Homebuying is rarely cheap or easy. And when mortgage rates are high, it’s even harder to get your foot in the door of a new house.
Factors like inflation, monetary policy and the overall health of the economy can influence whether mortgage rates move up and down on a daily basis. The rate you qualify for will also depend on more specific factors, like your credit score, loan type and the lender you choose.
If you’re in the market for a new house this year, make sure to compare multiple loan offers from different lenders to find the best rate for you.
What are today’s mortgage rates?
| Product | Interest rate | APR |
|---|---|---|
| 5/1 ARM jumbo | 5.70% | 6.85% |
| 30-year fixed-rate jumbo | 6.66% | 6.71% |
| 30-year fixed-rate | 6.55% | 6.60% |
| 10/1 ARM | 6.38% | 6.91% |
| 7/1 ARM jumbo | 5.92% | 6.89% |
| 5/1 ARM | 6.13% | 7.08% |
| 15-year fixed-rate | 5.83% | 5.91% |
| 7/1 ARM | 6.40% | 7.21% |
| 30-year fixed-rate FHA | 6.30% | 6.35% |
| 30-year fixed-rate VA | 6.39% | 6.44% |
| 15-year fixed-rate jumbo | 6.03% | 6.10% |
| 20-year fixed-rate | 6.33% | 6.39% |
| 10/1 ARM refinance | 6.33% | 6.88% |
| 20-year fixed-rate refinance | 6.36% | 6.42% |
| 7/1 ARM jumbo refinance | 5.85% | 6.84% |
| 5/1 ARM refinance | 5.92% | 6.83% |
| 15-year fixed-rate refinance | 5.88% | 5.96% |
| 30-year fixed-rate VA refinance | 6.29% | 6.33% |
| 30-year fixed-rate jumbo refinance | 6.49% | 6.54% |
| 7/1 ARM refinance | 6.23% | 6.96% |
| 30-year fixed-rate FHA refinance | 6.38% | 6.43% |
| 30-year fixed-rate refinance | 6.54% | 6.59% |
| 15-year fixed-rate jumbo refinance | 6.13% | 6.21% |
| 5/1 ARM jumbo refinance | 5.71% | 6.85% |
Updated on October 18, 2024.
We use information collected by Bankrate to track daily mortgage rate trends. The above table summarizes the average rates offered by lenders across the country.
Recent mortgage rate news
Starting in early 2022, home loan rates began to surge as the Federal Reserve aggressively hiked interest rates to bring down inflation. Now that inflation appears to be under control, the central bank has started to cut interest rates.
While the Fed doesn’t directly control mortgage rates, its policy decisions can influence whether they increase or decrease. Mortgage rate movement is also heavily contingent on economic and labor data, which give investors hints about the trajectory of monetary policy.
In late summer, mortgage rates fell significantly in response to weak labor data and an impending rate cut from the Fed on Sept. 18. However, rates quickly rebounded in October as markets digested some stronger-than-expected economic data, which could impact the pace at which the Fed cuts interest rates this year and next.
Without an impending recession, the central bank is likely to move gradually, lowering interest rates by 0.25% at a time over the next 18 months.
Are mortgage rates going down this year?
While mortgage rates have increased quite recently, they’re already significantly lower than last year’s peaks of around 8% and higher.
As the Fed cuts interest rates, the cost of borrowing will also decline. But experts say it will happen slowly, and there will be some volatility along the way. It’s possible mortgage rates will move toward 6% by the end of the year, but that’s not set in stone.
Any shift or sign of price growth could send mortgage rates up again and delay the central bank’s plans to reduce rates further. The opposite is also true: If unemployment spikes, the Fed could be forced to make larger and/or more frequent rate cuts to avoid a recession. Such a move would put downward pressure on mortgage rates, said Odeta Kushi, deputy chief economist at First American Financial Corporation.
It’s impossible to know exactly how far mortgage rates will fall. Ultimately, experts say a return to the sub-3% rates common during the pandemic is unlikely.
How to get the best mortgage rate
You can’t control the broader macroeconomic factors driving mortgage rates, but there are some ways to get a lower personal rate. Even a difference of a few tenths of a percentage point can shave off thousands of dollars from what you’ll pay for your home loan.
- Build your credit score: A higher credit score can help you qualify for a lower interest rate. Aim to pay bills on time, and keep your credit card balances below 30% of your credit limit. Check your credit report regularly for errors.
- Save for a bigger down payment: A larger down payment lowers the loan amount you need to borrow, making you less risky to the lender, which could help you become eligible for a lower interest rate.
- Consider a shorter-term loan: Shorter home loan terms (like a 15-year or 10-year mortgage) typically come with lower interest rates than longer-term loans (like 30-year mortgages). However, the monthly payments will be higher.
- Shop around for mortgage lenders: Compare rates, terms and loan estimates from at least three different mortgage lenders. If one lender offers you a lower interest rate and another offers a better deal on closing costs, you can use that to negotiate.
What to know about mortgages
Your mortgage rate is the percentage of interest a lender charges for providing the loan you need to buy a home. Multiple factors determine the rate you’re offered. Some are specific to you and your financial situation, and others are influenced by macro market conditions, such as inflation, the Fed’s monetary policy and the overall demand for loans.
The broader economy plays a key role in mortgage rates, some key factors under your control affect your rate:
- Your credit score: Lenders offer the lowest available rates to borrowers with excellent credit scores of 740 and above. Because lower credit scores are deemed riskier, lenders charge higher interest rates to compensate.
- The size of your loan: The size of your loan can impact the interest rate you qualify for.
- The loan term: The most common mortgage is a 30-year fixed-rate loan, which spreads your payments over three decades. Shorter loans, such as 15-year mortgages, typically have lower rates but larger monthly payments.
- The loan type: The type of mortgage you choose impacts your interest rate. Some loans have a fixed rate for the entire life of the loan. Others have an adjustable rate that have lower rates at the start of the loan but could result in higher payments down the road.
The annual percentage rate, or APR, is usually higher than your loan’s interest rate and represents the true cost of your loan. It includes the interest rate and other costs such as lender fees or prepaid points. So, while you might be tempted with an offer for “interest rates as low as 6.5%,” look at the APR instead to see how much you’re really paying.
Most mortgage loans are based on an amortization schedule: You’ll pay the same amount each month for the life of the loan, but the generated interest will be highest at the beginning and will taper as the principal (the amount you borrowed) decreases. Your amortization schedule will show how much of your monthly payment goes to interest and how much pays down the principal. Most borrowers find a fixed, predictable monthly payment more convenient.
Pros and cons of getting a mortgage
Pros
You’ll build equity in the property instead of paying rent with no ownership stake.
You’ll build your credit by making on-time payments.
You’ll be able to deduct the interest on the mortgage on your annual tax bill.
Cons
You’ll take on a sizable chunk of debt.
You’ll pay more than the list price due to interest charges; potentially a lot more over the course of a 30-year loan.
You’ll have to budget for closing costs to close the mortgage, which add up to tens of thousands of dollars in some states.
Mortgage lenders often publish their rates for different mortgage types, which can help you research and narrow down where you’ll apply for preapproval. An advertised rate isn’t always the rate you’ll get. When shopping for a new mortgage, it’s important to compare not just mortgage rates but also closing costs and any other fees associated with the loan. Experts recommend shopping around and reaching out to multiple lenders for quotes and not rushing the process.
How to refinance your mortgage
When you refinance your mortgage, you swap out your current home loan for a new one, ideally with better terms.
Determine whether you want to do a cash-out refinance or a rate-and-term refinance. With a cash-out refinance, you take out a new mortgage that’s bigger than your existing one and pocket the difference as cash. With a basic rate-and-term refinance, you take out a loan the same size as your existing mortgage, just with a new interest rate and/or loan term.
The refinancing process will feel the same as securing your existing mortgage. You’ll need to choose a lender, apply for the loan, wait for the underwriting process to conclude, have your home appraised and close on your new loan. Just like with your original mortgage, you’ll need to pay another set of closing costs when you refinance.
FAQs
Most conventional loans require a credit score of 620 or higher, but Federal Housing Administration and other loan types may accommodate borrowers with scores as low as 500, depending on the lender.
Your credit score isn’t the only factor that impacts your mortgage rate. Lenders will also look at your debt-to-income ratio to assess your level of risk based on the other debts you’re paying back such as student loans, car payments and credit cards. Additionally, your loan-to-value ratio plays a key role in your mortgage rate.
A rate lock means your interest rate won’t change between the offer and the time you close on the house. For example, if you lock in a rate at 6.5% today and your lender’s rates climb to 7.25% over the next 30 days, you’ll get the lower rate. A common rate-lock period is 45 days, so you’re still on a tight timeline. Be sure to ask lenders about rate lock windows and the cost to secure your rate.
Mortgage rates are always changing, and it’s impossible to predict the market. Most experts think mortgage rates will gradually decline over the course of 2024. Fannie Mae predicts the average rate for a 30-year fixed mortgage will end the year at 6.2%.