Mortgage interest rates are on the rise again

ZACH WICHTER
BANKRATE.COM
Interest rates are on the rise again.

National mortgage rates edged higher for all types of loans compared to a week ago. Rates for 30-year fixed, 15-year fixed, 5/1 ARMs and jumbo loans rose.

The average rate you’ll pay for a 30-year fixed mortgage is 3.09 percent, up 4 basis points over the last seven days. A month ago, the average rate on a 30-year fixed mortgage was higher at 3.12 percent.

At the current average rate, you’ll pay a combined $426.47 per month in principal and interest for every $100,000 you borrow. That’s an additional $2.16 per $100,000 compared to last week.

The average rate you’ll pay for a 15-year fixed mortgage is 2.36 percent, up 1 basis point over the last seven days.

Monthly payments on a 15-year fixed mortgage at that rate will cost around $660 per $100,000 borrowed. That’s clearly much higher than the monthly payment would be on a 30-year mortgage at that rate, but it comes with some big advantages: You’ll come out several thousand dollars ahead over the life of the loan in total interest paid and build equity much more rapidly.

The average rate on a 5/1 adjustable rate mortgage is 3.16 percent, ticking up 1 basis point from a week ago.

Adjustable-rate mortgages, or ARMs, are home loans that come with a floating interest rate. In other words, the interest rate can change intermittently throughout the life of the loan, unlike fixed-rate mortgages. These loan types are best for people who expect to refinance or sell before the first or second adjustment. Rates could be much higher when the loan first adjusts, and thereafter.

Monthly payments on a 5/1 ARM at 3.16 percent would cost about $430 for each $100,000 borrowed over the initial five years, but could increase by hundreds of dollars afterward, depending on the loan’s terms.

The average jumbo mortgage rate is 3.11 percent, an increase of 4 basis points over the last week. This time a month ago, the average rate for jumbo mortgages was greater than 3.11, at 3.12 percent.

At today’s average jumbo rate, you’ll pay a combined $427.56 per month in principal and interest for every $100k you borrow. Compared to last week, that’s $2.17 higher.

How mortgage interest rates have changed this week

-          30-year fixed mortgage rate: 3.09%, up from 3.05% last week, +0.04

-          15-year fixed mortgage rate: 2.36%, up from 2.35% last week, +0.01

-          5/1 ARM mortgage rate: 3.16%, up from 3.15% last week, +0.01

-          Jumbo mortgage rate: 3.11%, up from 3.07% last week, +0.04

Interested in refinancing? See mortgage refinance rates

-          30-year fixed-rate refinance rises, +0.06%

The average 30-year fixed-refinance rate is 3.15 percent, up 6 basis points from a week ago. A month ago, the average rate on a 30-year fixed refinance was higher, at 3.17 percent.

At the current average rate, you’ll pay $429.74 per month in principal and interest for every $100,000 you borrow. Compared with last week, that’s $3.27 higher.

Rate lock advice and recommendations

A rate lock guarantees your interest rate for a specified period of time. It’s common for lenders to offer 30-day rate locks for a fee or to include the price of the rate lock into your loan. Some lenders will lock rates for longer periods of time, sometimes for more than 60 days, but those locks can be costly. In today’s volatile market, some lenders will lock an interest rate for only two weeks to avoid unnecessary risk.

The benefit of a rate lock is that if interest rates rise, you’re locked into the guaranteed rate. You may be able to find a lender that offers a floating rate lock. A floating rate lock lets you get a lower rate if interest rates decline before closing your loan. It could be worth the cost in a declining rate environment. Because there is no guarantee of where mortgage rates will head in the future, it may be smart to lock in a low rate instead of holding out on rates for potentially decline further.

It’s important to keep in mind: During the pandemic, all aspects of real estate and mortgage closings are taking much longer than usual. Expect the closing on a new mortgage to take at least 60 days and expect refinancing to take at least a month.