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A home is probably the biggest purchase you'll ever make. Paying attention to your mortgage rate could help you shave thousands of dollars -- or even tens of thousands -- off the total cost of your loan. This is a situation where your efforts could have a big payoff. Here's what you need to know about getting the best current mortgage rate.
Mortgage rates as of December 19, 2024
According to Mortgage News Daily, rates for 30-year fixed-rate mortgages are currently:
- 0.05% higher than last month
- 0.48% higher than last year
Rates vary from lender to lender. Check your rates at our top-rated lenders below.
Mortgage rates today
Use our table below to compare mortgage interest rates today between different lenders.
How to get the best current mortgage rate
These are the eight factors that can help you get the best current mortgage rate.
1. Your credit score
Higher credit scores qualify for lower mortgage rates. Most lenders offer several mortgage rates, depending on what your score is. Every lender decides what credit score will qualify for its lowest rate, but it's typically around 740. If your score isn't quite that high, you could still qualify for a good rate. Shop around with lenders to see.
What you can do: Get your credit score (it shouldn't cost you anything). Research what you could do to bring your credit score up, like paying off a collection account or lowering your utilization ratio (your credit card balances). The site showing you your score might offer suggestions you could start with.
2. Loan term
This is the length of time your mortgage will last. Shorter loan terms (10-year mortgages or 15-year mortgages) typically come with lower interest rates compared to longer terms. Shortening the loan term can help you save a tremendous amount of money.
Besides getting a lower rate, shortening the length of your loan could significantly reduce the total amount that you have to repay. If you can afford a modestly higher payment, you could put a lot more money back into your own pocket.
What you can do: Plug different loan terms into a mortgage calculator to learn how much you'd pay overall with a shorter versus a longer loan. Here's an example:
| Loan amount | Interest rate | Term | Monthly payment | Total repaid |
|---|---|---|---|---|
| $300,000 | 6.975 | 30 years | $1,991 | $716,714 |
| $300,000 | 6.750 | 15 years | $2,655 | $477,851 |
Data source: Author's calculations.
3. Discount points
Money can't buy happiness, but it can usually buy a lower mortgage interest rate. Mortgage discount points are prepaid interest. You pay a fee when you get the loan, and your lender permanently reduces your interest rate. Buying points could be a good strategy if you plan to own the home for a long time.
What you can do: Ask the lender how much it would cost to knock half a percent or more off your rate.
4. Down payment
You might qualify for the best current mortgage rate if you can make a 20% (or larger) down payment. That's because making a bigger down payment reduces your loan-to-value ratio, which lowers the risk for the lender, which in turn could qualify you for a lower rate.
A smaller down payment doesn't always mean you'll have to settle for a higher rate, though. The interest rates for low down payment loans (like an FHA loan or a VA loan) can be very competitive. But if you make a down payment on a conventional loan that's less than 20%, you'll probably have to pay for private mortgage insurance until you have at least 20% equity in the home, and that will increase your monthly cost.
What you can do: Ask the lender which loans come with a lower rate, and whether other fees might offset the savings.
5. Purchase price
Some lenders charge different interest rates for loans of different sizes. Some charge higher rates on jumbo loans, some charge lower rates for jumbo loans. There isn't an industry standard.
What you can do: Ask the lender whether changing your loan amount could help you get a lower interest rate.
6. Loan type
Some types of mortgages cost more. For example, you might find that a lender offers different rates for conventional loans and government-backed loans.
What you can do: Ask the lender what types of mortgages you might qualify for and what the rates and fees are. You'll probably get better offers if you're able to document your income with tax returns and pay stubs that the lender can verify, and your debt-to-income ratio is below the lender's limit. On the other hand, if you're self-employed and looking for a stated income loan, the rate options might be higher than loans available to borrowers who can show income with tax returns and pay stubs.
7. Where you live
Lenders charge different rates in different states. That's because of economic factors like the unemployment rate and number of recent foreclosures.
What you can do: To steer this factor into your favor, you'd need to move to a state with lower rates. Mortgage rates are not a common reason to move, unless the state with lower rates also has a lower overall cost of living.
8. Interest rate type
Mortgages can have an adjustable rate or a fixed rate. Fixed rates don't change while you have the loan. With an adjustable rate, the rate is steady for a set number of years (often five or seven), and then can change every adjustment period (often once per year). The lender tracks an industry interest rate. If that rate goes up or down, so does the interest rate on your loan. Adjustable-rate mortgages are typically cheaper than fixed-rate mortgages during the first few years, but have the potential to cost you a lot more in the long run.
What you can do: Consider how long you plan to own the property. Most home buyers opt for a fixed-rate loan, because the payments will be predictable and there's no risk of the rate rising. But if you know you're planning to sell the home within a few years, you might be able to save money with an adjustable-rate mortgage.
How to compare current mortgage rates between lenders
You can compare current mortgage rates between lenders by applying for mortgage pre-approval with each lender you're considering. Online rates are hypothetical and might not apply to you.
For mortgage pre-approval, the lender reviews your credit history and financial situation and verifies your income. Getting a pre-approval isn't always a firm commitment to lend, but generally, if nothing in your financial situation or credit history changes, there's a good chance you'll get a green light when you formally apply.
For pre-approval, the lender will check your credit. It might verify details like income and employment. The lender should send you a loan estimate with your pre-approval, which is a document that gives you information about the loan you would likely qualify for. Loan estimates all use the same format and make it really easy to compare loans, so if the lender doesn't send it with your pre-approval notification, ask for one.
How to shop for a mortgage without hurting your credit score
When you apply for a loan (or pre-approval), the lender does a hard credit check or hard inquiry. Hard inquiries can temporarily take points off your credit score, but there's a way to shop around for a mortgage without harming your credit.
First, your FICO® Score isn't affected by any mortgage inquiries made in the past 30 days. If you find a loan within those 30 days, rate shopping won't affect you at all.
If you don't find a loan within those first 30 days, there's another benefit. All mortgage lender inquiries within a certain time period are counted as a single inquiry, whether you apply with one or 999. The time period varies from 14 to 45 days. That's because a creditor that pulls your score might use an older or newer FICO® Score. Some lenders may use your VantageScore. To protect your credit, make all your applications within a two-week window.
Should I lock in my current mortgage rate?
A mortgage rate lock means that for a period of time, you'll get that interest rate even if market rates change before your loan closes.
Unfortunately, there's no way to know whether locking your rate is a good idea -- it depends on a variety of factors, including:
- How soon you expect to finalize your loan
- If the lender charges a fee for locking the rate (or for extending it if your rate lock expires before your loan closes
- Whether you are happy with the rate
- What's happening in the economy
The lowest-risk rate locks are fee free and have a float-down feature. That means if market rates go down, your rate goes down. But if market rates go up, your rate stays where it is.
How current mortgage rates affect your mortgage payments
When interest rates are higher, you have to make bigger monthly payments compared to the payments for the same loan at a lower rate. If you can't afford the bigger monthly payments, you might have to borrow less.
| Loan amount | Interest rate | Monthly payment |
|---|---|---|
| $300,000 | 7% | $1,996 |
| $300,000 | 9% | $2,414 |
Data source: Author's calculations.
In this example, if your budget is $2,000 per month and rates rise to 9%, you might have to shop for a home with a lower price tag or wait for rates to come down.
Use a mortgage calculator to figure out how changing interest rates might affect you.
What is a mortgage rate?
A mortgage rate is the percentage a lender charges on the money you owe for the purchase of real estate. The lender multiplies the mortgage rate by the amount you still owe to determine how much interest you'll pay each month. As your balance goes down, so does the interest you pay.
Other mortgage rates pages
Check out our other mortgage rates pages:
Motley Fool Money's best mortgage lenders
If you want to uncover more about the best mortgage lenders for low rates and fees, our experts have created a shortlist of the top mortgage companies. Some of our experts have even used these lenders themselves to cut their costs.
Ask the experts
Jacelly Cespedes
Assistant Professor of Finance at the University of Minnesota Carlson School of Management
With mortgage rates near historic lows, what can homebuyers do right now to ensure they’re getting the best deal when purchasing a home?
Homeowners need to shop around to look for the best mortgage deal possible. Unfortunately, although the home is the most important asset and the mortgage is the most important liability for most households, research has shown that homebuyers do not do enough shopping. So they miss important savings. Comparing rates and fees from several lenders is important, not only from traditional lenders such as local banks, but also Fintech lenders. Importantly, when comparing offers, homebuyers need to take into account other costs beyond principal and interest payments.
What causes mortgage rates to rise or fall?
Monetary policy is one of the most important drivers of mortgage rates. In particular, following the Great Recession, in economic downturns, the Federal Reserve has been aggressively trying to influence long-term rates in the economy through quantitative easing (QE).
In QE, the Federal Reserve purchases longer-term securities from the open market in order to encourage lending and investment by increasing the money supply. In addition, this strategy of bidding up fixed-income securities also serves to lower interest rates.
Should current homeowners consider refinancing with rates that are this low?
Yes! Following the COVID-19 pandemic, the Fed implemented an expansionary monetary policy to help the economy, resulting in great rates for homeowners. If a homeowner has not taken advantage of the great rates in the last two years, they should refinance as soon as possible to try to lock in a lower rate. In fact, due to the increase in inflation, the Fed has signaled that it will increase short-term rates and reduce the QE programs, resulting in higher rates for refinancing.
Steven Swidler
Walter E. Hanson/KPMG Professor of Business and Finance at Lafayette College
With mortgage rates near historic lows, what can homebuyers do right now to ensure they’re getting the best deal when purchasing a home?
In today’s hot market, sellers often accept cash transactions ensuring that the deal will close, which can be a risky choice for the buyer. The danger to the buyer is that they may be overpaying for the home. With no appraisal needed for a loan, there is no independent third party providing an estimate for the value of the home. Ultimately, if homebuyers are looking to get the best price on a home, they should exercise caution if paying for a home with cash, or instead take advantage of historically low mortgage rates.
What causes mortgage rates to rise or fall?
Mortgage rates tend to follow the 10-year Treasury note, as ten years is close to the average tenure of home ownership. So as the 10-year Treasury note rate goes up or down, so do mortgage rates.
Should current homeowners consider refinancing with rates that are this low?
Refinancing at lower rates is always a good idea as long as the homeowner plans on staying in the home long enough to justify the closing costs of the loan. If the current rate is significantly lower than the original, the homeowner might consider shortening the new loan’s maturity. This could potentially save tens of thousands of dollars.
Clifford Rossi
Executive-in-Residence and Professor of the Practice at the Robert H. Smith School of Business at the University of Maryland
With mortgage rates near historic lows, what can homebuyers do right now to ensure they’re getting the best deal when purchasing a home?
The first thing borrowers need to think about is what type of product they want. There are two main categories. One is a fixed-rate amortizing loan, such as the common 30-year amortizing mortgage. The other is an adjustable rate mortgage (ARM) where the rate can fluctuate over time. This will narrow the search quite a bit. For example, if you plan to be in the home for quite some time and think you might want to pay down the mortgage balance faster, then a fixed-rate mortgage with a term lower than 30 years might be your preferred product. Once you've made that choice, then you can look at any number of websites that post mortgage rates to see which is the best fit for your needs. Also, you need to keep in mind the posted note rate, or the rate you locked in with your lender that is used to calculate your monthly principal and interest rate. Check that it does not include any upfront fees or points that could be charged. So looking at the APR, or annual percentage rate, provides a better all-in representation of what you may pay. Remember that you may be able to obtain a lower rate but by paying a higher percent of points. That tradeoff needs to take into account how long you see yourself in the home and mortgage.
What causes mortgage rates to rise or fall?
The standard 30-year fixed rate mortgage is benchmarked off the 10-year U.S. Treasury rate plus a spread. The spread reflects the "cost" of the mortgage to an investor based on the risks that the borrower could prepay their loan down the road or default on the loan in the future. These costs rise and fall with general economic conditions, including the prevailing interest rate environment causing rates to rise and fall according to changes in the risk of these loans to investors. Market demand and supply forces are drivers of mortgage rates, as well.
Should current homeowners consider refinancing with rates that are this low?
Many homeowners have taken the opportunity to refinance in this low rate environment, and it isn't too late to do so. For whatever reason, borrowers sometimes choose not to refinance when it is in their best interest to do so. In this environment with low rates and accelerating home prices, borrowers that currently pay private mortgage insurance may be in a position to remove that monthly premium due to equity already built up in their property. So, homeowners should definitely take the time to compare their existing mortgage rate and see if they can do better.
Ken Johnson, Ph.D.
Real Estate Economist and Associate Dean in Florida Atlantic University's College of Business
With mortgage rates near historic lows, what can homebuyers do right now to ensure they’re getting the best deal when purchasing a home?
Individuals should begin their mortgage search before they begin their home search. This will put them at the price point they can best afford and allow them to potentially prioritize their offer with sellers over other buyers, since they will be ready to close quickly.
What causes mortgage rates to rise or fall?
Increases or decreases in 10-year Treasury yields directly influence 30- and 15-year mortgage rates. Currently, the Federal Reserve is actively buying 10-year Treasury notes, which increases the demand for these securities and drives their price up and yields down. So, our near record low mortgage rates are directly tied to the Federal Reserve Board's response to COVID-19 in efforts to keep financial markets open. When it begins to taper (stop purchasing 10-year Treasury notes) significantly, mortgage rates will rise.
Should current homeowners consider refinancing with rates that are this low?
A quick way to determine if you should refinance is to estimate your out-of-pocket cost to refinance and divide by your monthly payment savings -- how much your payment goes down due to the refinance. The answer will represent the number of months it will take to get your money back from refinancing, also called the breakeven point. Therefore, if you plan to live in your home longer than the answer to this math problem, you should refinance. If you plan to live for fewer months, then you should not refinance.
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Article sources
- https://www.consumerfinance.gov/owning-a-home/prepare/get-your-money-situation-in-order/
- https://files.consumerfinance.gov/f/documents/cfpb_shopping_for_a_mortgage.pdf
- https://loanfinder.guaranteedrate.com/#/purchase/loan-purpose
- https://www.calculator.net/mortgage-calculator.html
- https://www.consumerfinance.gov/ask-cfpb/how-should-i-use-lender-credits-and-points-also-called-discount-points/
- https://www.consumerfinance.gov/ask-cfpb/what-is-private-mortgage-insurance-en-122/
- https://www.consumerfinance.gov/owning-a-home/explore-rates/
- https://www.consumerfinance.gov/ask-cfpb/what-is-the-difference-between-a-fixed-rate-and-adjustable-rate-mortgage-arm-loan-en-100/
- https://www.experian.com/blogs/ask-experian/do-multiple-loan-inquiries-affect-your-credit-score/
- https://www.consumerfinance.gov/ask-cfpb/what-exactly-happens-when-a-mortgage-lender-checks-my-credit-en-2005/
- https://www.consumerfinance.gov/ask-cfpb/whats-a-lock-in-or-a-rate-lock-en-143/
- https://www.consumerfinance.gov/ask-cfpb/what-is-the-difference-between-a-mortgage-interest-rate-and-an-apr-en-135/
FAQs
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To compare current mortgage rates while preserving your credit score, apply for pre-approval from several lenders in a short time period (14 days) so that only one credit inquiry is recorded in that period. Get a loan estimate from each lender. Loan estimates should all look the same, making it easy to examine each loan's terms and fees and compare them to one another.
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Mortgage rates are determined by a number of factors including your credit score, the economy, and your loan-to-value ratio.
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You should lock in a mortgage rate when you're happy with your rate and can afford your monthly payments. Because interest rates fluctuate and can be unpredictable, it can be risky to wait on mortgage rates going down.
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