Mortgage charges for Oct. 12, 2021: Charges improve
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Some closely monitored mortgage rates have risen today. The interest rates on 15-year and 30-year fixed mortgages were higher. We also saw an upward trend in the average rate of 5/1 variable rate mortgages. Mortgage rates are never set in stone, but rates are at all-time lows. If you are planning to finance a home, now may be a good time to set a fixed rate. Before buying a home, make sure to consider your personal needs and financial situation and look around for various lenders to find the right one for you.
30-year fixed-rate mortgages
For a 30-year fixed-rate mortgage, the average interest rate is 3.19%, which is an increase of 8 basis points over the previous week. (One basis point is 0.01%.) The most common repayment term is a 30-year fixed-rate mortgage. A 30-year fixed-rate mortgage usually has a lower monthly payment than a 15-year – but usually a higher interest rate. Although you’ll pay more interest over time – you pay off your loan over a longer period of time – if you’re looking for a lower monthly payment, a 30-year fixed-rate mortgage can be a good option.
15-year fixed-rate mortgages
The average interest rate on a 15-year fixed-rate mortgage is 2.43%, an increase of 6 basis points over the same point in time last week. Compared to a 30-year fixed-rate mortgage, a 15-year fixed-rate mortgage has a higher monthly payment for the same mortgage lending value and interest rate. However, if you can afford the monthly payments, then a 15 year loan has several advantages. This usually includes the option of getting a lower interest rate, paying off your mortgage earlier, and paying less total interest in the long run.
5/1 adjustable rate mortgages
A 5/1 ARM has an average rate of 3.21%, an increase of 9 basis points compared to a week ago. For the first five years, you will typically get a lower interest rate on a 5/1 variable rate mortgage than you would on a 30 year fixed rate mortgage. However, you may find yourself paying more after this time, depending on the terms of your loan and how the interest rate changes with the market rate. For borrowers planning to sell or refinance their home before interest rates change, an ARM can be a good option. However, if it doesn’t, you may be looking for a significantly higher rate if market rates shift.
Mortgage rate trends
We use the rates collected by Bankrate, owned by the same parent company as CNET, to track rate changes over time. This table summarizes the average interest rates offered by US lenders:
Current average mortgage interest rate
|Credit type||interest rate||A week ago||Change|
|30-year fixed rate||3.19%||3.11%||+0.08|
|15 years fixed rate||2.43%||2.37%||+0.06|
|30 year jumbo mortgage rate||2.80%||2.80%||opener|
|30 year mortgage refinancing rate||3.17%||3.07%||+0.10|
Updated October 12, 2021.
How to buy the best mortgage rate
When you’re ready to apply for a loan, you can contact a local mortgage broker or search online. When looking for home mortgage rates, consider your goals and your current financial situation. Specific interest rates vary based on factors such as creditworthiness, down payment, debt-to-income ratio, and loan-to-value ratio. In general, you want a higher credit score, higher down payment, lower DTI, and lower LTV to get a lower interest rate. The interest rate isn’t the only factor that affects the cost of your home – consider additional factors like fees, closing costs, taxes, and discount points as well. Make sure you speak to multiple lenders – local and national banks, credit unions, and online lenders, for example – and a comparison shop to find the best mortgage loan for you.
How does the repayment period affect my mortgage?
One important thing to consider when choosing a mortgage is the repayment term or payment schedule. The most common mortgage terms on offer are 15 year and 30 year, although you can also find 10, 20 and 40 year mortgages. Mortgages are further divided into fixed rate and adjustable rate mortgages. The interest rates on a fixed-rate mortgage are stable over the life of the loan. Unlike a fixed-rate mortgage, the interest rates on an adjustable-rate mortgage are only fixed for a certain period of time (usually five, seven or 10 years). Thereafter, the interest rate changes annually based on the market interest rate.
One important factor to consider when choosing between a fixed rate mortgage and an adjustable rate mortgage is how long you plan to live in your home. If you want to live in a new home for the long term, fixed-rate mortgages may be a better option. Fixed rate mortgages offer greater stability over time compared to adjustable rate mortgages, but adjustable rate mortgages can offer lower interest rates upfront. However, if you don’t plan to keep your new home for more than three to ten years, a variable rate mortgage may be a better deal for you. The best repayment term depends entirely on your personal situation and your goals. So when choosing a mortgage, think about what matters to you.
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