, or annual percentage rate, reflects the interest rate and other borrowing costs, such as broker fees, discount points, private mortgage insurance and some closing costs. The APR offers a more accurate reading of your true borrowing costs than the mortgage rate by itself.
How do I get the best loan rate?
Shopping around is the key to landing the best mortgage rate. Look for a rate that’s equal to or below the average rate for your loan term and product. Compare rates from at least three, and ideally four or more, lenders. This lets you make certain you’re getting competitive offers. Check with a variety of types of lenders — large banks, credit unions, online lenders, regional banks, direct lenders and mortgage brokers. ACFA offers a mortgage rates comparison tool to help you find the right rate from a variety of trusted lenders.
Interest rates and terms can vary significantly among lenders depending on how much they want your business and how busy they are processing loans. Many lenders staffed up during the refinancing boom of 2020 and in 2021 are lowering their profit margins to keep enough new mortgages in the pipeline. As online and non-bank lenders take an ever-greater share of the mortgage market, expect to see the deals get even better no matter where interest rates go.
Keep in mind that mortgage rates change daily, even hourly. Rates move with market conditions and can vary by loan type and term. To ensure you’re getting accurate rate quotes, be sure to compare similar loan estimates based on the same term and product.
What does the future hold for mortgage rates?
Mortgage rates plumbed new depths in January 2021, setting all-time lows south of 3 percent. Rates have climbed a bit since then, and their trajectory for the rest of the year depends on the strength of the economic recovery. Given the robust rebound, the Federal Reserve has indicated it will ease back on its stimulus. That sets the stage for rates to rise. However, increases are likely to be gradual rather than sudden. Many mortgage experts expect rates to climb above 3.5 percent by the end of 2021.
Learn more about historical mortgage rate trends.
Mortgage rate forecast for July 2021
Rates have remained enticingly low throughout the first half of 2021 – lower than many experts predicted six months ago. And the outlook for July doesn’t call for a radical rate leap, either.
But several factors are in play that can easily result in you paying at least slightly more for a purchase or refinance home loan in the coming weeks or months. That’s the consensus opinion among the group of industry pros ACFA recently polled, who envision mortgage rates edging marginally higher at worst or standing pat over the next month.
“Over the next month, rates may rise a bit but will likely be pretty close to where they are today – around 3 percent for the 30-year fixed-rate mortgage,” says Leonard Kiefer, deputy chief economist for Freddie Mac in McLean, Virginia.
“While inflation has ticked higher in recent months, many analysts consider much of the increase in consumer prices to be transitory. Thus, even with higher inflation rates, mortgage rates have held pretty steady. I’d expect these near historically low mortgage rates to stay through at least early summer.”