The 30-Year Mortgage Rate Jumps Over 3.5% | October 13, 2021

The average rate for a 30-year fixed-rate mortgage rose to 3.523% over the holiday weekend, a jump of 0.054 percentage points. The last time the average rate was above 3.5% was in late June. Rates for all other loan categories were also higher, with the rate on the 30-year refinance loan increasing to 3.664%.

Rates have been rising over the past few weeks, but remain near historic lows. Borrowers with strong credit who apply for a new mortgage or to refinance an existing loan should be able to find competitive rates and low monthly payments.

  • The latest rate on a 30-year fixed-rate mortgage is 3.469%.
  • The latest rate on a 15-year fixed-rate mortgage is 2.518%.
  • The latest rate on a 5/1 jumbo ARM is 2.378%.
  • The latest rate on a 7/1 conforming ARM is 3.057%.
  • The latest rate on a 10/1 conforming ARM is 3.807%.

Money’s daily mortgage rates reflect what a borrower with a 20% down payment and a 700 credit score — roughly the national average score — might pay if he or she applied for a home loan right now. Each day’s rates are based on the average rate 8,000 lenders offered to applicants the previous business day. Freddie Mac’s weekly rates will generally be lower, since they measure rates offered to borrowers with higher credit scores.

Current mortgage rates: 30-year fixed-rate mortgage rates

  • The 30-year rate is 3.523%.
  • That’s a one-day increase of 0.054 percentage points. ⇑
  • That’s a one-month increase of 0.299 percentage points. ⇑

Most borrowers choose to finance their home purchase with a fixed-rate mortgage because of its predictable interest rate and steady monthly payments. Although this type of loan comes in a few different terms, the most popular is the 30-year loan. This is because its long payback time results in lower and more affordable monthly payments. The interest rate, on the other hand, will be higher than the rate on a shorter-term loan, so you’ll pay more interest over time.

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Average Mortgage Rates

Data based on US mortgage loans closed on Oct 12, 2021

Loan Type Oct 12 Last Week Change
15 Year Fixed Conventional 2.56% 2.49% 0.07%
30 Year Fixed Conventional 3.52% 3.41% 0.11%
7/1 ARM Rate 3.41% 2.88% 0.53%
10/1 ARM Rate 3.85% 3.77% 0.08%

Your actual rate may vary

Current mortgage rates: 15-year fixed-rate mortgage rates

  • The 15-year rate is 2.559%.
  • That’s a one-day increase of 0.041 percentage points. ⇑
  • That’s a one-month increase of 0.243 percentage points. ⇑

A shorter-term loan like a 15-year fixed-rate mortgage will have higher monthly payments compared to a 30-year mortgage of equal size. The interest rate will be lower, however, so you’ll actually save money by not paying as much interest.

Current mortgage rates: 5/1 jumbo adjustable-rate mortgage rates

  • The 5/1 ARM rate is 2.427%.
  • That’s a one-day increase of 0.049 percentage points. ⇑
  • That’s a one-month increase of 0.229 percentage points. ⇑

If you opt for an adjustable-rate mortgage instead of a fixed-rate loan, the interest rate will be fixed at first but eventually begin to reset regularly. The monthly payments on the loan will also be fixed at first and then change whenever the rate resets. For instance, a 5/1 ARM will have a fixed rate for five years before it starts resetting every year. You can find ARMs in a variety of terms, including a 7/1 ARM and a 10/1 ARM.

Current mortgage rates: VA, FHA and jumbo loan rates

The average rates for FHA, VA and jumbo loans are:

  • The rate on a 30-year FHA mortgage is 3.214%. ⇑
  • The rate on a 30-year VA mortgage is 3.256%. ⇑
  • The rate on a 30-year jumbo mortgage is 3.601%. ⇑

Current mortgage refinance rates

The average rates for 30-year loans, 15- year loans and 5/1 jumbo ARMs are:

  • The refinance rate on a 30-year fixed-rate refinance is 3.664%. ⇑
  • The refinance rate on a 15-year fixed-rate refinance is 2.667%. ⇑
  • The refinance rate on a 5/1 jumbo ARM is 2.727%. ⇑
  • The refinance rate on a 7/1 conforming ARM is 3.889%. ⇑
  • The refinance rate on a 10/1 conforming ARM is 4.082%. ⇑
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Average Mortgage Refinance Rates

Data based on US mortgage loans closed on Oct 12, 2021

Loan Type Oct 12 Last Week Change
15 Year Fixed Conventional 2.67% 2.6% 0.07%
30 Year Fixed Conventional 3.66% 3.57% 0.09%
7/1 ARM Rate 3.89% 3.85% 0.04%
10/1 ARM Rate 4.08% 4.05% 0.03%

Your actual rate may vary

Where are mortgage rates heading this year?

Mortgage rates sank through 2020. Millions of homeowners responded to low mortgage rates by refinancing existing loans and taking out new ones. Many people bought homes they may not have been able to afford if rates were higher.

In January 2021, rates briefly dropped to the lowest levels on record, but trended higher through the month and into February.

Looking ahead, experts believe interest rates will rise more in 2021, but modestly. Factors that could influence rates include how quickly the COVID-19 vaccines are distributed and when lawmakers can agree on another economic relief package. More vaccinations and stimulus from the government could lead to improved economic conditions, which would boost rates.

While mortgage rates are likely to rise this year, experts say the increase won’t happen overnight and it won’t be a dramatic jump. Rates should stay near historically low levels through the first half of the year, rising slightly later in the year. Even with rising rates, it will still be a favorable time to finance a new home or refinance a mortgage.

Factors that influence mortgage rates include:

  • The Federal Reserve. The Fed took swift action when the pandemic hit the United States in March of 2020. The Fed announced plans to keep money moving through the economy by dropping the short-term Federal Fund interest rate to between 0% and 0.25%, which is as low as they go. The central bank also pledged to buy mortgage-backed securities and treasuries, propping up the housing finance market. The Fed has reaffirmed its commitment to these policies for the foreseeable future multiple times, most recently at a late January policy meeting.
  • The 10-year Treasury note. Mortgage rates move in lockstep with the yields on the government’s 10-year Treasury note. Yields dropped below 1% for the first time in March 2020 and have been slowly rising since then. Currently, yields have been hovering above 1% since the beginning of the year, pushing interest rates slightly higher. On average, there is typically a 1.8 point “spread” between Treasury yields and benchmark mortgage rates.
  • The broader economy. Unemployment rates and changes in gross domestic product are important indicators of the overall health of the economy. When employment and GDP growth are low, it means the economy is weak, which can push interest rates down. Thanks to the pandemic, unemployment levels reached all-time highs early last year and have not yet recovered. GDP also took a hit, and while it has bounced back somewhat, there is still a lot of room for improvement.

Tips for getting the lowest mortgage rate possible

There is no universal mortgage rate that all borrowers receive. Qualifying for the lowest mortgage rates takes a little bit of work and will depend on both personal financial factors and market conditions.

Check your credit score and credit report. Errors or other red flags may be dragging your credit score down. Borrowers with the highest credit scores are the ones who will get the best rates, so checking your credit report before you start the house-hunting process is key. Taking steps to fix errors will help you raise your score. If you have high credit card balances, paying them down can also provide a quick boost.

Save up money for a sizeable down payment. This will lower your loan-to-value ratio, which means how much of the home’s price the lender has to finance. A lower LTV usually translates to a lower mortgage rate. Lenders also like to see money that has been saved in an account for at least 60 days. It tells the lender you have the money to finance the home purchase.

Shop around for the best rate. Don’t settle for the first interest rate that a lender offers you. Check with at least three different lenders to see who offers the lowest interest. Also consider different types of lenders, such as credit unions and online lenders in addition to traditional banks.

Also take time to find out about different loan types. While the 30-year fixed-rate mortgage is the most common type of mortgage, consider a shorter-term loan like a 15-year loan or an adjustable-rate mortgage. These types of loans often come with a lower rate than a conventional 30-year mortgage. Compare the costs of all to see which one best fits your needs and financial situation. Government loans — such as those backed by the Federal Housing Authority, the Department of Veterans Affairs and the Department of Agriculture — can be more affordable options for those who qualify.

Finally, lock in your rate. Locking your rate once you’ve found the right rate, loan product and lender will help guarantee your mortgage rate won’t increase before you close on the loan.

Our mortgage rate methodology

Money’s daily mortgage rates show the average rate offered by over 8,000 lenders across the United States the most recent business day rates are available for. Today, we are showing rates for Tuesday, October 12, 2021. Our rates reflect what a typical borrower with a 700 credit score might expect to pay for a home loan right now. These rates were offered to people putting 20% down and include discount points.

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