Current Mortgage Rates

Buyers hoping for lower rates got a bit of good news this week: the benchmark mortgage rate ticked lower once again.

The average rate on a 30-year fixed-rate loan edged down to 6.35%, according to Freddie Mac’s weekly rate survey. That’s a decrease of 0.04 percentage points from a week ago.

The average rate on a 15-year fixed-rate mortgage was virtually unchanged this week, decreasing by just 0.01 percentage point to 5.75%.

This week’s interest rate movement came amid better-than-expected news on the economic front. Consumer prices decreased more than anticipated in April, dropping below 5% and recording the lowest year-over-year increase since April 2021.

If inflation continues to decelerate, it would “bode well for the trajectory of mortgage rates over the long term,” Sam Khater, Freddie Mac’s chief economist, said in a statement.

If you are offered a rate that is higher than you expect, make sure to ask why, and compare offers from multiple lenders. (Money’s list of the Best Mortgage Lenders is a good place to start. Homeowners considering a mortgage refinance should consider our list of the Best Mortgage Refinance Companies.)

How are mortgage rates impacting home sales?
What credit score do mortgage lenders use?
What is a good interest rate on a mortgage?
How are mortgage rates determined?
How to get the best mortgage rate
Difference between APR and interest rate

What’s been happening in the housing market

Here’s a round-up of the latest news in housing and real estate:

The housing market may be slowing down, but you wouldn’t know it in some regions. Reasonably priced homes in desirable locations, Redfin says, are selling in just two weeks or less, harkening back to unpleasant memories of the highly competitive pandemic market.
Homeowners seem to be getting used to the idea of 6%+ mortgage rates. The number of refinance applications has hit its highest level since September 2022, despite the low number of owners who could benefit from a refi at current interest rates.
The mortgage industry isn’t happy with the Federal Reserve’s latest rate hike. The recent 0.25 percentage point increase in the federal fund rate was called “unnecessary” by Lawrence Yun, chief economist for the National Association of Realtors, at a forum discussing the housing market.

Mortgage interest rates for the week ending May 11, 2023

Mortgage rate trends

Money

This week’s mortgage rates were lower

The current rate for a 30-year fixed-rate mortgage is 6.35%, down by 0.04 percentage points from a week ago. Last year, the 30-year rate averaged 5.30%.
The current rate for a 15-year fixed-rate mortgage is 5.75%, a decrease of 0.01 percentage points higher over the past week. The 15-year rate averaged 4.48% a year ago this week.

For its weekly rate analysis, Freddie Mac looks at rates offered for the week ending each Thursday. The average rate represents roughly the rate a borrower with strong credit and a 20% down payment can expect to see when applying for a mortgage right now. Borrowers with lower credit scores will generally be offered higher rates.

Money’s average mortgage rates for May 11, 2023

Mortgage rates were down yesterday for most loan types, ending a four-day streak of increases. The average rate on a 30-year fixed-rate loan dropped to 7.36%, down by 0.172 percentage points.

The only exception was the rate on the 5/6 adjustable-rate loan, which ticked up by 0.011 percentage points.

The latest rate on a 30-year fixed-rate mortgage is 7.36% ⇓ 0.172%
The latest rate on a 15-year fixed-rate mortgage is 6.182% ⇓ 0.087%
The latest rate on a 5/6 ARM is 7.048%. ⇑ 0.011%
The latest rate on a 7/6 ARM is 7.14%. ⇓ 0.08%
The latest rate on a 10/6 ARM is 7.154%. ⇓ 0.124%

Money’s daily mortgage rates are a national average and reflect what a borrower with a 20% down payment, no points paid and a 700 credit score — roughly the national average score — might pay if he or she applied for a home loan right now. Each day’s rates are based on the average rate 8,000 lenders offered to applicants the previous business day. Your individual rate will vary depending on your location, lender and financial details.

These rates are different from Freddie Mac’s rates, which represent a weekly average based on a survey of quoted rates offered to borrowers with strong credit, a 20% down payment and discounts for points paid.

Today’s mortgage rates and your monthly payment

The rate on your mortgage can make a big difference in how much home you can afford and the size of your monthly payments.

If you bought a $250,000 home and made a 20% down payment — $50,000 — you would end up with a starting loan balance of $200,000. On a $200,000 home loan with a fixed rate for 30 years:

At 3% interest rate = $843 in monthly payments (not including taxes, insurance, or HOA fees)
At 4% interest rate = $955 in monthly payments (not including taxes, insurance, or HOA fees)
At 6% interest rate = $1,199 in monthly payments (not including taxes, insurance, or HOA fees)
At 8% interest rate = $1,468 in monthly payments (not including taxes, insurance, or HOA fees)

You can experiment with a mortgage calculator to find out how much a lower rate or other changes could impact what you pay. A home affordability calculator can also give you an estimate of the maximum loan amount you may qualify for based on your income, debt-to-income ratio, mortgage interest rate and other variables. The Consumer Financial Protection Bureau can also provide a range of rates being offered by lenders in each state.

There are other factors that determine how much you’ll pay each month, which are detailed in the loan disclosures provided by your lender. These factors include:

Loan Term:

Choosing a 15-year mortgage instead of a 30-year mortgage will increase monthly mortgage payments but reduce the amount of interest paid throughout the life of the loan.

Fixed vs. ARM:

The mortgage rates on adjustable-rate mortgages reset regularly (after an introductory period) and monthly payments change with it. With a fixed-rate loan payments remain the same throughout the life of the loan.

Taxes, HOA Fees, Insurance:

Homeowners’ insurance premiums, property taxes and homeowners association fees are often bundled into your monthly mortgage payment. Check with your real estate agent to get an estimate of these costs.

Mortgage Insurance:

Mortgage insurance costs up to 1% of your home loan’s value per year. Borrowers with conventional loans can avoid private mortgage insurance by making a 20% down payment or reaching 20% home equity. FHA borrowers pay a mortgage insurance premium throughout the life of the loan.

Closing Costs:

Some buyers finance their new home’s closing costs into the loan, which adds to the debt and increases monthly payments. Closing costs generally run between 2% and 5% and the sale prices.

Current Mortgage Rates Guide

Mortgage rates are an important part of the homeownership puzzle. Our guide answers some of the most common questions surrounding mortgage rates and how they affect the housing market.

How are mortgage rates impacting home sales?

Home sales edged lower in March, the most recent month where data is available, as homebuyers took a step back from the housing market.

Sales of existing homes, which include closed transactions for single-family homes, condos, townhomes and co-ops, were 2.4% lower compared to the previous month, according to the National Association of Realtors.

On a seasonally adjusted basis, the number of annual home sales dropped to 4.44 million units as a result of the downturn.

The slide coincides with the uptick in mortgage rates that occurred in February when many of the sales contracts are likely to have been signed.

“Home sales are trying to recover and are highly sensitive to changes in mortgage rates,” said Lawrence Yun, NAR’s chief economist, in a press release.

Compared to March 2022, home sales were down by 22%, highlighting the drastic impact that higher rates have had on the housing market.

On a more positive note, unsold inventory ticked up to 980,000 homes, which represents a 2.6-month supply at the current pace of sales.

What credit score do mortgage lenders use?

Most mortgage lenders use your FICO score — a credit score created by the Fair Isaac Corporation — to determine your loan eligibility.

Lenders will request a merged credit report that combines information from all three of the major credit reporting bureaus — Experian, Transunion and Equifax. This report will also contain your FICO score as reported by each credit agency.

Each credit bureau will have a different FICO score and your lender will typically use the middle score when evaluating your creditworthiness. If you are applying for a mortgage with a partner, the lender can base their decision on the average credit score of both borrowers.

Lenders may also use a more thorough residential mortgage credit report that includes more detailed information that won’t appear in your standard reports, such as employment history and current salary.

What is a good interest rate on a mortgage?

A good mortgage rate is one where you can comfortably afford the monthly payments and where the other loan details fit your needs. Consider details such as the loan type (i.e. whether the rate is fixed or adjustable), length of the loan, origination and lender fees and other costs. Note that refinance rates tend to be higher than purchase rates for a primary residence.

That said, today’s mortgage rates are near historic lows. Freddie Mac’s average rates show what a borrower with a 20% down payment and a strong credit score might be able to get if they were to speak to a lender this week.

If you are making a smaller down payment, have a lower credit score or are taking out a non-conforming (or jumbo loan) mortgage, you may see a higher rate. It’s also worth noting that jumbo loans have a higher down payment requirement than conventional loans. Money’s daily mortgage rate data shows borrowers with 700 credit scores are finding rates averaging above 7% right now.

How are mortgage rates determined?

Lenders use a number of factors to set rates each day. Every lender’s formula will be a little different but will factor in the current federal funds rate (a short-term rate set by the Federal Reserve), competitor rates and even how much staff they have available to underwrite loans. Your individual qualifications will also impact the rate you are offered.

In general, rates track the yields on the 10-year Treasury note. Average mortgage rates are usually about 1.8 percentage points higher than the yield on the 10-year note.

Yields matter because lenders don’t keep the mortgage they originate on their books for long. Instead, in order to free up money to keep originating more loans, lenders sell their mortgages to entities like Freddie Mac and Fannie Mae. These mortgages are then packaged into what are called mortgage-backed securities and sold to investors. Investors will only buy if they can earn a bit more than they can on the government notes.

Your individual qualifications will also impact the rate you are offered, as will the loan-to-value ratio (LTV). The LTV of your property is one way lenders assess the amount of risk posed by approving a loan and is calculated by dividing the maximum loan amount you qualify for by the appraised home value.

How to get the best mortgage rate

Shopping around for the best mortgage rate can mean a lower rate and big savings. On average, borrowers who get a rate quote from one additional lender save $600 over the life of the loan, according to Freddie Mac. That number goes up to $1,200 if you get three quotes. A larger down payment amount will also result in a lower interest rate.

The best mortgage lender for you will be the one that can give you the lowest rate and the terms you want. Your local bank or credit union is one place to look. Online lenders have expanded their market share over the past decade and promise to get you pre-approved within minutes.

Shop around to compare loan options, rates and terms, and make sure your lender has the type of mortgage you need. Not all lenders write FHA loans, USDA-backed mortgages or VA loans, for example. If you’re not sure about a lender’s credentials, ask for its NMLS number and search for online reviews.

The difference between the interest rate and APR on a mortgage?

Borrowers often mix up interest rates and annual percentage rates (APR). That’s understandable since both rates refer to how much you’ll pay for the loan. While similar in nature, the terms are not synonymous.

An interest rate is what a lender will charge on the principal amount being borrowed. Think of it as the basic cost of borrowing money for a home purchase.

An APR represents the total cost of borrowing money and includes the interest rate plus any fees, associated with generating the loan. The APR will always be higher than the interest rate.

For example, a $300,000 loan with a 3.1% interest rate and $2,100 worth of fees would have an APR of 3.169%.

When comparing rates from different lenders, look at both the APR and the interest rate. The APR will represent the true cost over the full term of the loan, but you’ll also need to consider what you’re able to pay upfront versus over time.

Current mortgage rates FAQ

When will mortgage rates go down?

Mortgage rates have been trending lower after hitting a high of 7.08% last November. While most experts believe rates will eventually move into the 5% range, borrowers should expect them to remain between 6% and 7% for the foreseeable future.

Should I lock in my mortgage rate today?

Yes. Obtaining a mortgage rate lock as soon as you have an accepted offer on a house (and find a rate you’re comfortable with) can help guarantee a competitive rate and affordable monthly payments on your loan. A rate lock means that your lender will guarantee your agreed-upon rate, typically for 45 to 60 days, regardless of market fluctuations. Ask your lender about “float-down” options as well, which allow you to snag a lower interest rate if average rates drop during your lock period. This option usually comes with a fee that ranges between 0.50% and 1% of the loan amount.

What are discount points on a mortgage?

Discount points are a way for borrowers to reduce the interest they pay on a mortgage. By buying points, you’re basically prepaying some of the interest the bank charges on the loan. In return, you get a lower interest rate, which can lead to lower monthly payments and additional savings on the cost of the loan over its full term. Each mortgage point normally costs 1% of your loan amount and could shave up to 0.25 percentage points off your interest rate.

Why is my mortgage rate higher than average?

You may have a higher-than-average mortgage rate for a number of reasons. Credit scores, loan terms, interest rate types (fixed or adjustable), down payment size, home location and loan size will all affect the rate offered to individual home shoppers. One of the best ways to lower your rate is to improve your credit score.

Different mortgage lenders offer different rates. It’s estimated that about half of all buyers only look at one lender, primarily because they tend to trust referrals from their real estate agent. But shopping around for a lender will help you snag the lowest rate out there.

Should I refinance my mortgage when interest rates drop?

Refinancing your mortgage when interest rates drop could make sense if it provides a tangible benefit; be it lower monthly payments or a shorter loan term. Determining whether now is the right time to refinance your home loan involves a number of factors. Most experts say you should consider refinancing if your current mortgage rate exceeds today’s rates by at least 0.50 percentage points. But since there are fees involved, it doesn’t make sense to refinance every time rates inch down.

Summary of current mortgage rates

This week’s mortgage rates were lower

The current rate for a 30-year fixed-rate mortgage is 6.35%, down by 0.04 percentage points from a week ago. Last year, the 30-year rate averaged 5.30%.
The current rate for a 15-year fixed-rate mortgage is 5.75%, a decrease of 0.01 percentage points higher over the past week. The 15-year rate averaged 4.48% a year ago this week.