May 11, 2021
A discussion on the current real estate market can’t occur without mentioning historically low mortgage interest rates. This week, the rates fell and now everyone is watching. Here’s what you should know about the current trends and what the future has in store for us as mortgage rates drop.
30 Year Fixed Mortgages
As of today, the 30-year fixed mortgage interest rate is about 3.05%, a decrease from 3.09% (or 4 basis points) one week ago. While the 30 year fixed notes usually have lower monthly payments, they also have a higher interest rate. This is the most commonly used loan type.
15 Year Fixed Mortgages
Today’s interest rate on a 15-year fixed mortgage is 2.35%, which is 3 basis points lower than last week. While the interest rate is better, which means you will be paying back less in interest over a shorter period of time. One downfall is the larger monthly payment compared to the 30-year fixed.
5/1 Adjustable Rate Mortgages (ARM)
Currently, you can get a 5/1 adjustable-rate mortgage (ARM) for about 2.75% interest rate. This is down by 4 basis points from last week. A 5/1 ARM usually starts at a lower interest rate than the fixed rate but changes after 5 years, switching over to whatever the fixed rate is at that time. This will only happen once every year until the loan matures. This is a good option for those looking to sell or refinance before the first 5 years are up, unless the fixed rate at this time is less than your current rate.
30 Year Jumbo Mortgage Rate
A jumbo loan refers to loans higher than what conventional loans allow in your county. For Northern Virginia, in general, any loan over $726,525 is considered a jumbo loan. Currently, the rate for these loans is averaging 3.15%, 11 base points lower than last week.
Refinancing – 30 Year Mortgage
The average interest on a 30-year mortgage rate is 3.09%, or 5 base points lower than 7 days ago. If you are eligible for a refinance, this is still a good time to take advantage. Eligibility requirements include credit score, home equity (should be around 20% equity for a good interest rate).
As mortgage rates drop, buyers want to take advantage of locking in great rates. Homeowners also want to use the opportunity to refinance homes, possibly pay for some renovations, and still get a lower monthly mortgage payment. Everyone will continue to watch mortgage rates in 2021.