Mortgage rates have reached their lowest level in a year, with the 30-year fixed mortgage rate averaging 6.11%, according to the latest data from Zillow. This gradual decline in rates has brought some homeowners closer to considering refinancing options, though refinance rates still trend slightly higher than those for new mortgage loans.
Key mortgage rate averages
As of today, the national averages for major mortgage types are as follows, based on Zillow’s latest figures:
- 30-year fixed: 6.11%
- 20-year fixed: 5.98%
- 15-year fixed: 5.58%
- 5/1 ARM: 6.58%
- 7/1 ARM: 6.69%
- 30-year VA: 5.61%
- 15-year VA: 5.13%
- 5/1 VA: 5.69%
These averages are rounded to the nearest hundredth and represent nationwide data. Local rates may differ based on housing markets and lender policies.
Refinancing rates remain slightly higher
For those exploring refinancing options, rates remain above standard mortgage loans, though they have also seen slight improvements. Zillow reports the following refinance rate averages nationally:
- 30-year fixed refinance: 6.29%
- 20-year fixed refinance: 6.11%
- 15-year fixed refinance: 5.70%
- 5/1 ARM refinance: 6.83%
- 7/1 ARM refinance: 7.26%
- 30-year VA refinance: 5.97%
- 15-year VA refinance: 5.80%
- 5/1 VA refinance: 5.55%
Refinancing costs and rates vary depending on multiple factors, including the type of loan, equity in the property, and the borrower’s credit profile.
Comparing 30-year and 15-year fixed mortgages
Borrowers deciding between a 30-year or 15-year fixed mortgage should weigh the trade-offs between lower monthly payments and long-term interest savings. The current 30-year fixed rate stands at 6.11%, offering lower monthly payments spread over 360 months. In contrast, the 15-year fixed rate is 5.58%, which allows borrowers to pay off their mortgage sooner, but with higher monthly costs.
For example, on a $300,000 mortgage at today’s rates:
- A 30-year fixed mortgage at 6.11% results in a monthly principal and interest payment of $1,820, with total interest paid over the loan’s life amounting to $355,172.
- A 15-year fixed mortgage at 5.58% results in a higher monthly payment of $2,464, but borrowers pay only $143,521 in total interest over the term.
Fixed-rate versus adjustable-rate mortgages
Borrowers also face a choice between fixed-rate and adjustable-rate mortgages (ARMs). Fixed-rate mortgages lock in the same interest rate for the life of the loan, while ARMs offer an initial fixed period before rates adjust periodically. For example, a 7/1 ARM maintains a fixed rate for the first seven years, followed by annual rate adjustments. However, current trends show that some fixed rates now start lower than adjustable rates, making them a more attractive option for many buyers.
Achieving a lower mortgage rate
To secure the best mortgage rates, borrowers should focus on strengthening their financial profile. Lenders offer their most competitive rates to those with excellent credit scores, significant down payments, and low debt-to-income ratios. While waiting for rates to drop further might seem tempting, improving personal finances is often the more reliable strategy for reducing borrowing costs.
Conclusion
With mortgage rates reaching their lowest point in a year, today’s market presents a favorable opportunity for buyers and those considering refinancing. However, borrowers should carefully assess their options and financial goals while working with lenders to secure the best possible terms. As always, mortgage rates can vary greatly across regions and lenders, so thorough research and preparation are key.