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Mortgage rates and refinance rates have decreased since last Wednesday, with the exception of 15-year refinance rates, which have increased by just one basis point.
If you lock in a rate today, then you could end up paying less for a fixed-rate mortgage than for an ARM over the years.
Darrin English, Senior Community Development Loan Officer at Quontic Bank, told Business Insider that typically there’s an advantage to an adjustable-rate mortgage, in which the rate fluctuates after an initial period. That advantage is usually a lower rate for the fixed period.
However, he points out that ARMs don’t currently follow that pattern. Fixed rates are currently better than adjustable rates, because lenders want to keep customers banking with them for as long as possible. Even though the 30-year fixed rate and 5/1 adjustable rate are about the same right now, you’d risk your 5/1 ARM rate increasing in five years, whereas you could lock in a low rate for decades with a 30-year term.
If your finances are in order, consider refinancing or getting a fixed-rate mortgage soon.
The best mortgage rates Wednesday, October 28, 2020
| Mortgage type | Average rate today | Average rate last week | Average rate last month |
| 30-year fixed | 2.80% | 2.81% | 2.90% |
| 15-year fixed | 2.33% | 2.35% | 2.40% |
| 5/1 ARM | 2.87% | 2.90% | 2.90% |
Rates from the Federal Reserve Bank of St. Louis.
Rates have decreased since this time last week, and fixed rates have gone down even more since this time last month.
Mortgage rates are low in general. The trend downward becomes 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 | 2.80% | 3.33% | 3.75% |
| 15-year fixed | 2.33% | 2.86% | 3.18% |
| 5/1 ARM | 2.87% | 3.28% | 3.40% |
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 Wednesday, October 28, 2020
| Mortgage type | Average rate today | Average rate last week | Average rate last month |
| 30-year fixed | 3.12% | 3.20% | 3.07% |
| 15-year fixed | 2.65% | 2.64% | 2.56% |
| 10-year fixed | 2.61% | 2.66% | 2.54% |
Rates from Bankrate.
The 30-year and 10-year refinance rates have decreased since last Wednesday. The 15-year rates have increased by just one basis point. Refinance rates have increased a bit since this time last month.
How do 30-year fixed rates work?
A 30-year fixed mortgage comes with a higher interest rate than fixed-rate loans with shorter terms. For a long time, 30-year fixed rates were higher than adjustable rates. But right now, 30-year fixed rates the better deal.
Your monthly payments will be lower for a 30-year term than for a shorter term, because you’re spreading payments out over a longer period of time.
You’ll pay more in interest with a 30-year term than you would for a 15-year or 10-year mortgage, because a) the rate is higher, and b) you’ll be paying interest for longer.
How do 15-year fixed rates work?
A 15-year fixed-rate mortgage is more affordable than a 30-year mortgage in the long run. The 15-year rates are lower, and you’ll pay off the loan in half the time.
Short-term costs will be higher, though. You’ll pay more per month than you would on a 30-year loan, because you’re fitting the same loan principal into a shorter amount of time.
How do 10-year fixed rates work?
A 10-year term isn’t very common for an initial mortgage, but you may refinance into a 10-year fixed mortgage.
The 10-year rates are similar to 15-year rates, but you’ll pay off the mortgage in a shorter amount of time.
How do 5/1 ARMs work?
With an adjustable-rate mortgage, your interest rate stays the same for the first few years, then changes periodically. For instance, a 5/1 ARM locks in your rate for the first five years, then your rate will increase or decrease once per year.
ARM rates are at all-time lows right now, but a fixed-rate mortgage is still the better deal. You could lock in a super low rate for the entire life of your loan rather than risk your rate increasing down the road.
You used to be able to get a lower rate during the intro rate period with an ARM than with a fixed-rate mortgage. But right now, fixed rates are lower.
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?
If your finances are in a good place, you may…
Read More: Today’s best mortgage and refinance rates: Wed, Oct 28, 2020 | Rates stay low