Mortgage rates plummeted earlier this week. They have now stabilized, but most rates are still trending lower. The main exception is the 30-year fixed rate, which is up 3 basis points since yesterday to 6.21%. However, the 15-year fixed rate is down 6 basis points to 5.46%, and the 5/1 ARM rate is down 3 basis points to 6.30%.
Most economists expect the Fed to cut the federal funds rate at its Sept. 18 meeting, and mortgage rates will likely fall even more dramatically after that announcement. But with interest rates continuing to gradually decline overall, it may be a good time to get started on your home purchase.
Learn more: Is now a good time to refinance your mortgage?
Today's mortgage rates
According to the latest Zillow data, current mortgage rates are as follows:
30-year fixed rate: 6.21%
20-Year Fixed Rate: 5.81%
15-year fixed rate: 5.46%
5/1 ARM: 6.30%
7/1 ARM: 6.21%
30-Year FHA: 4.96%
15-year FHA: 4.38%
5/1 FHA: 4.87%
30-year VA: 5.48%
15-year VA: 5.07%
5/1 VA: 5.78%
Please note that these are national averages and are rounded to one decimal place.
Read more: 5 strategies to get the lowest mortgage interest rate
Today's mortgage refinance rates
According to the latest Zillow data, current mortgage refinance rates are as follows:
30-year fixed rate: 7.14%
20-year fixed rate: 6.46%
15-year fixed rate: 6.45%
5/1 ARM: 5.98%
7/1 ARM: 6.33%
5/1 FHA: 4.94%
30-year VA: 5.76%
15-year VA: 4.72%
5/1 VA: 5.29%
Again, the figures provided are national averages rounded to one decimal place. Mortgage refinance rates are often higher than interest rates for buying a home, but that's not always the case.
Use our mortgage calculator
Yahoo Finance's free mortgage calculator can help you see how different interest rates and repayment terms will affect your monthly mortgage payment, as well as how the price of the home and the size of your down payment will affect it.
Our calculator includes homeowners insurance and property taxes in estimating your monthly payment. You can also enter private mortgage insurance (PMI) and homeowners association dues, if applicable. These details give you a more accurate estimate of your monthly payment than if you were to calculate just mortgage principal and interest.
30-Year Fixed Mortgage Rates: Pros and Cons
A 30-year fixed mortgage offers two main benefits: lower payments and predictable monthly payments.
A 30-year fixed-rate mortgage has a relatively lower monthly payment because you spread your payments out over a longer period than, say, a 15-year mortgage. Unlike an adjustable-rate mortgage (ARM), your interest rate doesn't change from year to year, so your payments are predictable. In most years, the only things that can affect your monthly payment are changes to your homeowners insurance or property taxes.
The main disadvantage of a 30-year fixed rate mortgage is the mortgage interest rate, both in the short and long term.
A 30-year fixed term comes with a higher interest rate than a shorter fixed term, and it's higher than the introductory rate on a 30-year ARM. The higher the interest rate, the higher your monthly payment will be. And because of the higher rate and longer term, you'll pay significantly more in interest over the life of the loan.
15-Year Fixed Mortgage Rates: Pros and Cons
The pros and cons of a 15-year fixed mortgage are essentially swapped for a 30-year fixed rate one. Sure, your monthly payments are predictable, but another benefit is that the shorter the term, the lower your interest rate. Not to mention, you'll pay off your mortgage 15 years sooner, which means you could potentially save hundreds of thousands of dollars in interest over the life of your loan.
However, because you’re paying back the same amount over half the time, your monthly payments will be higher than if you opt for the 30-year term.
Learn more: 15-year vs. 30-year mortgages
Adjustable Rate Mortgages: Pros and Cons
With an adjustable-rate mortgage, your interest rate is fixed for a set period of time and then changes periodically. For example, with a 5/1 ARM, your interest rate stays the same for the first five years, but increases or decreases once a year for the remaining 25 years.
The main advantage is that the introductory rate is usually lower than a 30-year fixed rate, resulting in lower monthly payments (however, current average interest rates do not reflect this; fixed rates are actually lower; speak to your lender before deciding between a fixed and variable rate).
With an ARM, you run the risk of interest rates increasing later because you don't know what your mortgage interest rate will be after the introductory rate period ends, which can result in higher costs and makes your monthly payments less predictable from year to year.
But if you plan to move before the introductory rate period ends, you could potentially enjoy the benefits of a lower interest rate without running the risk of higher interest rates in the future.
Learn more: Adjustable Rate Mortgages vs Fixed Rate Mortgages
Is now a good time to buy a house?
Especially when you compare current mortgage rates to 2021, when you could lock in rates below 3% , now may not seem like a good time to buy a home.
But it may be a better time to buy than you think: The highest mortgage rate on record was 18.63% in October 1981, so a 6.21% rate doesn't seem so bad. It's also highly unlikely that rates will fall below 3% again anytime soon.
In summary, it's not the best time to buy a home, as interest rates are still relatively high and may fall significantly after the next Federal Reserve meeting in September, but if the timing is right, your budget can accommodate rising interest rates, and you've found the right home for you, now could be the perfect time.
Today's mortgage rates: FAQs
What are the current interest rates for a 30-year mortgage?
According to Zillow, the national average 30-year mortgage rate is currently 6.21%, but keep in mind that the average can vary depending on where you live. For example, if you're buying a home in a city with a high cost of living, your interest rate may be higher.
Are interest rates expected to fall?
Yes, mortgage interest rates are expected to gradually decline over the next few years. Experts predict that the average 30-year rate will settle at 6.6% to 6.7% by the end of 2024, then at 6% to 6.2% by late 2025.
Are mortgage rates falling?
Yes, mortgage rates are inching lower across the board: According to data from Zillow, 30-year fixed mortgage rates have remained below 6.25% all week.
How can I get the lowest refinance rate?
In many ways, securing a low mortgage refinance rate is similar to when you first bought a home: Try to improve your credit score and lower your debt-to-income ratio (DTI). If you shorten the refinance term, you'll also get a lower interest rate, but your monthly mortgage payment will be higher.
