Wednesday, August 4, 2021

Mortgage Interest Rates Today, July 14, 2021 | Rates Cool Off

What we’re seeing today is a number of closely followed mortgage rates have decreased. Both 30-year fixed and 15-year fixed mortgage rates dwindled. The most common type of variable-rate mortgage is the 5/1 adjustable-rate mortgage (ARM) also slid lower.

The average mortgage rates are as follows:

Today’s average 30-year fixed mortgage rate is 3.02%
20-year fixed mortgage rates are averaging 2.91%
15-year fixed mortgage rates are averaging 2.37%
The average 10-year fixed-rate mortgage currently sits at 2.34%
5/1 ARM rate: 2.82%
What this means for borrowers:
Historically low rates continue to be available to eligible borrowers. But home buying is about much more than your mortgage interest rate. Exceptionally low inventory has led to a rise in bidding wars and pushed home prices higher at a rapid pace. With so few homes for sale, buyers can expect to face a competitive market..

Looking at Today’s Mortgage Refinance Rates
There’s good news if you’ve been considering a refinance, because the mean rates for 15-year fixed and 30-year fixed refinance loans receded. If you’ve been considering a 10-year refinance loan, just know average rates also declined.

The refinance averages for 30-year, 15-year, and 10-year loans are:

30-year fixed refinance rates are averaging: 3.10%
20-year refinance rate: 3.02%
15-year fixed refinance rate: 2.43%
10-year fixed refinance rate: 2.45%
Here are mortgage rates for different types of loan.

30-Year Mortgage Rates
The 30-year fixed-mortgage rate average is 3.02%, which is a decrease of 5 basis points from the previous week.

You can use NextAdvisor’s mortgage calculator to determine your monthly payments and calculate what you’ll save with additional payments. The mortgage calculator can also show you all of the interest you’ll pay over the life of the loan

15-Year Fixed Mortgage Interest Rates
The median rate for a 15-year fixed mortgage is 2.37%, which is a decrease of 1 basis point from the same time last week.

A 15-year, fixed-rate mortgage’s monthly payment is, undeniably, a much bigger monthly payment than what you’d get with a 30-year mortgage offering the same interest rate. But, 15-year loans have some considerable benefits: You’ll pay thousands less in interest and pay off your loan much earlier.

5/1 ARM Rates
A 5/1 ARM has an average rate of 2.82%, a slide of 5 basis points from seven days ago.

An ARM is ideal for individuals who will refinance or sell before the rate changes. If that’s not the case, their interest rates could end up being significantly higher after a rate adjusts.

For the first five years, a 5/1 ARM will typically have a lower interest rate compared to a 30-year fixed mortgage. Just keep in mind that your rate could climb higher and your payment might grow by hundreds of dollars a month.

Mortgage Rate Trends
To get an idea of the current mortgage rate trends rely on information collected by Bankrate, which is owned by the same parent company as NextAdvisor. Looking at the history of mortgage rates, we’re in an exceptionally low rate environment. This table has current average rates based on information provided to Bankrate by lenders nationwide:

Current average mortgage interest rates
30-year fixed rate 3.02% 3.07% -0.05
15-year fixed rate 2.37% 2.38% -0.01
30-year jumbo mortgage rate 3.03% 3.08% -0.05
30-year mortgage refinance rate 3.10% 3.14% -0.04
Updated on July 14, 2021.

There isn’t a single factor that causes mortgage rates to move, but rather there are many. Chief among them are things including inflation and even the unemployment rate. When you see inflation increasing, that usually means mortgage rates are about to climb higher. On the other hand, lower inflation typically accompanies lower mortgage rates. With higher inflation, the dollar becomes less valuable. This scenario pushes buyers away from mortgage-backed securities, which leads to price decreases and the need for increasing yields. And higher yields require borrowers to pay higher interest rates.

While there is no single entity that sets mortgage rates, the Federal Reserve Bank’s policies can impact what happens with interest rates. And it has expressed its desire to keep rates low for the foreseeable future to aid in the economic recovery. To achieve this, it has kept the Federal Funds rate (the overnight interest rate for inter-bank lending ) to roughly zero, and it has committed to purchasing a large number of mortgage-backed securities each month. Both of these actions will help to keep rates low.

Should I Lock in My Mortgage Rate Now?
It’s impossible to know what direction mortgage rates will go from day to day. That’s why a mortgage rate lock is such a useful tool, because it protects you if rates go up. And with interest rates so low right now, you should lock in your rate as soon as you can.

When you lock in your rate, ask your lender how long the lock is valid for. A rate lock can be good for anywhere from 30 to 60 days, which typically will give you enough time to close before the lock expires. If something happens where you need to extend your rate lock, ask about fees as many lenders charge a fee for extending a rate lock.

What Is in the Future for Mortgage Rates?
To start the year, mortgage rates rose sharply and crossed 3% for the first time since July 2020. After this dramatic increase, we saw a drop that brought rates back under 3%. Since then rates have hovered around 3%, they are still near or below the levels many experts expected mortgage rates to be at in 2021.

America’s economic recovery will greatly impact rates, if we continue to see economic growth the expectation is that rates will rise. And although inflation looks to be rising, the Federal Reserve believes this is only temporary. So inflation hasn’t pushed rates higher. But in spite of the potential for rising inflation, it’s unlikely that we’ll see skyrocketing mortgage rates in 2021. One reason for this: the Federal Reserve believes that low interest rates will help the economy rebound. So it’s likely to make policy decisions in favor of keeping rates low.

Mortgage Rate Predictions for 2021
In the near term, any changes in mortgage rates should be moderate. So rates should hover near 3% for the time being.

While there is nothing this week that should cause a spike or dramatic downturn in rates, the unexpected can happen. And currently, the economy still has a long way to go to return to its pre-pandemic level.

How to Get the Lowest Mortgage Rate
There are three main factors to getting the best interest rate: Debt-to-income ratio (DTI), loan-to-value ratio (LTV), and your credit score.

These days, a credit score over 750 will help you get the lowest rate. But, even a score of 700+ can get you a decent rate reduction compared to a lower credit score. Once your score starts climbing above 800, the mortgage rate discount is negligible.

Your debt will impact not only what price range of house you can purchase, but also your interest rate. The maximum DTI for most mortgage loans is 43%. That means, on a $3000 monthly salary you’d be allowed to have up to $1,290 in monthly bills. To qualify for the lowest mortgage rate, aim for a DTI ratio no higher than 28%.

Lenders offer the most substantial mortgage rate reductions to borrowers that are seen as less risky. One surefire way to signal you’re more likely to make your monthly payments is to have a bigger down payment. A down payment of 20% or more will save you money in two ways: with a more favorable mortgage rate, and you’ll be able to avoid paying for private mortgage insurance (PMI).

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