Interest rates offered on most major types of home loans inched up very slightly but continued to resist any big movements.
Homebuyers using a conventional 30-year fixed mortgage, the most popular type of home loan, were offered an average rate of 3.16%, up from 3.15% the previous business day. The average for 15-year fixed mortgages rose slightly to 2.35% from 2.34% the previous business day. Neither has swung more than 6 basis points this month.
Fixed mortgage rates tend to track 10-year Treasury yields, which typically rise as inflation fears mount, or in the pandemic era, when the Federal Reserve is perceived as signaling it may scale back emergency monetary support sooner than expected. Yields have fluctuated over the past few trading days, but generally, concerns about the economic impact of the delta variant of the coronavirus have kept yields lower than they were earlier in the year.
Keep in mind the average 30-year rate hasn’t gone more than about half a percentage point higher than the record low reached this past winter, according to a Freddie Mac measure.
Those relatively low rates have bolstered buying power during the pandemic, allowing house hunters to buy more expensive homes with the same monthly budget and helping to fuel a fiercely competitive residential real estate boom that has only recently begun to cool slightly as more homes have gone on the market.
Mortgage rates, like the rates on any loan, are going to depend on your credit score, with lower rates going to people with better scores, all else being equal. The rates shown reflect the average offered by more than 200 of the country’s top lenders, assuming the borrower has a FICO credit score of 700-759 (within the “good” or “very good” range) and a loan-to-value ratio of 80%.
30-Year Mortgage Rates Increase
A 30-year fixed mortgage is by far the most common type of mortgage because it offers a consistent and relatively low monthly payment. (Shorter-term fixed mortgages have higher payments because the borrowed money is paid back more quickly.)
Besides conventional 30-year mortgages, some are backed by the Federal Housing Authority or the Department of Veterans Affairs. FHA loans offer borrowers with lower credit scores or a smaller down payment a better deal than they might otherwise get; VA loans let current or past members of the military and their families skip a down payment.
- 30-year fixed: The average rate rose to 3.16%, up from 3.15% the previous business day. A week ago, it was 3.18%. For every $100,000 borrowed, monthly payments would cost about $430.28, or $1.09 less than a week ago.
- 30-year fixed (FHA): The average rate rose to 2.95% from 2.94% the previous business day. A week ago, it was 2.98%. For every $100,000 borrowed, monthly payments would cost about $418.91, or $1.62 less than a week ago.
- 30-year fixed (VA): The average rate rose to 2.96% from 2.95% the previous business day. A week ago, it was 2.98%. For every $100,000 borrowed, monthly payments will cost about $419.45, or $1.08 less than a week ago.
All else being equal, a higher rate increases your monthly payment, but there are other parts of the equation. For example, if you know your monthly payment can’t be more than $2,000, you can get a $387,000 home at a 3.4% rate or a $380,000 home at a 3.6% rate. Both assume a 30-year loan, a 20% down payment, typical homeowners’ insurance costs, and property taxes, per our mortgage calculator.
15-Year Mortgage Rate Falls
The major advantage of a 15-year fixed mortgage is that it offers a lower interest rate than the 30-year and you’re paying off your loan more quickly, so your total borrowing costs are far lower. But for the same reason—that the loan is paid back over a shorter time frame—the monthly payments will be higher.
- 15-year fixed: The average rate fell to 2.34% from 2.38% the previous business day. A week ago, it was 2.36%. For every $100,000 borrowed, monthly payments would cost about $659.28, or $0.94 less than a week ago.
Besides fixed-rate mortgages, there are adjustable-rate mortgages (ARMs), where rates change based on a benchmark index tied to Treasury bonds or other interest rates. Most adjustable-rate mortgages are actually hybrids, where the rate is fixed for a period of time and then adjusted periodically. For example, a common type of ARM is a 5/1 loan, which has a fixed rate for five years (the “5” in “5/1”) and is then adjusted every one year (the “1”).
Jumbo Mortgage Rates Decline
Jumbo loans, which allow you to borrow bigger amounts for more expensive properties, tend to have slightly higher interest rates than loans for more standard amounts. Jumbo means over the limit that Fannie Mae and Freddie Mac are willing to buy from lenders, typically $548,250 for a single-family home (except in Hawaii, Alaska, and a few federally designated high-cost markets, where the limit is $822,375).
- Jumbo 30-year fixed: The average rate fell to 3.23%, down from 3.24% the previous business day. A week ago, it was also 3.23%. For every $100,000 borrowed, monthly payments would cost about $434.11, unchanged from a week ago.
- Jumbo 15-year fixed: The average rate fell to 2.93% from 2.97% the previous business day. A week ago, it was 2.95%. For every $100,000 borrowed, monthly payments would cost about $687.22, or $0.96 less than a week ago.
Refinance Rates Are Down
Refinancing an existing mortgage tends to be slightly more expensive than getting a new one, especially in a low-rate environment.
- 30-year fixed: The average rate to refinance fell to 3.26% from 3.28% the previous business day. A week ago, it was 3.29%. For every $100,000 borrowed, monthly payments would cost about $435.76, or $1.64 less than a week ago.
- 15-year fixed: The average rate to refinance fell to 2.46% from 2.49% the previous business day. A week ago, it was 2.48%. For every $100,000 borrowed, monthly payments at that rate will cost about $664.91, or $0.94 less than a week ago.
Our rates for “today” reflect national averages provided by more than 200 of the country's top lenders one business day ago, and the “previous” is the rate provided the business day before that. Similarly, the week earlier references compare the data from five business days earlier (so bank holidays are excluded.) The rates assume a loan-to-value ratio of 80% and a borrower with a FICO credit score of 700 to 759—within the “good” to “very good” range. They’re representative of the rates customers would see in actual quotes from lenders, based on their qualifications, and may vary from advertised teaser rates.
David Rubin contributed to this report.
Have a question, comment, or story to share? You can reach Diccon at firstname.lastname@example.org.