Wed. Oct 20th, 2021
Mortgage rates for Oct. 12, 2021: Rates increase
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Some closely followed mortgage rates climbed up today. 15-year fixed and 30-year fixed mortgage rates both were higher. We also saw an upward trend in the average rate of 5/1 adjustable-rate mortgages. Mortgage interest rates are never set in stone, but interest rates are at historic lows. If you plan to finance a home, now might be an excellent time to lock in a fixed rate. Before you buy a house, remember to consider your personal needs and financial situation, and shop around for different lenders to find the right one for you.

30-year fixed-rate mortgages

For a 30-year, fixed-rate mortgage, the average rate you’ll pay is 3.19%, which is an increase of 8 basis points compared to one week ago. (A basis point is equivalent to 0.01%.) The most common loan term is a 30-year fixed mortgage. A 30-year fixed rate mortgage will usually have a lower monthly payment than a 15-year one — but usually a higher interest rate. Although you’ll pay more interest over time — you’re paying off your loan over a longer timeframe — if you’re looking for a lower monthly payment, a 30-year fixed mortgage may be a good option.

15-year fixed-rate mortgages

The average rate for a 15-year, fixed mortgage is 2.43%, which is an increase of 6 basis points from the same time last week. Compared to a 30-year fixed mortgage, a 15-year fixed mortgage with the same loan value and interest rate will have a larger monthly payment. However, if you’re able to afford the monthly payments, there are several benefits to a 15-year loan. These include typically being able to get a lower interest rate, paying off your mortgage sooner, 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 uptick of 9 basis points compared to a week ago. For the first five years, you’ll typically get a lower interest rate with a 5/1 adjustable-rate mortgage compared to a 30-year fixed mortgage. But you may end up paying more after that time, depending on the terms of your loan and how the rate shifts with the market rate. For borrowers who plan to sell or refinance their house before the rate changes, an ARM may be a good option. But if that’s not the case, you might be on the hook for a significantly higher interest rate if the market rates shift.

Mortgage rate trends

We use rates collected by Bankrate, which is owned by the same parent company as CNET, to track rates changes over time. This table summarizes the average rates offered by lenders across the US:

Current average mortgage interest rates

Loan type Interest rate A week ago Change
30-year fixed rate 3.19% 3.11% +0.08
15-year fixed rate 2.43% 2.37% +0.06
30-year jumbo mortgage rate 2.80% 2.80% N/C
30-year mortgage refinance rate 3.17% 3.07% +0.10

Updated on Oct. 12, 2021.

How to shop for the best mortgage rate

When you are ready to apply for a loan, you can reach out to a local mortgage broker or search online. When researching home mortgage rates, consider your goals and current financial situation. Specific interest rates will vary based on factors including credit score, down payment, debt-to-income ratio and loan-to-value ratio. Generally, you want a higher credit score, a higher down payment, a lower DTI and a lower LTV to get a lower interest rate. The interest rate isn’t the only factor that affects the cost of your home — be sure to also consider additional factors such as fees, closing costs, taxes and discount points. Make sure you speak with multiple lenders — for example, local and national banks, credit unions and online lenders — and comparison shop to find the best mortgage loan for you.

How does the loan term impact my mortgage?

One important thing to keep in mind when choosing a mortgage is the loan term, or payment schedule. The mortgage terms most commonly offered are 15 years and 30 years, 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 in a fixed-rate mortgage are stable for the duration of the loan. Unlike a fixed-rate mortgage, the interest rates for an adjustable-rate mortgage are only fixed for a certain amount of time (commonly five, seven or 10 years). After that, the rate changes annually based on the market interest rate.

One important factor to take into consideration when choosing between a fixed-rate and adjustable-rate mortgage is how long you plan on living in your home. If you plan on living long-term in a new house, fixed-rate mortgages may be the better option. Fixed-rate mortgages offer greater stability over time in comparison to adjustable-rate mortgages, but adjustable-rate mortgages might offer lower interest rates upfront. If you don’t have plans to keep your new house for more than three to 10 years, though, an adjustable-rate mortgage might give you a better deal. The best loan term is entirely dependent on your personal situation and goals, so make sure to consider what’s important to you when choosing a mortgage.

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