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By Leslie Cook
December 2, 2021
Current Mortgage Rates
Money; Getty Images

The average interest rate charged on a 30-year fixed-rate mortgage ticked up to 3.11% this week, a modest increase of 0.01 percentage points from last week.

It's the third week in a row that Freddie Mac's benchmark rate has stayed above 3%. The average rate for 5/1 adjustable-rate mortgage also rose slightly to 2.49%. While the rate for a 15-year mortgage moved down to 2.39%.

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Mortgage interest rates for the week ending December 2, 2021

Mortgage rate trends

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Mortgage rates were mixed this week, with the 30-year and 5/1 ARM rates increasing and 15-year rate edging lower:

  • The current rate for a 30-year fixed-rate mortgage is 3.11% with 0.6 points paid, moving up by 0.01 percentage points week-over-week. The average rate at this same time last year was 2.71%.
  • The current rate for a 15-year fixed-rate mortgage is 2.39% with 0.6 points paid, decreasing by 0.03 percentage points from the previous week. Last year the average rate was 2.26%.
  • The current rate on a 5/1 adjustable-rate mortgage is 2.49% with 0.3 points paid, up 0.02 percentage points from the previous week. The average rate was 2.86% last year.

“Mortgage rates continue to remain stable notwithstanding volatility in the financial markets,” said Sam Khater, Freddie Mac’s chief economist in a statement. "The consistency of rates in the face of changes in the economy is primarily due to the evolution of the pandemic, which lingers and continues to pose uncertainty. This low mortgage rate environment offers favorable conditions for refinancing."

Today’s mortgage rates and your monthly payment

The rate on your mortgage can make a big difference in how much home you can afford and the size of your monthly payments.

If you bought a $250,000 home and made a 20% down payment — $50,000 — you would end up with a starting loan balance of $200,000. On a $200,000 home loan with a fixed rate for 30 years:

  • At 3% interest rate = $843 in monthly payments (not including taxes, insurance, or HOA fees)
  • At 4% interest rate = $955 in monthly payments (not including taxes, insurance, or HOA fees)
  • At 6% interest rate = $1,199 in monthly payments (not including taxes, insurance, or HOA fees)
  • At 8% interest rate = $1,468 in monthly payments (not including taxes, insurance, or HOA fees)

You can experiment with a mortgage calculator to find out how much a lower rate or other changes could impact what you pay.

Other factors that determine how much you'll pay each month include:

Loan Term:

Choosing a 15-year mortgage instead of a 30-year mortgage will increase monthly mortgage payments but reduce the amount of interest paid throughout the life of the loan.

Fixed vs. ARM:

The mortgage rates on adjustable-rate mortgages reset regularly (after an introductory period) and monthly payments change with it. With a fixed-rate loan payments remain the same throughout the life of the loan.

Taxes, HOA Fees, Insurance:

Homeowners insurance premiums, property taxes and homeowners association fees are often bundled into your monthly mortgage payment. Check with your real estate agent to get an estimate of these costs.

Mortgage Insurance:

Mortgage insurance costs up to 1% of your home loan's value per year. Borrowers with conventional loans can avoid private mortgage insurance by making a 20% down payment or reaching 20% home equity. FHA borrowers pay a mortgage insurance premium throughout the life of the loan.

Closing Costs:

Some buyers finance their new home's closing costs into the loan, which adds to the debt and increases monthly payments. Closing costs generally run between 2% and 5% and the sale prices.

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The latest information on current mortgage rates

Will current mortgage rates last?

Mortgage rates saw little movement this week as fears that the Omicron variant of the coronavirus could lead to another pause in the economic recovery. Increasing inflationary pressure caused by supply chain problems is also causing some uncertainty. Federal Reserve Chair Jerome Powell said this week that the central bank is considering speeding up its tapering of bond purchases as a means of slowing the increase in prices.

As the year draws closer to its end, expect mortgage rates to remain within a tight range of around 3% unless some major economic news forces rates to move.

On Wednesday, the yield on the 10-year Treasury note opened at 1.421%, down from Tuesday's close of 1.434%. There tends to be a spread of about 1.8 percentage points between the 10-year Treasury and average mortgage rates. Yields have been trending lower since the Thanksgiving holiday.

How are mortgage rates impacting home sales?

The overall number of mortgage applications was down for the week ending November 26, led by a large drop in refinancing. Total applications were decreased by 7.2% week-over-week after being adjusted for the Thanksgiving holiday weekend, according to the Mortgage Bankers Association.

  • The number of purchase applications increased last week by 5%, marking the fourth straight week of increases. Compared to the same week last year, however, applications were 8% lower.
  • Refinance applications, on the other hand, were 15% lower than the previous week and 41% lower year-over-year. Refinance applications now make up about 59% of all mortgage activity, down from 63% last week.

"As home-price appreciation continues at a double-digit pace, buyers of newer, pricier homes continue to dominate purchase activity, while the share of first-time buyer activity remains depressed," said Joel Kan, MBA's associate vice president of economic and industry forecasting.

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Current Mortgage Rates Guide

What is a good interest rate on a mortgage?

Today's mortgage rates are near historic lows. Freddie Mac's average rates show what a borrower with a 20% down payment and a strong credit score might be able to get if they were to speak to a lender this week. If you are making a smaller down payment, have a lower credit score or are taking out a non-conforming (or jumbo) mortgage, you may see a higher rate. A good mortgage rate is one where you can comfortably afford the monthly payments and where the other loan details (such as the length of the loan, whether the rate is fixed or adjustable and other fees) fit your needs.

How much does the interest rate affect mortgage payments?

In general, the lower the interest rate the lower your monthly payments will be. For example:

  • If you have a $300,000 fixed-rate 30-year mortgage at 4% interest, your monthly payment will be $1,432 (not including property taxes and insurance). You'll pay a total of $215,608 in interest over the full loan term.
  • The same-sized loan at 3% interest will have a monthly payment of $1,264. You will pay a total of $155,040 in interest — a savings of over $60,000.

You can use a mortgage calculator to determine how different mortgage rates and down payments will affect your monthly payment. Consider steps for improving your credit score in order to qualify for a better rate.

How are mortgage rates set?

Lenders use a number of factors to set prevailing rates each day. Every lender's formula will be a little different but will take into account things like the current Federal Funds rate (a short-term rate set by the Federal Reserve), competitor rates and even how much staff they have available to underwrite loans.

In general, rates track the yields on the 10-year Treasury notes. Average mortgage rates are usually about 1.8 percentage points higher than the yield on the 10-year note. Yields matter because lenders don't keep the mortgage they originate on their books for long. Instead, in order to free up money to keep originating more loans, lenders sell their mortgages to entities like Freddie Mac and Fannie Mae. These mortgages are then packaged into what are called mortgage-backed securities and sold to investors. Investors will only buy if they can earn a bit more than they can on the government notes.

Why is my mortgage rate higher than average?

Not all applicants will receive the very best rates when taking out a new mortgage or refinancing. Credit scores, loan term, interest rate types (fixed or adjustable), down payment size, home location and the loan size will all affect mortgage rates offered to individual home shoppers.

Rates also vary between mortgage lenders. It's estimated that about half of all buyers only look at one lender, primarily because they tend to trust referrals from their real estate agent. Yet this means that they may miss out on a lower rate elsewhere.

Freddie Mac estimates that buyers who got offers from five different lenders averaged 0.17 percentage points lower on their interest rate than those who didn't get multiple quotes. If you want to find the best rate and term for your loan, it makes sense to shop around first.

Should you refinance your mortgage when interest rates drop?

Determining whether it's the right time to refinance your home loan or not involves a number of factors. Most experts agree you should consider refinancing if your current mortgage rate exceeds today's mortgage rates by 0.75 percentage points. It doesn't make sense to refinance every time rates decline a little bit because mortgage fees would cut into your savings. You also have to consider whether your credit score would qualify you for today's best refinance rates.

Many online lenders can give you free rate quotes to help you decide whether the money you'd save in interest charges justifies the cost of a new loan. Try to get a quote with a soft credit check which won't hurt your credit score.

You could increase interest savings by going with a shorter loan term such as a 15-year mortgage. Your payments will be higher, but you could save on interest charges over time and you'd pay off your house sooner.

Should you buy mortgage points?

Many lenders sell mortgage points (also known as discount points). Buying points means you’d pay more up front to lower your mortgage rate which could save you money long-term. A mortgage discount point normally costs 1% of your loan amount and could shave 0.25 percentage points off your interest rate. (So, with a $200,000 mortgage loan, a point would cost $2,000.) Discount points only pay off if you keep the home long enough. Selling the home or refinancing the mortgage before you break even would short circuit the discount point strategy.

In some cases, it makes more sense to put extra cash toward your down payment instead of discount points If a larger down payment could help you avoid paying PMI premiums, for example.

How to shop for the best mortgage rate

Shopping around for the best mortgage rate can not only help you qualify for a lower rate but also save you money. Borrowers who get a rate quote from one additional lender are able to save $1,500 over the life of the loan, according to Freddie Mac. That number goes up to $3,000 if you get five additional quotes.

The best mortgage lender for you will be the one that can give you the lowest rate and the terms you want. Your local bank or credit union is one place to look. Online lenders have expanded their market share over the past decade and promise to get you pre-approved within minutes.

Shop around to compare rates and terms, and make sure your lender has the loan option you need. Not all lenders write USDA-backed mortgages or VA loans, for example. If you're not sure about a lender's credentials, ask for its NMLS number and search for online reviews.

Summary of current mortgage rates

Mortgage rates were mixed this week, with the 30-year and 5/1 ARM rate increasing and 15-year rate edging lower:

  • The current rate for a 30-year fixed-rate mortgage is 3.11% with 0.6 points paid, moving up by 0.01 percentage points week-over-week. The average rate at this same time last year was 2.71%.
  • The current rate for a 15-year fixed-rate mortgage is 2.39% with 0.6 points paid, decreasing by 0.03 percentage points from the previous week. Last year the average rate was 2.26%.
  • The current rate on a 5/1 adjustable-rate mortgage is 2.49% with 0.3 points paid, up 0.02 percentage points from the previous week. The average rate was 2.86% last year.