After several consecutive weeks of declines, mortgage rates are rising again. According to Freddie Mac, 30-year fixed mortgage rates rose 13 basis points week over week 6.85%and the 15-year fixed rate increased by eight basis points 6.00%.
Mortgage interest rates will likely remain high for the foreseeable future. At last week’s Federal Reserve meeting, Fed Chairman Jerome Powell announced that the central bank plans to cut the federal funds rate just twice in 2025 — down from the four forecast cuts announced at the meeting were mentioned in September. This means that mortgage interest rates will remain relatively high for some time to come.
Dig deeper: How the Federal Reserve’s interest rate decision affects mortgage rates
Here are the current mortgage rates, according to the latest Zillow data:
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30 years fixed: 6.73%
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20 years fixed: 6.78%
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15 years fixed: 6.14%
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5/1ARM: 6.81%
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7/1ARM: 6.75%
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30 years VA: 6.19%
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15 years VA: 5.57%
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5/1 VA: 6.38%
Please note that these are national averages, rounded to the nearest hundredth.
More information: 5 strategies to get the lowest mortgage interest rate
Here are the current mortgage refinance interest rates, according to the latest Zillow data:
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30 years fixed: 6.86%
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20 years fixed: 6.58%
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15 years fixed: 6.07%
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5/1ARM: 6.14%
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7/1ARM: 6.64%
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30 years VA: 6.19%
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15 years VA: 5.96%
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5/1 VA: 5.79%
As with the purchase mortgage interest rate, these are national averages that we have rounded to the nearest hundred. The refinancing rate can be higher than the mortgage rate, but as you can see above, that is not always the case.
Yahoo Finance has a free mortgage payment calculator that allows you to see how different mortgage interest rates affect your monthly payments.
Our calculator goes even deeper by including factors like homeowners insurance and property taxes in your calculation. You can even add private mortgage insurance costs and HOA dues if they apply to you. These monthly expenses, along with your mortgage’s principal and interest rate, will give you a realistic idea of ​​what your monthly payment could be.
A mortgage interest rate is a fee for borrowing money from your lender, expressed as a percentage. There are two basic types of mortgage rates: fixed and variable rates.
With a fixed-rate mortgage, your interest rate is fixed for the entire term of your loan. For example, if you take out a 30-year mortgage with an interest rate of 6%, your interest rate will remain at 6% for the entire 30 years. (Unless you refinance or sell the house.)
With an adjustable-rate mortgage, your rate stays the same for the first few years and then changes periodically. Let’s say you get a 5/1 ARM with an introductory rate of 6%. Your rate is 6% for the first five years, and then the rate increases or decreases once a year for the last 25 years of your term. Whether your rate goes up or down depends on several factors, such as the economy and the U.S. housing market.
At the beginning of your mortgage term, most of your monthly payment goes toward interest. As time goes by, less of your payment goes toward interest, and more goes toward the principal of the mortgage, or the amount you originally borrowed.
Dig deeper: Variable rate mortgage versus fixed rate mortgage: which one should you choose?
There are two categories that determine the mortgage interest rate: the interest rate that you can control and the interest rate that you cannot control.
What factors can you control? First, you can compare the best mortgage lenders to find the one that offers you the lowest interest rates and fees.
Second, lenders typically offer lower interest rates to people with higher credit scores, lower debt-to-income ratios (DTI), and sizable down payments. If you can save more or pay off debt before taking out a mortgage, a lender will likely give you a better interest rate.
What factors are out of your control? In short: the economy.
The list of ways the economy affects mortgage rates is long, but here are the basic details. When the economy – think of employment, for example – is struggling, mortgage rates go down to encourage borrowing, which helps stimulate the economy. When the economy is strong, mortgage rates go up to dampen spending.
All other factors being equal, mortgage refinance rates tend to be slightly higher than purchase rates. So don’t be surprised if your refinance rate turns out to be higher than you might have expected.
Two of the most common mortgage terms are 30-year and 15-year fixed-rate mortgages. Both fix your rate for the entire term of the loan.
A mortgage with a term of 30 years is popular because it has relatively low monthly costs. But the interest rate is higher than for shorter terms, and because you accrue interest for thirty years, you pay a lot of interest in the long term.
A 15-year mortgage can be great because it has a lower interest rate than longer terms, meaning you’ll pay less interest over the years. In addition, you will pay off your mortgage much faster. But your monthly costs will be higher because you pay off the same loan amount in half the time.
In short, 30-year mortgages are more affordable month to month, while 15-year mortgages are cheaper in the long run.
According to data from the Home Mortgage Disclosure Act (HMDA) of 2023, some of the banks with the lowest average mortgage rates are Citibank, Wells Fargo, and USAA. However, it’s a good idea to look for the best interest rates not only at banks, but also at credit unions and companies that specialize in mortgage loans.
Yes, 2.75% is a fantastic mortgage rate. You’re unlikely to get a 2.75% interest rate in today’s market unless you get an acceptable mortgage from a seller who locked that rate in 2020 or 2021, when rates were at an all-time low.
According to Freddie Mac, the lowest 30-year fixed mortgage rate ever was 2.65%. This was the national average in January 2021. It is extremely unlikely that interest rates will fall this low again anytime soon.
Some experts say it’s worth it to refinance if you can get an interest rate that’s 2% lower than your current mortgage rate. Others say 1% is the magic number. It all depends on what your financial goals are for refinancing and when your breakeven point would be after paying the closing costs for refinancing.
