Buying a home has never been easy or cheap, and mortgage interest rates of around 7% are making it even more difficult for would-be buyers to finance a home purchase.
The average mortgage interest rate changes daily depending on different economic conditions and market expectations. Your final interest rate will also depend on more specific factors like your credit score, income, loan type, and lender.
If you're looking to buy a new home this year, make sure you compare multiple loan offers from different lenders to find the best interest rate for you.
Current Mortgage and Refinance Rates
What are mortgage rates today?
Purchase Refinance
Product Interest Rate APR 30-Year Fixed Jumbo 7.04% 7.09% 7/1 ARM 6.78% 7.85% 5/1 ARM Jumbo 6.51% 7.62% 30-Year Fixed FHA 6.74% 6.79% 20-Year Fixed 6.65% 6.71% 15-Year Fixed Jumbo 6.55% 6.63% 30-Year Fixed VA 6.79% 6.83% 10/1 ARM 7.11% 7.72% 15-Year Fixed 6.41% 6.49% 30-Year Fixed 6.94% 6.99% 7/1 ARM Jumbo 6.59% 7.63% 5/1 ARM 6.59% 7.81% 5/1 ARM Jumbo Refinance 6.42% 7.60% 20-Year Fixed Rate Refinance 6.65% 6.71% 30-Year Fixed Rate Jumbo Refinance 7.00% 7.05% 5/1 ARM Refinance 6.47% 7.66% 10/1 ARM Refinance 7.16% 7.70% 7/1 ARM Jumbo Refinance 6.50% 7.58% 30-Year Fixed Rate FHA Refinance 6.73% 6.77% 15-Year Fixed Rate Jumbo Refinance 6.64% 6.72% 30-Year Fixed Rate VA Refinance 6.79% 6.84% 30-Year Fixed Rate Refinance 6.94% 6.99% 7/1 ARM Refinance 6.75% 7.69% 15-Year Fixed Rate Refinance 6.46% 6.54%
Last updated on July 12, 2024.
We use information collected by Bankrate, which is owned by the same parent company as CNET, to track daily mortgage rate trends, and the table above summarizes the average rates offered by lenders across the country.
Recent mortgage interest rate news
Excluding daily and weekly fluctuations, mortgage interest rates have remained around 7% for most of this year. Changing economic data, geopolitical risks, and monetary policy adjustments by the Federal Reserve all affect the interest rates charged on mortgages. In recent months, high inflation and economic uncertainty have led to increased volatility in mortgage rates.
The economy is finally starting to stabilize. The latest Consumer Price Index showed inflation at 3% year-over-year in June. That should encourage lower mortgage rates in the short term, according to Melissa Kohn, regional vice president at William LaVais Mortgage and a member of CNET Money's expert review panel.
Experts don't expect rates to fall dramatically anytime soon, instead instead seeing a gradual decline over the next year.
Will mortgage rates fall this year?
Many homebuyers had been expecting mortgage rates to fall this year, and the Federal Reserve has signaled it is ready to start cutting its key short-term interest rate, the federal funds rate, by the spring as it looks to end 2023.
But after months of lackluster inflation data, experts expect the pace of rate cuts to slow. For now, the Fed is likely to cut rates just once or twice, but not until this fall.
“If inflation continues to moderate and unemployment rises, the Fed has an opportunity to cut rates once before the election and perhaps again in December,” said Jeb Smith, a real estate broker and ERB member at CNET Money.
Mortgage rates are expected to continue to fall, but the central bank's actions will depend on upcoming economic data. Any signs of price growth or changes could send mortgage rates rising again and further delay the Fed's rate cut plans.
Most economic forecasts expect the average interest rate on a 30-year fixed mortgage to be around 6.5% by the end of the year. That's still higher than the ultra-low rates of around 2% to 3% seen before 2022, but it's unlikely we'll see such rock-bottom rates again.
How to get the best mortgage rate
While you can't control the broad macroeconomic factors that drive mortgage rates, there are ways you can lower your personal interest rate, and even a difference of just a few tenths of a percentage point can reduce the amount you pay by thousands of dollars over the life of your mortgage.
Build your credit score: The higher your credit score, the more likely you are to qualify for a lower interest rate. Pay your bills on time and keep your credit card balances below 30% of your credit limit. Regularly check your credit report for errors. Save for a larger down payment: A larger down payment reduces the loan amount you need to take out, reducing your risk to the lender and making you more likely to qualify for a lower interest rate. Consider a shorter-term loan: A shorter mortgage term (such as a 15- or 10-year mortgage) usually has a lower interest rate than a longer-term loan (such as a 30-year mortgage). However, your monthly payments will be higher. Compare mortgage lenders: Compare interest rates, terms, and loan quotes from at least three different mortgage lenders. If one lender offers a low interest rate and another lender offers better terms on closing costs, you can use that to negotiate.
What you need to know about mortgages
What are mortgage interest rates?
A mortgage interest rate is the interest rate that lenders charge you to provide the loan you need to purchase a home. The interest rate you're offered is determined by several factors, some of which are specific to you and your financial situation, while others are influenced by macro market conditions like inflation, the Fed's monetary policy, and overall demand for loans.
What factors determine mortgage interest rates?
While the overall economy plays a major role in mortgage interest rates, there are also some important factors you can control that affect rates.
Credit score: Lenders offer the lowest available interest rates to borrowers with a good credit score of 740 or above. A lower credit score means you're considered a higher risk, so lenders will charge a higher interest rate to compensate. Loan amount: The amount of your loan can affect the rate you qualify for. Loan term: The most common mortgage is a 30-year fixed-rate loan, where you spread your payments over 30 years. Shorter loans, such as a 15-year mortgage, usually have lower interest rates but larger monthly payments. Loan type: Your interest rate will change depending on the type of mortgage you choose. Some loans have a fixed interest rate for the life of your loan. Other loans have adjustable-rate rates, which mean a lower interest rate at the start of your loan but higher payments down the line.
What is the annual interest rate on your mortgage?
The Annual Percentage Rate (APR) is usually higher than the interest rate on a loan and represents the true cost of a loan. The rate includes interest and other costs, such as lender fees and prepaid points. So while you might be attracted by an offer that says “interest rates as low as 6.5%,” check the APR to see what you'll actually pay.
How does the APR affect principal and interest?
Most mortgages are based on an amortization schedule. You pay the same amount every month for the life of the loan, but the interest you accrue is highest at the beginning and gradually decreases as the principal (the amount you borrowed) is reduced. The amortization schedule shows how much of your monthly payment goes to interest and how much goes to paying down the principal. Most borrowers find a fixed, predictable monthly payment more convenient.
Home Loan Advantages and Disadvantages
Strong Points
Instead of paying rent without ownership, you can increase the asset value of your property.
Making payments on time helps build credit.
Mortgage interest can be deducted from your annual taxes.
Cons
You will incur a significant amount of debt.
Because of interest, you’ll end up paying more than the list price, which could end up costing you more over the life of the 30-year loan.
To pay off your mortgage, you'll need to budget for closing costs, which in some states can run into the tens of thousands of dollars.
Mortgage lenders often publish interest rates for different mortgage types, which can help you narrow down where to apply for pre-approval. But the rate that's advertised isn't necessarily the rate you'll get. When shopping for a new mortgage, it's important to compare not only mortgage interest rates, but also loan closing costs and other fees associated with the loan. Experts recommend getting quotes from multiple lenders so you don't rush the process.
How to refinance your mortgage
When you refinance your mortgage, you exchange your current mortgage for a new one, hopefully with better terms.
Decide whether 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 mortgage and receive the difference as cash. With a basic rate-and-term refinance, you take out a loan the same size as your existing mortgage, at a new interest rate and/or loan term.
The refinancing process will feel similar to taking out an existing mortgage: You'll need to choose a lender, apply for a loan, wait for underwriting to complete, have your home appraised, and pay off the new loan. Just like with your original mortgage, you'll have to pay different closing costs when you refinance.
FAQ
What credit score do I need to get a mortgage?
Most conventional loans require a credit score of 620 or higher, but for Federal Housing Administration and other types of loans, some lenders may be able to accommodate borrowers with scores as low as 500.
How are mortgage interest rates determined?
Your credit score isn't the only factor that affects your mortgage interest rate. Lenders also look at your debt-to-income ratio to assess your risk level based on how well you're paying off other debts like student loans, car loans, credit cards, etc. Additionally, your loan-to-value ratio also plays a vital role in your mortgage interest rate.
What is a rate lock?
Locking in your rate means your interest rate won't change from the time you make the offer until you close on the home. For example, if you lock in a 6.5% rate today and your lender's interest rate rises to 7.25% in the next 30 days, you'll get the lower rate. A typical rate lock period is 45 days, so you're still on a tight timeline. Be sure to ask your lender about the length of time they'll lock in your rate and the costs of locking in your rate.
Will interest rates rise or fall?
Mortgage rates are constantly changing and it's impossible to predict the market. However, most experts believe mortgage rates will gradually decline through 2024. Fannie Mae predicts that the average interest rate on a 30-year fixed mortgage will be 6.7% by the end of the year.