Today’s Mortgage Rates & Trends, July 21, 2021

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The average rates on 30-year and 15-year mortgages dropped again, marking new lows for at least the last three months.

The average on the conventional 30-year fixed mortgage, the most popular type of home loan, declined to 3.09% from 3.13% the previous business day, while the average for the 15-year fixed dropped to 2.31% from 2.34% the previous business day. Both fell to their lowest level since at least April 20, when our data begins. Rates on most other major types of mortgages also dropped.

Fixed mortgage rates tend to track 10-year Treasury yields, which have declined significantly in July, even amid rising inflation, because of concerns about a new strain of COVID-19 and fears that the economy has reached peak growth. Yields hit their lowest level since early February earlier this week, but have since recovered some.

While mortgage rates are still higher than the record lows reached this past winter (2.65% for the 30-year and 2.16% for the 15-year, according to Freddie Mac’s measure), they are quite affordable by historic standards. (In the decade leading up to the onset of the pandemic, for instance, the 30-year often stayed between 3.5% and 4.5%.)

The 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. But home prices have gotten so high, and the choice of homes so small, that the relatively low rates are increasingly not enough for prospective homebuyers.

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%.

Most 30-Year Mortgage Rates Decline

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 fell to 3.09%, down from 3.13% the previous business day. A week ago, it was 3.22%. For every $100,000 borrowed, monthly payments would cost about $426.47, or $7.09 less than a week ago.
  • 30-year fixed (FHA): The average rate fell to 2.93% from 2.94% the previous business day. A week ago, it was 3.06%. For every $100,000 borrowed, monthly payments would cost about $417.84, or $7.01 less than a week ago.
  • 30-year fixed (VA): The average rate stayed flat at 2.98%. A week ago, it was 3.11%. For every $100,000 borrowed, monthly payments will cost about $420.53, or $7.03 less than a week ago.

A lower rate can lower your monthly payment, but it can also give you more buying power, something you’ll want if you’re considering jumping into this fiercely competitive real estate market. For example, at 3% on a 30-year mortgage, your payments for a $380,000 home would be about $1,900 a month, assuming a 20% down payment, typical homeowners’ insurance costs, and property taxes, per our mortgage calculator. If you lock in a rate at 2.9%, though, you’ll have the same monthly payment for a $383,500 home.

15-Year Mortgage Rate Drops

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 2.31%, down from 2.34% the previous business day. A week ago, it was 2.43%. For every $100,000 borrowed, monthly payments would cost about $657.88, or $5.62 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 Fall

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% from 3.28% the previous business day. A week ago, it was 3.33%. For every $100,000 borrowed, monthly payments would cost about $434.11, or $5.50 less than a week ago.
  • Jumbo 15-year fixed: The average rate fell to 2.88% from 2.94% the previous business day. A week ago, it was 2.98%. For every $100,000 borrowed, monthly payments would cost about $684.82, or $4.80 less than a week ago.

Refinance Rates Decrease

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 3.33% from 3.38% the previous business day. A week ago, it was 3.51%. For every $100,000 borrowed, monthly payments would cost about $439.61, or $9.99 less than a week ago.
  • 15-year fixed: The average rate to refinance fell to 2.5% from 2.55% the previous business day. A week ago, it was 2.64%. For every $100,000 borrowed, monthly payments at that rate will cost about $666.79, or $6.61 less than a week ago.

Methodology

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.

Rob Anthes and David Rubin contributed to this report.

Have a question, comment, or story to share? You can reach Diccon at dhyatt@thebalance.com.