Current Mortgage Interest Rates, May 17, 2021 | Benchmark Rates MixedMay 17, 2021
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Looking at today’s mortgage rates, they had no unified trajectory. The average interest rate for a 30-year fixed mortgage was static, however 15-year fixed-rate mortgages saw average rates inflate. At the same time, average rates for 5/1 adjustable-rate mortgages (ARM) dwindled.
Mortgage rates currently are:
Current 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 dropped. Shorter term, 10-year fixed-rate refinance mortgages didn’t change.
The refinance averages for 30-year, 15-year, and 10-year loans are:
Compare national home loan rates from various lenders .
30-Year Fixed-Rate Mortgages
The average 30-year fixed mortgage interest rate is 3.06%, which is the same from last week.
You can use NextAdvisor’s mortgage calculator to determine your monthly payments and play around with extra mortgage payments to wrap your head around how much you could save. The mortgage calculator can also show you all of the interest you’ll pay over the life of the loan
15-Year Fixed-Rate Mortgages
The median rate for a 15-year fixed mortgage is 2.35%, which is an increase of 1 basis point from the same time last week.
A 15-year, fixed-rate mortgage’s monthly payment will be much bigger. So finding room in your budget for a 30-year loan’s monthly payment would be less difficult. However, 15-year loans have some considerable benefits: You’ll save thousands of dollars in interest and pay off your loan much earlier.
5/1 Adjustable-Rate Mortgages
A 5/1 ARM has an average rate of 3.14%, a downtick of 2 basis points from the same time last week.
An ARM is ideal for households who will sell or refinance before the rate changes. If that’s not the case, their interest rates could end up being markedly 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 depending on how much your loan’s rate adjusts, your payment has the potential to increase by a large amount.
Recent Mortgage Rate Movement
To see where mortgage rates are moving we rely on information collected by Bankrate, which is owned by the same parent company as NextAdvisor. Looking at mortgage rate history, we’re in an exceptionally low rate environment. This table has current average rates based on information provided to Bankrate by lenders from across the nation:
Rates accurate as of May 17, 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.
A strong economy has historically increased demand for homes. When more homes are sold, the demand for mortgages also increases, which can cause rates to go up. But the flip side is also true: A drop in demand for mortgages could signal a coming downturn in mortgage rates.
Where Are Mortgage Rates Headed in 2021?
Recently, mortgage rates have risen sharply and crossed 3% – a level we haven’t seen since last summer. Even with this dramatic increase, rates are near or still below the levels many experts expected mortgage rates to be at in 2021.
The direction rates go will depend on the economy. And effectively dealing with the impacts of the coronavirus pandemic should boost our economic recovery. As the economy recovers, we should see inflation rise, which will put upward pressure on mortgage rates. But in spite of the potential for rising inflation, mortgage rates are likely to stay low this year. One reason for this: the Federal Reserve believes that low interest rates will help the economy rebound. So it’s unlikely to make moves that could increase rates.
This Month’s Mortgage Predictions
Following the recent flurry of activity with mortgage rates, many experts are predicting mortgage rates will be calmer this month.
The Federal Reserve would still like to keep rates low to boost the economy. And some experts believe the fears of inflation that have been driving rates higher are a bit overblown. So even though mortgage interest rates are likely to continue to rise over the long term, a massive spike isn’t likely.
This Week’s Mortgage Predictions
A modest rise is what some experts are forecasting for mortgage rates this week. This would be a bit of a leveling off from previous weeks.
However, the economy still has a long way to go before it recovers to pre-pandemic levels. If we get surprised by any bad news, that could put a damper on rates.
Factors Behind Today’s Mortgage Rates
Everything from the direction of the economy to your individual financial situation can influence mortgage rates. Not only that, but the type of mortgage and the property itself also make a difference.
Here are a few factors that influence rates:
- Overall strength of the economy
- Federal Reserve policy decisions
- Spending in the private and public sectors
- U.S. Treasury bond Yields
- Rate of inflation
- Personal finances: Credit score, down payment, and debt-to-income ratio
How to Get the Best Mortgage Rate
There are three key considerations 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 best rate. However, even a score 700 or higher can get you a decent rate reduction compared to a lower credit score. For a credit score over 800, the interest rate discount won’t be meaningful.
How much debt you have will affect not only what price range of house you can purchase, but also your mortgage rate. The maximum DTI for most mortgages is 43%. That means, on a $3000 monthly salary you’d be allowed to have up to $1,290 in monthly bills. Although, having a DTI under 28% is more likely to get you a discount on your mortgage rate..
Mortgage providers give the most substantial mortgage rate reductions to borrowers that are seen as less risky. One surefire way to show you’re a less risky borrower 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).
How Rising Mortgage Rates Impact Home Buying
Over the past few months, mortgage rates have been rising. Since we hit an all-time low average of 2.65% for 30-year fixed mortgages, the same rates have increased to 3.09%.
Rising rates can have a significant impact on your homebuying budget. The 0.44% increase we’ve experienced has increased the monthly payment on a 30-year $300,000 loan by $71 a month. But don’t expect current rates to cool off the red hot real estate market.
There is still a severe shortage of homes for sale. So as we enter peak buying season, expect to continue seeing bidding wars and rising prices. Those trends can make it can be a frustrating market for buyers.
How We Got These Rates
The rates we have included are averages provided by Bankrate.com Site Averages and are calculated after the close of the previous business day. The lenders that the “Bankrate.com Site Average” tables include are not the same from day to day.
National lenders provide this mortgage rate information to Bankrate.com. It is possible the mortgage rates we reference has changed since this was published.
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Mortgage Refinance Rates
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