Buying a home is never easy or cheap. And with mortgage rates around 7%, potential buyers are finding it even more challenging to afford a home purchase.
Average mortgage rates change daily in response to a range of economic conditions and market expectations. The rate you end up with also depends on more specific factors, like your credit score, income, loan type and lender.
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.
Current mortgage and refinance rates
What are today’s mortgage rates?
| Product | Interest rate | APR |
|---|---|---|
| 10/1 ARM | 7.03% | 7.85% |
| 7/1 ARM | 6.70% | 7.84% |
| 30-year fixed-rate FHA | 6.86% | 6.91% |
| 5/1 ARM jumbo | 6.41% | 7.64% |
| 30-year fixed-rate VA | 7.06% | 7.10% |
| 15-year fixed-rate | 6.41% | 6.49% |
| 7/1 ARM jumbo | 6.52% | 7.64% |
| 30-year fixed-rate jumbo | 7.02% | 7.07% |
| 20-year fixed-rate | 6.71% | 6.76% |
| 15-year fixed-rate jumbo | 6.57% | 6.64% |
| 5/1 ARM | 6.51% | 7.79% |
| 30-year fixed-rate | 6.92% | 6.97% |
| 5/1 ARM refinance | 6.39% | 7.68% |
| 20-year fixed-rate refinance | 6.72% | 6.77% |
| 30-year fixed-rate refinance | 6.93% | 6.98% |
| 30-year fixed-rate FHA refinance | 6.90% | 6.95% |
| 5/1 ARM jumbo refinance | 6.32% | 7.63% |
| 7/1 ARM jumbo refinance | 6.44% | 7.60% |
| 7/1 ARM refinance | 6.62% | 7.69% |
| 30-year fixed-rate VA refinance | 7.75% | 7.77% |
| 10/1 ARM refinance | 7.06% | 7.86% |
| 30-year fixed-rate jumbo refinance | 7.01% | 7.05% |
| 15-year fixed-rate jumbo refinance | 6.65% | 6.73% |
| 15-year fixed-rate refinance | 6.45% | 6.52% |
We use information collected by Bankrate, which is owned by the same parent company as CNET, to track daily mortgage rate trends. The above table summarizes the average rates offered by lenders across the country.
Recent mortgage rate news
Aside from daily and weekly fluctuations, mortgage rates have spent most of this year around 7%. Changing economic data, geopolitical risks and monetary policy adjustments from the Federal Reserve all affect the percentage of interest charged on a home loan. In recent months, sticky inflation and uncertainty about the economy have increased mortgage rate volatility.
The economy is finally starting to cool down. The most recent Consumer Price Index shows inflation at 3% year over year in June. That should trigger mortgage rates to move lower in the near term, according to Melissa Cohn, regional vice president of William Raveis Mortgage and a member of CNET Money’s expert review board.
Experts don’t expect rates to dramatically decrease just yet. A gradual decline over the next year is more likely.
Are mortgage rates going down this year?
Many homebuyers expected mortgage rates to fall this year. Toward the end of 2023, the Federal Reserve signaled it was prepared to start making cuts to its key short-term interest rate, the federal funds rate, by the spring.
However, following several months of disappointing inflation statistics, experts now predict a slower rate-cutting path. Now, it’s likely we’ll see just one or two cuts by the Fed, but not until later this fall.
“If inflation continues to moderate and unemployment goes up, the Fed has an opportunity to cut one time before the election and potentially again in December,” said Jeb Smith, a real estate agent and a member of CNET Money’s ERB.
While mortgage rates are still expected to ease, the central bank’s actions will depend on incoming economic data. Any shift or sign of price growth could send mortgage rates up again and further push out the Fed’s plans to cut rates.
Most economic forecasts call for the average rate on a 30-year fixed mortgage to end the year around 6.5%. That’s still high compared to the ultra-low mortgage rates of around 2% and 3% that we saw prior to 2022, but we’re unlikely to see those rock-bottom rates again.
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 over the course of 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.
While 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 -- potentially a lot more over the course of a 30-year loan -- due to interest charges.
You’ll have to budget for closing costs to close the mortgage, which add up to tens of thousands of dollars in some states.
Shopping for mortgage rates
Mortgage lenders often publish their rates for different mortgage types, which can help you research and narrow down where you’ll apply for preapproval. But 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. However, 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 6.7%.
