Current mortgage rates: Compare today’s rates and get quotes
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Mortgage interest rates can vary significantly between lenders and change daily based on market conditions. That’s why it’s crucial to compare offers from multiple lenders to find the most competitive rate you qualify for. The rate you lock in will directly impact your monthly mortgage payment and the total interest you pay over the life of your loan. Understanding the factors that influence mortgage rates can also help you make an informed decision on when to lock in your rate. We’ll walk you through these factors below.
Today’s mortgage rates
Here are today’s average mortgage rates from a few of our top lenders. You can use the toggles to get a rate more tailored to you.
Your individual rate may vary based on your location, lender and financial details.
Over the last year, mortgage rates have risen sharply as the Federal Reserve raised its benchmark short-term rate to combat inflation. While the Fed doesn’t directly control mortgage rates, its policies influence the interest rates lenders charge consumers.
When the Fed raises or lowers the target rate range, it influences interest rates across the economy. That’s because the federal funds rate serves as a benchmark for many other rates, including the prime rate used by banks to set rates on credit cards, auto loans and home equity lines of credit (HELOCs).
So the Fed’s target rate doesn’t directly dictate mortgage rates, but it does contribute to the overall interest rate environment. Mortgage rates also typically follow the direction of the 10-year Treasury yield, which is influenced by the federal funds rate and investor demand for longer-term bonds. When the Fed raises rates, it puts upward pressure on the 10-year Treasury and mortgage rates often follow suit.
In general, when the Fed is hiking rates to cool the economy, mortgages get more expensive for borrowers. When the Fed is cutting rates to stimulate growth, mortgages tend to get cheaper.
However, there’s usually a lag between Fed actions and mortgage rate changes, and market forces like inflation and economic uncertainty also play a key role.
Keeping an eye on Fed policy can help you gauge the direction of mortgage rates and decide when to lock in a rate. But keep in mind that the Fed’s moves are just one factor and that rates can change daily based on market conditions.
Now that inflation is cooling, economists expect rates to stabilize and potentially decline over the next year.
How lenders set mortgage rates
While market conditions provide the baseline for mortgage rates, the specific rate you’re offered will be determined by how your lender views your individual loan scenario. Lenders assess a variety of factors to calculate the level of risk they’re taking on with each borrower.
In general, the lowest rates go to borrowers deemed least likely to default on their mortgage based on their credit score, debt-to-income ratio, down payment and cash reserves. A high credit score, low debts, significant down payment and ample savings will typically equate to a lower rate.
Lenders also look at your loan characteristics, including the type (conventional, jumbo, government-backed), term (30-year, 15-year, adjustable-rate), and whether you’re buying a primary residence, second home or investment property. They set rates for each loan product based on how much risk they’re comfortable taking on and the types of borrowers they want to attract.
Another primary factor in the rates a lender sets is the lender’s business model, including its priorities and operating costs. For instance, an online-only lender with lower overhead can offer more competitive rates than a traditional bank. Lenders also have different appetites for certain loan types and may price them accordingly.
There are also times when lenders will offer temporary promotions or discounts to drum up business or respond to market changes. That’s why it’s so important to shop around and compare offers rather than accepting the first rate you’re quoted.
Keep in mind that lender practices are not always transparent and can vary, so the only way to know if you’re getting the best deal is to get rate quotes from multiple sources. Providing your detailed financial information for a pre-approval will give you the most accurate picture of the rates you qualify for.
How to find the best mortgage rate
While you can’t control what’s happening in the broader economy, there are steps you can take to position yourself for the best rate.
Improve your credit score
Lenders use your credit score to evaluate how reliably you’ve managed debt in the past. In general, borrowers with higher credit scores receive lower mortgage rates because they pose less risk to lenders.
Paying down debt, making on-time payments and correcting any errors on your credit report can help boost your credit score. Avoid applying for new credit or making large purchases on credit in the months before applying for a mortgage.
Save for a larger down payment
Making a larger down payment tells lenders that you’re financially stable and invested in the home, making you a less risky borrower. Plus, putting at least 20% down allows you to avoid paying private mortgage insurance (PMI), an additional monthly cost.
Compare offers from multiple lenders
Mortgage rates and terms can vary widely between lenders. Some lenders may offer better deals than others depending on their operating costs and desired borrower profiles. You could save thousands over the life of your loan by gathering quotes from a few lenders.
Many lenders allow you to get pre-qualified online with just some basic personal and financial information. Mortgage pre-qualification doesn’t affect your credit score, so it’s a good way to estimate your rate and compare offers without consequence.
Consider different loan types
The type of mortgage you choose will impact your interest rate. For instance, adjustable-rate mortgages tend to have lower initial rates than fixed-rate mortgages, but your rate can go up or down after a set period of time. Government-backed loans like FHA loans may have more lenient qualifying requirements but higher interest rates than conventional loans.
Think about how long you plan to stay in the home and whether a fixed or adjustable rate makes sense for your budget. Discuss your options with lenders to determine which loan type is best for your circumstances.
Negotiate with lenders
Once you’ve gathered a few mortgage offers, you may be able to negotiate a better deal. Share your competing offers with your preferred lenders and ask if they can beat the interest rate or closing costs. Lenders are often willing to compete for well-qualified borrowers.
Lock in your rate at the right time
Mortgage rates fluctuate daily, so timing your rate lock can impact your interest rate. Rate locks typically last 30 to 60 days. It’s generally wise to wait to lock until you have a signed purchase agreement and are within 45 days of closing.
However, if rates are rising quickly, you might consider locking in sooner to avoid potential increases before closing. On the other hand, if rates are trending down, you may want to float your rate and lock later. Your loan officer can offer advice based on current market conditions and your timeline.
Factors that influence your mortgage rate
Mortgage rates are influenced by a combination of economic conditions and your individual borrower profile. Here’s a closer look at the key factors that determine rates.
Economic conditions
Mortgage rates rise and fall based on market forces and the overall economy. When the economy is growing, rates tend to rise. During economic downturns, rates typically fall. Major economic news, like the monthly jobs report and Fed announcements on short-term interest rates, can fuel rate volatility.
Loan type
Different mortgage programs come with different rates. For instance, 30-year fixed mortgages usually have higher rates than 15-year loans because the lender is committing to the same rate for twice as long.
Adjustable-rate mortgages tend to have lower initial rates than fixed-rate mortgages, but your rate can go up or down over time.
Government-backed loans like FHA, VA and USDA loans sometimes have different rates than conventional mortgages. Jumbo loans on high-cost properties also tend to have unique rates.
Credit score
Lenders use your credit score to evaluate how likely you are to repay your mortgage. Higher credit scores generally translate to lower rates because these borrowers are seen as less risky.
Average rates are based on a FICO score of 740 or higher. With a score below 740, you could pay a higher rate or even have trouble qualifying for certain loan types. With a score of 760 or above, you may secure a slightly lower rate.
Down payment
In most cases, the more you put down on a home, the lower your mortgage rate will be. That’s because you’re seen as a less risky borrower when you have more equity in your home. Making a down payment of at least 20% also allows you to avoid paying private mortgage insurance.
Loan term
The length of your mortgage affects your interest rate. Shorter-term loans tend to have lower rates because the lender assumes less risk that your financial circumstances will change over a 15-year period versus 30 years.
However, a shorter term means a higher monthly payment. Choose a term that balances an affordable monthly payment with total interest costs over the life of the loan.
Loan amount
Larger mortgage balances tend to translate to higher interest rates, all else being equal. That’s because more money is at stake for the lender if you were to default. Jumbo mortgages on high-end properties usually have higher rates than conforming loans that meet Fannie Mae and Freddie Mac’s standards.
How to calculate your mortgage payment
Your mortgage rate directly impacts your monthly mortgage payment along with your loan amount and term. You can estimate your payment using a mortgage calculator.
Let’s say you’re taking out a $400,000 loan, using a 30-year fixed-rate mortgage. Here’s how your rate affects your payment. The figure below represent just the principal and interest, not any additional payments you’d typically make for taxes and insurance.
- 6% rate: $2,398 per month
- 7% rate: $2,661 per month
- 8% rate: $2,935 per month
In this scenario, a 1% point increase in your rate means a nearly $300 difference in your monthly mortgage payment. Over a 30-year term, that adds up to nearly $100,000 more in total interest.
Even a slight change in mortgage rates can have a big impact on your home buying budget and long-term costs. Use a mortgage payment calculator to determine how much home you can afford based on current rates and your down payment. Keep in mind that your total monthly payment also includes property taxes, homeowners insurance and potentially PMI or HOA fees.
Mortgage rate FAQ
What is a good mortgage rate?
A “good” mortgage rate varies based on market conditions and your finances. In general, a competitive rate is one that’s equal to or lower than the current national average for your loan type, credit score and down payment.
However, the best rate is ultimately the lowest one you’re offered after shopping around with multiple lenders. Even a small difference in rate can add up to big savings over a 30-year mortgage.
How can I avoid paying PMI?
To avoid paying private mortgage insurance on a conventional loan, you’ll need to either make a down payment of at least 20% or wait until you have 20% equity and then request PMI cancellation.
You can build equity faster by paying extra toward your principal balance each month or making improvements that increase your home’s value. Once you reach 22% equity, your lender is required to automatically cancel PMI.
How much does 1 point lower your interest rate?
Mortgage discount points are a way to “buy down” your interest rate by paying an extra fee at closing. One discount point typically lowers your rate by 0.25% and costs roughly 1% of the loan amount. On a $400,000 loan, each point would cost $4,000.
Determine how long it would take you to break even and start seeing savings before buying points. For instance, if a point lowers your payment by $64 per month and costs $4,000, it will take you about five years to recoup the cost and start saving money. If you don’t plan to stay in your home that long, buying points may not make sense.
What are the disadvantages of a 15-year mortgage?
The main disadvantage of a 15-year mortgage is the higher monthly payment compared to a 30-year loan. However, there are several advantages to a 15-year mortgage: You’ll secure a lower interest rate, pay off your balance twice as fast and build equity more quickly. Before choosing a 15-year loan, make sure your budget can comfortably handle the higher payment.
Methodology
Mortgage rate data comes from Freddie Mac, a government-sponsored leader in the housing industry that tracks average mortgage rates. We considered average rates for both the 30-year fixed rate mortgage and 15-year fixed rate mortgage. Freddie Mac rates exclude additional fees and points.
Average rates are reported weekly on Thursdays and updated accordingly.
This article is not intended to be financial advice. Before making significant financial decisions, you can review your options with a financial advisor or credit counselor.
