The average 30-year fixed rate is 6.95% and the 15-year fixed rate is 6.25%, both up 9 basis points since last week, according to Freddie Mac data. This is the first time Freddie Mac rates have increased since May.
“New home sales and sales contracts are both declining, which is resulting in an increase in the number of homes available for sale,” Freddie Mac chief economist Sam Carter said in a press release. “We expect interest rates to continue to decline moderately later this year, which should bode well for prospective homebuyers as more inventory becomes available.”
If you're not in a rush to buy, waiting until later in 2024 could allow interest rates and home prices to drop. But if you're pressed for time and need to buy sooner, don't be too disheartened. Interest rates aren't expected to plummet this year, so you won't miss out on a significantly lower rate. And remember, you can always refinance to a better rate later.
Read more: Why are house prices so high?
Today's mortgage rates
According to the latest Zillow data, current mortgage rates are as follows:
30-Year Fixed Rate: 6.70%
20-Year Fixed Rate: 6.25%
15-year fixed rate: 6.05%
5/1 ARM: 6.67%
7/1 ARM: 6.69%
30-year VA: 6.02%
15-year VA: 5.53%
5/1 VA: 6.25%
Please note that these are national averages and are rounded to one decimal place.
Read more: 5 strategies to get the lowest mortgage interest rate
Monthly Mortgage Payment Calculator
Yahoo Finance has a free mortgage payment calculator that allows you to see how different mortgage interest rates will affect your monthly payment.
Our calculator goes even further by factoring in factors like homeowners insurance and property taxes. If applicable, you can also add in the cost of private mortgage insurance and HOA dues. These monthly costs, along with your mortgage principal and interest, will give you a realistic idea of what your monthly payments will be.
How do mortgage interest rates work?
A mortgage interest rate is the fee that you charge for borrowing money from a lender and is expressed as a percentage. There are two basic types of mortgage interest rates: fixed and adjustable.
A fixed-rate mortgage keeps your interest rate constant for the life of your loan. For example, if you take out a 30-year mortgage with a 6.75% interest rate, your interest rate will stay at 6.75% for the entire 30 years (unless you refinance or sell your home).
With an adjustable rate mortgage, your interest rate stays constant for the first few years and then changes periodically after that. For example, say you take out a 5/1 adjustable rate loan with an introductory rate of 6%. Your interest rate will be 6% for the first five years, and then it will go up or down every year for the remaining 25 years. Whether your interest rate goes up or down depends on several factors, including the economy and the U.S. housing market.
At the beginning of your mortgage term, most of your monthly payment goes towards interest. Over time, less of your payment goes towards interest and more goes towards the mortgage principal, or the amount you originally owe.
Learn more: Adjustable Rate Mortgages vs Fixed Rate Mortgages — Which Should You Choose?
What factors affect mortgage interest rates?
There are two categories of factors that affect your mortgage interest rate: those you can control and those you can't 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 strong credit scores, low debt-to-income ratios (DTI), and sizable down payments. If you can save more or pay off debt before taking out a mortgage, lenders will likely offer you a more favorable rate.
Read more: Best mortgage lenders for first-time home buyers
What is out of your control? In one word: the economy.
The list of how the economy affects mortgage rates is long, but here are the basic details: When the economy (e.g. employment rate) is sluggish, mortgage rates fall to encourage borrowing and help stimulate the economy. When the economy is strong, mortgage rates rise to discourage spending.
30-year fixed mortgage rate vs. 15-year fixed mortgage rate
The two most common mortgage terms are the 30-year fixed rate mortgage and the 15-year fixed rate mortgage, both of which keep your interest rate constant for the entire life of the loan.
30-year loans are popular because they offer relatively low monthly payments, but they have higher interest rates than shorter-term loans, and because interest accumulates over 30 years, you end up paying more in interest over the long term.
A 15-year mortgage is great because it has a lower interest rate than a longer term mortgage, so you'll pay less interest over the years, and you'll also pay off your mortgage much quicker, but your monthly payments will be higher because you're paying off the same loan amount in half the time.
Essentially, a 30-year mortgage is more affordable month-to-month, while a 15-year mortgage is cheaper over the long term.
Current Mortgage Rates: FAQs
Which banks offer the lowest mortgage interest rates?
Banks with the lowest median mortgage interest rates include Wells Fargo and USAA, according to Home Mortgage Disclosure Act of 2023 (HMDA) data, but it's a good idea to shop around for the best rates, not just among banks but also among credit unions and companies that specialize in mortgage lending.
Is 2.75% a good mortgage rate?
Yes, 2.75% is a great mortgage rate, and it’s unlikely you’ll get a 2.75% interest rate in today’s market unless you get an assumeable mortgage from a seller who locked in this rate in 2020 or 2021 when interest rates were at an all-time low.
What are the lowest mortgage rates on record?
Thirty-year fixed mortgage rates were at a record low of 2.65%, the national average in January 2021, according to Freddie Mac.