15-Year Mortgages Look Sweet Right Now


Mortgage rates remain relatively low — for now — but the gap between 15-year and 30-year fixed mortgage rates are widening — and that’s good news if you’re in the market for a 15-year mortgage. Here’s how low you can go when it comes to 15-year fixed-mortgage rates.

First, some basics. A 15-year mortgage is a fixed-rate home mortgage loan where the interest rate remains the same for the life of the loan. For instance, on a 15-year, $300,000 mortgage with an interest rate of 5.75%, the monthly mortgage bill clocks in at $3,097.90. That’s the same interest rate over the entire 15 years of the loan.

Fifteen-year mortgages have their pluses and minuses. If you can handle the higher mortgage payment, you’ll save big on interest over the course of the loan, when compared to the traditional 30-year fixed-rate mortgage. Typically, interest rates are lower on 15-year home loans, too.

On the downside, 15-year mortgages are tougher to get (creditors take a much closer look at loan applicants), and the monthly payments are significantly higher with 15-year loans, leaving less wiggle room for financial calamities like the loss of a job or a debilitating illness. In addition, the mortgage tax deduction on a 15-year loan is lower than on a 30-year loan.

But if you’re in the market for a 15-year mortgage loan, and have weighed the pros and cons and decided to go ahead, now might be a great time to pull the trigger.

Let’s take a look at the numbers. BankingMyWay’s Weekly Mortgage Rate Tracker has 15-year fixed-rate mortgages at 4.47%, and 30-year fixed mortgages at 5.095% this week. That’s a spread of 63 basis points.

Let’s widen the lens a bit and look at where mortgage rates have been over the past year. According to Freddie Mac’s most recent Primary Mortgage Market Survey, the average 30-year fixed-rate mortgage currently stands at 5.05%. A year ago at this time, the average 30-year fixed-rate mortgage stood at 5.07%.

So what about 15-year fixed-rate mortgages? According to the same Freddie Mac (Stock Symbol: FRE) survey, the current average 15-year fixed-rate mortgage interest rate averaged 4.4% for the last week of February. But a year ago, that average rate stood at 4.68%.

So here we go. Interest rates on 30-year mortgages have pretty much stayed the same, based on the Freddie Mac numbers, but 15-year fixed-rate mortgage rates declined by about 0.28 percentage points.

Use the simple BankingMyWay Fixed Mortgage Loan Calculator to figure out how much you can save from the widening interest rate gap between 15-year loans and 30-year loans.

Depending on your financial situations and long-term goals, it could be substantial.

—For the best rates on loans, bank accounts and credit cards, enter your ZIP code at BankingMyWay.com.

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