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Refinance rates are down since last Tuesday and since this time last month.
The 30-year fixed rates for new mortgages are up by just one basis point since last Tuesday. The 15-year fixed and 5/1 adjustable rates are down since this time last week, but 5/1 ARMs have increased since this time last month. Adjustable-rate mortgages have become more expensive than fixed-rate mortgages.
Adjustable-rate mortgages change your rate after an initial period. Darrin English, Senior Community Development Loan Officer at Quontic Bank, told Business Insider these mortgages used to work in favor of some borrowers, because adjustable rates would start lower than fixed rates.
However, English points out that adjustable rates aren’t starting lower than fixed rates anymore. The 30-year and 15-year fixed rates are currently offering better rates than the 5/1 adjustable rate mortgage, because lenders want to keep customers banking with them for as long as possible.
If your finances are in order, consider refinancing or getting a fixed-rate mortgage soon.
The best mortgage rates Tuesday, September 22, 2020
| Mortgage type | Average rate today | Average rate last week | Average rate last month |
| 30-year fixed | 2.87% | 2.86% | 2.99% |
| 15-year fixed | 2.35% | 2.37% | 2.54% |
| 5/1 ARM | 2.96% | 3.11% | 2.91% |
Rates from the Federal Reserve Bank of St. Louis.
The 30-year fixed rates are up by just one basis point since last Tuesday, and 15-year fixed rates are down by two basis points. The 5/1 adjustable rates have decreased since last Tuesday, but they’re still higher than what you’d pay on a 30-year or 15-year fixed-rate term.
The 30-year and 15-year fixed rates have decreased since August 22, while 5/1 ARM rates have increased by a few basis points.
Mortgage rates are low overall. The trends become more apparent when you look at rates from 6 months and a year ago:
| Mortgage type | Average rate today | Average rate 6 months ago | Average rate 1 year ago |
| 30-year fixed | 2.87% | 3.65% | 3.73% |
| 15-year fixed | 2.35% | 3.06% | 3.21% |
| 5/1 ARM | 2.96% | 3.11% | 3.49% |
Rates from the Federal Reserve Bank of St. Louis.
Several factors affect mortgage rates. Decreasing rates are usually a sign of a struggling economy. As the coronavirus pandemic and economic crisis continue, rates will likely stay relatively low.
The best refinance rates Tuesday, September 22, 2020
| Mortgage type | Average rate today | Average rate last week | Average rate last month |
| 30-year fixed | 2.96% | 3.07% | 3.22% |
| 15-year fixed | 2.51% | 2.53% | 2.75% |
| 10-year fixed | 2.45% | 2.59% | 2.80% |
Rates from Bankrate.
Refinance rates are down since last Tuesday and since this time last month.
How do 30-year fixed rates work?
You’ll pay a higher rate on a 30-year fixed-rate mortgage than on shorter-term loans with fixed rates. Normally you’d also pay more for a 30-year fixed mortgage than for an adjustable-rate mortgage, but currently, a 30-year fixed mortgage is more affordable than a 5/1 ARM.
Your monthly payments will be lower compared to the other types of loans, because your principal is spread out over a longer period of time.
The downside is that you’ll pay more in interest than you would with a 15-year fixed term because a) the rate is higher, and b) your interest is also spread out over a longer period of time.
How do 15-year fixed rates work?
A 15-year fixed rate is lower than what you’ll pay for a 30-year mortgage. Monthly payments will likely be higher, because you’re paying off the principal in half the time.
You’ll save money in the long run, though, because the rate is lower, and you’ll be making payments for a shorter amount of time.
How do 10-year fixed rates work?
A 10-year fixed-rate mortgage isn’t very common for an initial mortgage. But you might refinance into a 10-year mortgage after you’ve paid down some of your loan.
Rates are similar to what you’ll pay for a 15-year fixed-rate mortgage, but you’ll pay off your loan faster.
How do 5/1 adjustable rates work?
With a 5/1 ARM, a low rate is locked in for the first five years. Then your rate changes once per year for the remaining 25 years.
A 5/1 ARM rate is higher than a 30-year or 15-year fixed rate right now. In the past, ARM rates have been lower, but that isn’t the case in recent weeks. This means ARMs cost more than they used to, and are therefore less beneficial.
If you’re considering an ARM, then you should still ask your lender about what your individual rates would be if you chose a fixed-rate versus adjustable-rate mortgage.
Is it a good time to get a mortgage or refinance?
Think about refinancing soon if your finances are in a good place. Starting December 1, 2020, many borrowers will pay a…
Read More: The best mortgage and refinance rates today: Tues, Sept 22, 2020 | Under 3%