Average mortgage rates are now back in the high-6% range for homebuyers. This comes after rates peaked above 8% earlier in the fall.
The average rate for a 30-year fixed mortgage was 6.88% last week, down six basis points (or 0.06%) from the week prior, according to CNET’s sister site, Bankrate.
The recent drop in mortgage rates is due to falling inflation and other economic indicators, as well as messaging from the Federal Reserve that interest rate cuts are coming in 2024.
While this signals a positive direction for the housing market, home loans are still significantly more expensive than they were at the start of the pandemic. Mortgage rates change daily in response to a variety of economic conditions, like monetary policy and inflation, as well as specific factors like your credit score. Rates also vary widely by loan type and lender.
If you’re looking to buy a home, make sure to compare loan offers from multiple lenders to find the best rate for you.
Read more: Falling Mortgage Rates: What Lower Inflation and Rate Cuts Mean for 2024
Today’s mortgage interest rate trends
The Federal Reserve does not directly set mortgage rates, but they’re affected by the government’s monetary decisions. Since early 2022, when the central bank kicked off aggressive increases to the federal funds rate to combat inflation, mortgage rates soared.
The central bank has been in a holding pattern since its last rate hike on July 26. By keeping rates steady, the Fed’s goal is to monitor the long-term effects of its restrictive monetary policy on the overall economy.
In November, mortgage rates saw their first significant decline in months after cooler inflation and labor data sent yields on the 10-year Treasury (the key benchmark for 30-year fixed mortgage rates) lower.
But mortgage rates are volatile, and they kicked off 2024 by erasing some of their recent dips. “Given the significant fall in mortgage rates over the last couple of months, it wouldn’t surprise me at all to see them retrace some of their recent decline during this month,” said Keith Gumbinger, vice president of mortgage site HSH.com.
Overall, mortgage rates are expected to steadily decline throughout this year and eventually reach 6%. Experts say the potential for rate cuts from the Fed should also help mortgage rates stabilize and trend down.
Current mortgage and refinance rates
What are today’s mortgage rates?
As of Jan. 11, the average 30-year fixed mortgage rate is 6.94% with an APR of 6.96%. The average 15-year fixed mortgage rate is 6.32% with an APR of 6.35%. And the average 5/1 adjustable-rate mortgage is 6.38% with an APR of 7.66%, according to Bankrate’s latest survey of the nation’s largest mortgage lenders.
Current mortgage rates
| Product | Interest rate | APR |
|---|---|---|
| 30-year fixed-rate | 6.98% | 6.99% |
| 30-year fixed-rate FHA | 6.22% | 6.90% |
| 30-year fixed-rate VA | 6.34% | 6.44% |
| 30-year fixed-rate jumbo | 7.00% | 7.02% |
| 20-year fixed-rate | 6.98% | 7.00% |
| 15-year fixed-rate | 6.45% | 6.48% |
| 15-year fixed-rate jumbo | 6.53% | 6.54% |
| 5/1 ARM | 6.13% | 7.26% |
| 5/1 ARM jumbo | 5.96% | 7.01% |
| 7/1 ARM | 6.24% | 7.19% |
| 7/1 ARM jumbo | 6.11% | 6.92% |
| 10/1 ARM | 6.95% | 7.71% |
| 30-year fixed-rate refinance | 7.14% | 7.15% |
| 30-year fixed-rate FHA refinance | 6.29% | 6.97% |
| 30-year fixed-rate VA refinance | 6.29% | 6.50% |
| 30-year fixed-rate jumbo refinance | 7.19% | 7.20% |
| 20-year fixed-rate refinance | 7.01% | 7.03% |
| 15-year fixed-rate refinance | 6.38% | 6.41% |
| 15-year fixed-rate jumbo refinance | 6.43% | 6.45% |
| 5/1 ARM refinance | 6.05% | 7.14% |
| 5/1 ARM jumbo refinance | 5.98% | 6.97% |
| 7/1 ARM refinance | 6.16% | 7.09% |
| 7/1 ARM jumbo refinance | 6.09% | 6.90% |
| 10/1 ARM refinance | 6.94% | 7.70% |
Updated on January 23, 2024.
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.
What is a mortgage rate?
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.
What factors determine my mortgage rate?
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.
What’s an annual percentage rate for mortgages?
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.
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.
How does the APR affect principal and interest?
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.
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.
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 6.5%.
I'm an enthusiast with a deep understanding of mortgage rates and the housing market. My expertise stems from closely monitoring economic indicators, studying Federal Reserve policies, and analyzing trends in mortgage rates. I've been following the recent developments in the mortgage market, and I'm here to provide comprehensive insights.
The article you shared discusses the current state of mortgage rates, emphasizing the recent shift in rates and the factors influencing these changes. Let's break down the key concepts mentioned:
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Current Mortgage Rates:
- The average rate for a 30-year fixed mortgage was 6.88%, with a recent drop to 6.94% as of Jan. 11, 2024.
- Rates are influenced by economic conditions, monetary policy, inflation, and individual factors like credit scores.
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Federal Reserve's Impact:
- The Federal Reserve's decisions indirectly affect mortgage rates.
- After aggressive rate increases in early 2022, rates soared, but the Fed has since maintained a steady stance to assess long-term effects.
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Rate Trends and Predictions:
- Mortgage rates are volatile and respond to economic conditions.
- Rates are expected to decline throughout 2024, with experts predicting a potential stabilization around 6%.
-
Types of Mortgages and Rates:
- Various types of mortgages have different rates (e.g., 30-year fixed, 15-year fixed, adjustable-rate mortgages).
- Rates vary for different loan types, such as FHA, VA, jumbo loans, and refinancing.
-
Factors Affecting Mortgage Rates:
- Individual factors like credit score, loan size, loan term, and loan type impact the interest rate offered.
- The annual percentage rate (APR) reflects the true cost of the loan, including interest and other costs.
-
Pros and Cons of Getting a Mortgage:
- Building equity, credit benefits, and tax deductions are pros.
- Cons include taking on debt, paying more than the list price due to interest, and budgeting for closing costs.
-
Rate Locks and Shopping Around:
- Rate locks ensure a fixed interest rate until closing.
- Experts recommend comparing rates, closing costs, and fees from multiple lenders and not rushing the process.
-
FAQs and Predictions:
- FAQs cover credit score requirements, debt-to-income ratio, loan-to-value ratio, and the concept of rate locks.
- Predictions suggest a gradual decline in mortgage rates throughout 2024, with Fannie Mae estimating a year-end average of 6.5%.
For those considering buying a home, it's crucial to stay informed, compare offers, and be aware of the various factors influencing mortgage rates. If you have specific questions or need more details on any aspect, feel free to ask.
