Current Mortgage Rates

Mortgage rates moved higher for the second week in a row, reaching their highest level in more than a month.

This week, the average rate on a 30-year fixed-rate loan jumped up to 6.57%, according to Freddie Mac's weekly data. The 30-year rate is 0.18 percentage points higher compared to a week ago and is now at its highest level since March 16th.

There was movement in the 15-year fixed-rate average as well. The rate for the short-term loan increased to 5.97%, up by almost a quarter of a percentage point.

Mortgage rates moved higher this week as a result of concerns surrounding the debt ceiling and a potential government default, said Sam Khater, Freddie Mac's chief economist.

"Dampened affordability remains an issue" for potential buyers, he said in a statement.

If you are offered a rate that is higher than you expect, make sure to ask why, and compare offers from multiple lenders. (Money's list of the Best Mortgage Lenders is a good place to start. Homeowners considering a mortgage refinance should consider our list of the Best Mortgage Refinance Companies.)

• How are mortgage rates impacting home sales?
• What credit score do mortgage lenders use?
• What is a good interest rate on a mortgage?
• How are mortgage rates determined?
• How to get the best mortgage rate
• Difference between APR and interest rate

What's been happening in the housing market

Here's a round-up of the latest news in housing and real estate:

• Buyers in some cities are finding relief when it comes to buying a house. On a national level, the median home price is down by an average of $18,000, according to a report by brokerage Redfin. In some popular pandemic boomtowns (hello, Boise), homes are selling for about $80,000 less than they were a year ago.
• Potential homebuyers who have been priced out of their cities are finding more affordable options just a short drive away, according to a report from Point2 Homes. Suburban markets close to some of the largest cities in the U.S. offer not only more space but also lower home prices — sometimes up to 65% lower.
• The lack of existing homes on the market has been a boon for home builders. New single-family home sales reached a seasonally-adjusted annual rate of 683,000 units in April, an increase of nearly 12% compared to the same month last year. Sales of newly built homes have consistently increased over the past few months.
• Pending home sales in April were unchanged from March, according to the National Association of Realtors. In a statement, NAR's chief economist Lawrence Yun said affordability and low inventory are to blame.

Mortgage interest rates for the week ending May 25, 2023

Mortgage rate trends

Mortgage rates were higher this week —

• The current rate for a 30-year fixed-rate mortgage is 6.57%, up by 0.18 percentage points over the past week. Last year, the 30-year rate averaged 5.10%.
• The current rate for a 15-year fixed-rate mortgage is 5.97%, an increase of 0.22 percentage points compared to a week ago. The 15-year rate averaged 4.31% a year ago this week.

For its weekly rate analysis, Freddie Mac looks at rates offered for the week ending each Thursday. The average rate represents roughly the rate a borrower with strong credit and a 20% down payment can expect to see when applying for a mortgage right now. Borrowers with lower credit scores will generally be offered higher rates.

Money's average mortgage rates for May 31, 2023

After the holiday weekend, most mortgage rates moved lower. The average rate on a 30-year fixed-rate mortgage tumbled back below 8% on Tuesday, slipping down to 7.884%. Rates on all other loan categories were also lower, with the exception of the 7/6 adjustable rate mortgage, which ticked higher.

• The latest rate on a 30-year fixed-rate mortgage is 7.884% ⇓ 0.133%
• The latest rate on a 15-year fixed-rate mortgage is 6.664% ⇓ 0.089%
• The latest rate on a 5/6 ARM is 7.375%. ⇓ 0.011%
• The latest rate on a 7/6 ARM is 7.342%. ⇑ 0.009%
• The latest rate on a 10/6 ARM is 7.392%. ⇓ 0.021%

Money's daily mortgage rates are a national average and reflect what a borrower with a 20% down payment, no points paid, and a 700 credit score — roughly the national average score — might pay if he or she applied for a home loan right now. Each day's rates are based on the average rate 8,000 lenders offered to applicants the previous business day. Your rate will vary depending on your location, lender and financial details.

These rates are different from Freddie Mac’s rates, which represent a weekly average based on a survey of quoted rates offered to borrowers with strong credit, a 20% down payment and discounts for points paid.

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 a 3% interest rate = $843 in monthly payments (not including taxes, insurance, or HOA fees)
• At a 4% interest rate = $955 in monthly payments (not including taxes, insurance, or HOA fees)
• At a 6% interest rate = $1,199 in monthly payments (not including taxes, insurance, or HOA fees)
• At an 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. A home affordability calculator can also give you an estimate of the maximum loan amount you may qualify for based on your income, debt-to-income ratio, mortgage interest rate and other variables. The Consumer Financial Protection Bureau can also provide a range of rates being offered by lenders in each state.

Other factors determine how much you'll pay each month, which are detailed in the loan disclosures provided by your lender. These factors 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.

Current Mortgage Rates Guide

Mortgage rates are an important part of the homeownership puzzle. Our guide answers some of the most common questions surrounding mortgage rates and how they affect the housing market.

How are mortgage rates impacting home sales?

There was another dip in home sales in April, as high mortgage rates and a lack of homes for sale continued to limit perspective buyers' options.

The volume of existing home sales, which include closed contracts for single-family homes, townhouses, condos and co-ops, decreased by 3.4% compared to March, and by about 23% year-over-year, according to the National Association of Realtors.

The housing market is experiencing a lot of ups and downs as a result of the "combination of job gains, limited inventory and fluctuating mortgage rates over the last several months," said Lawrence Yun, NAR's chief economist, in a press release.

There was one bright spot last month. Inventory, or the lack of it, has been one of the main reasons why prices haven't dropped significantly in many cities. In April, inventory finally increased — compared to March, it was up by more than 7% or 1.04 million homes.

Still, at the current pace of sales, this represents a less than 3-month supply of homes, which is well below the 6-month supply most experts consider "normal."

What credit score do mortgage lenders use?

Most mortgage lenders use your FICO score — a credit score created by the Fair Isaac Corporation — to determine your loan eligibility.

Lenders will request a merged credit report that combines information from all three of the major credit reporting bureaus — Experian, Transunion and Equifax. This report will also contain your FICO score as reported by each credit agency.

Each credit bureau will have a different FICO score and your lender will typically use the middle score when evaluating your creditworthiness. If you are applying for a mortgage with a partner, the lender can base their decision on the average credit score of both borrowers.

Lenders may also use a more thorough residential mortgage credit report that includes more detailed information that won’t appear in your standard reports, such as employment history and current salary.

What is a good interest rate on a mortgage?

A good mortgage rate is one where you can comfortably afford the monthly payments and where the other loan details fit your needs. Consider details such as the loan type (i.e. whether the rate is fixed or adjustable), length of the loan, origination and lender fees and other costs. Note that refinance rates tend to be higher than purchase rates for a primary residence.

That said, 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 loan) mortgage, you may see a higher rate. It’s also worth noting that jumbo loans have a higher down payment requirement than conventional loans. Money’s daily mortgage rate data shows borrowers with 700 credit scores are finding rates averaging above 7% right now.

How are mortgage rates determined?

Lenders use several factors to set rates each day. Every lender's formula will be a little different but will factor in 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. Your qualifications will also impact the rate you are offered.

In general, rates track the yields on the 10-year Treasury note. 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, 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.

Your qualifications will also impact the rate you are offered, as will the loan-to-value ratio (LTV). The LTV of your property is one way lenders assess the amount of risk posed by approving a loan and is calculated by dividing the maximum loan amount you qualify for by the appraised home value.

How to get the best mortgage rate

Shopping around for the best mortgage rate can mean a lower rate and big savings. On average, borrowers who get a rate quote from one additional lender save $600 over the life of the loan, according to Freddie Mac. That number goes up to $1,200 if you get three quotes. A larger down payment amount will also result in a lower interest rate.

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 loan options, rates and terms, and make sure your lender has the type of mortgage you need. Not all lenders write FHA loans, 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.

What's the difference between interest rate and APR on a mortgage?

Borrowers often mix up interest rates and annual percentage rates (APR). That’s understandable since both rates refer to how much you’ll pay for the loan. While similar, the terms are not synonymous.

An interest rate is what a lender will charge on the principal amount being borrowed. Think of it as the basic cost of borrowing money for a home purchase.

An APR represents the total cost of borrowing money and includes the interest rate plus any fees, associated with generating the loan. The APR will always be higher than the interest rate.

For example, a $300,000 loan with a 3.1% interest rate and $2,100 worth of fees would have an APR of 3.169%.

When comparing rates from different lenders, look at both the APR and the interest rate. The APR will represent the true cost over the full term of the loan, but you’ll also need to consider what you’re able to pay upfront versus over time.

Summary of current mortgage rates

Mortgage rates were higher this week —

• The current rate for a 30-year fixed-rate mortgage is 6.57%, up by 0.18 percentage points over the past week. Last year, the 30-year rate averaged 5.10%.
• The current rate for a 15-year fixed-rate mortgage is 5.97%, an increase of 0.22 percentage points compared to a week ago. The 15-year rate averaged 4.31% a year ago this week.