Almost all mortgage rates are down now. According to Zillow, the 30-year fixed purchase rate has decreased by three basis points to 5.90%and the fixed refinance rate of 30 years has dropped by 11 basis points to 6.10%.
Rates are seen falling in anticipation of the upcoming August jobs report. The Bureau of Labor Statistics will release its report tomorrow, and if unemployment numbers are high, mortgage rates should continue to fall. If employment is strong, expect mortgage rates to inch up. That’s the way mortgage rates work – lower when the economy is struggling and higher when the economy is booming.
Learn more: Is it a good time to buy a house?
Current mortgage rates
Here are the current mortgage rates, according to the latest Zillow data:
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30 years fixed: 5.90%
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20 years fixed: 5.59%
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15 years fixed: 5.18%
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5/1 ARMS: 6.19%
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7/1 ARMS: 6.21%
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5/1 FHA: 4.85%
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30 years VA: 5.24%
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15 years VA: 4.75%
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5/1 VA: 5.62%
Remember, this is a national average and rounded to the nearest hundred.
Learn more: 5 strategies to get the lowest mortgage rates
Current mortgage refinance rates
Here are the current refinance mortgage interest rates, according to the latest Zillow data:
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30 years fixed: 6.10%
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20 years fixed: 5.72%
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15 years fixed: 5.38%
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5/1 ARMS: 6.21%
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7/1 ARMS: 6.32%
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5/1 FHA: 4.83%
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30 years VA: 5.31%
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15 years VA: 5.03%
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5/1 VA: 5.23%
As with purchase mortgage rates, these are national averages that have been rounded to the nearest hundred. Note that refinance rates are usually higher than purchase mortgage rates.
Monthly mortgage payment calculator
Yahoo Finance has a free mortgage payment calculator to help you see how different mortgage rates will affect your monthly payments.
Our calculator goes even deeper by including factors like homeowner’s insurance and property taxes in your calculation. You may also increase the cost of private mortgage insurance and HOA dues if they apply to you. This monthly charge, along with the mortgage principal and interest rate, will give you a realistic idea of ​​your monthly payment.
How do mortgage rates work?
The mortgage interest rate is the fee for borrowing money from the lender, expressed as a percentage. There are two basic types of mortgage rates: fixed and adjustable rates.
A fixed rate mortgage locks in your rate for the life of your loan. For example, if you get a 30-year mortgage with an interest rate of 6%, your rate will remain at 6% for the entire 30 years. (Unless you’re refinancing or selling your home.)
An adjustable-rate mortgage keeps your rate the same for the first few years, then changes periodically. For example, you get a 5/1 ARM with an introductory rate of 6%. Your rate will be 6% for the first five years and then the rate will increase or decrease once every year for the last 25 years. Whether your rates go up or down depends on a number of factors, such as the economy and the US housing market.
At the beginning of the mortgage term, most of the monthly payments go towards interest. As time passes, less of the payment goes to interest, and the rest goes to the mortgage principal or the original amount you borrowed.
Dig deeper: Adjustable rate vs fixed rate mortgage – Which should you choose?
How are mortgage rates determined?
Two categories define mortgage rates: controllable and uncontrollable.
What factors can you control? First, you can compare the best mortgage lenders to find the one that offers the lowest rates and fees.
Second, lenders typically extend lower rates to people with higher credit scores, lower debt-to-income (DTI) ratios, and large down payments. If you can save more or pay off your debt before securing a mortgage, the lender will offer you a better interest rate.
What factors are out of your control? In short, the economy.
The list of ways the economy affects mortgage rates is long, but here are the basic details. If the economy – think of labor rates, for example – is struggling, mortgage rates fall to encourage lending, which helps boost the economy. If the economy is strong, mortgage rates go up to fuel emotions.
All other things being equal, mortgage refinance rates are usually higher than purchase rates. So, don’t be surprised if the refinance rate is higher than expected.
30 year vs 15 year fixed mortgage rates
The two most common mortgage terms are the 30-year and 15-year fixed rate mortgages. Both lock in your rate for the entire loan term.
30-year mortgages are popular because of their relatively low monthly payments. But it comes with a higher interest rate than a shorter term, and since you’re accumulating interest over three decades, you’ll be paying a lot of interest in the long run.
A 15-year mortgage can be great because it has a lower rate than you would get with a longer term, so you’ll pay less over the years. You’ll also pay off your mortgage faster. But your monthly payments will be higher because you pay off the same loan amount in half the time.
Basically, a 30-year mortgage is more affordable monthly, while a 15-year mortgage is cheaper in the long run.
Current mortgage rates: FAQs
Which bank offers the lowest mortgage rates?
According to 2023 Home Mortgage Disclosure Act (HMDA) data, some of the banks with the lowest average mortgage rates are Citibank, Wells Fargo, and USAA. However, it is a good idea to shop around for the best rate with not only banks, but also credit unions and companies that specialize in mortgage loans.
Is 2.75% a good mortgage rate?
Yes, 2.75% is a very good mortgage rate. You’re unlikely to get a 2.75% rate in today’s market unless you take out a predictable mortgage from a seller who locks in this rate in 2020 or 2021, when rates are at their lowest.
What are the lowest mortgage rates?
According to Freddie Mac, the lowest 30-year fixed mortgage rate is 2.65%. This is the national average as of January 2021.
At what rate should you repay your mortgage?
Some experts say it’s worth refinancing when you can lock in a rate that’s 2% less than your current mortgage rate. Others say 1% is the magic number. It all depends on what your financial goals are when refinancing and when the break-even point is after paying the closing costs of the refinance.
