A few important mortgage rates moved downward over the last seven days. The average interest rates for both 15-year fixed mortgage rates and 30-year fixed mortgage rates had a downswing. At the same time, average rates for 5/1 adjustable-rate mortgages also moved down.
In March 2022, the Federal Reserve stepped in to combat surging inflation by hiking its key interest rate. Mortgage rates, which are not set by the central bank but are indirectly influenced by rate hikes, increased alongside them. After 11 nearly consecutive rate increases, average mortgage rates are now above 7%.
While inflation has dropped from its record highs, it's still above target. That means the Fed could continue to raise rates as it sees fit to increase the cost of borrowing and slow down the economy.
About these rates: Like CNET, Bankrate is owned by Red Ventures. This tool features partner rates from lenders that you can use when comparing multiple mortgage rates.
However, experts predict the Fed will hold off on another rate increase during its September meeting this week. Progress on inflation and other key economic indicators may ease some of the upward pressure on mortgage rates. But, if future inflation data comes in hotter than expected, mortgage rates could keep going up in 2023.
Fluctuations in the mortgage and housing markets are always going to happen. That's why experts say it's a good idea for homebuyers to focus on what they can control: getting the best rate for their financial situation.
To increase your odds of qualifying for the lowest rate available, take steps to improve your credit score and save for a down payment. Also, be sure to look at the annual percentage rate, or APR, which reflects the mortgage interest rate plus other borrowing charges. By looking at the total cost of borrowing from multiple lenders, you can make a more accurate apples-to-apples comparison.
30-year fixed-rate mortgages
The average interest rate for a standard 30-year fixed mortgage is 7.55%, which is a decrease of 4 basis points compared to one week ago. (A basis point is equivalent to 0.01%.) Thirty-year fixed mortgages are the most common loan term. A 30-year fixed mortgage will typically have a greater interest rate than a 15-year fixed rate mortgage -- but also a lower monthly payment. Although you'll pay more interest over time -- you're paying off your loan over a longer timeframe -- if you're looking for a lower monthly payment, a 30-year fixed mortgage may be a good option.
15-year fixed-rate mortgages
The average rate for a 15-year, fixed mortgage is 6.80%, which is a decrease of 1 basis point compared to a week ago. You'll definitely have a higher monthly payment with a 15-year fixed mortgage compared to a 30-year fixed mortgage, even if the interest rate and loan amount are the same. But a 15-year loan will usually be the better deal, if you can afford the monthly payments. You'll typically get a lower interest rate, and you'll pay less interest in total because you're paying off your mortgage much quicker.
5/1 adjustable-rate mortgages
A 5/1 ARM has an average rate of 6.53%, a downtick of 4 basis points compared to last week. You'll typically get a lower interest rate (compared to a 30-year fixed mortgage) with a 5/1 adjustable-rate mortgage in the first five years of the mortgage. However, changes in the market may cause your interest rate to increase after that time, as detailed in the terms of your loan. Because of this, an adjustable-rate mortgage may be a good option if you plan to sell or refinance your house before the rate changes. But if that's not the case, you could be on the hook for a significantly higher interest rate if the market rates change.
Mortgage rate trends
Mortgage rates were historically low throughout most of 2020 and 2021 but increased steadily throughout 2022 as the Federal Reserve began aggressively hiking interest rates. The top question is what the rest of 2023 has in store for prospective homebuyers.
"Today's high mortgage rates are not the only challenge we have in the current market," said Erin Sykes, chief economist at Nest Seekers International. "The combination of high interest rates plus sustained property prices and persistent inflation are making day-to-day life more expensive."
While experts say mortgage rates are unlikely to return to the rock-bottom levels in the early pandemic, there's a good chance we could see mortgage rates dip before the end of the year.
In order for that to happen, though, Sykes says we need to see inflation pull back on a consistent basis for at least four to six readings. If the federal funds rate remains steady, that should also help stabilize mortgage rates going into 2024.
Fannie Mae calls for the average 30-year fixed mortgage rate to close out the year at 6.7%.
We use data collected by Bankrate to track rate changes over time. This table summarizes the average rates offered by lenders across the country:
Today's mortgage interest rates
|Loan term||Today's Rate||Last week||Change|
|30-year mortgage rate||7.55%||7.59%||-0.04|
|15-year fixed rate||6.80%||6.81%||-0.01|
|30-year jumbo mortgage rate||7.58%||7.62%||-0.04|
|30-year mortgage refinance rate||7.74%||7.78%||-0.04|
Rates as of Sept. 19, 2023.
How to find the best mortgage rates
When you are ready to apply for a loan, you can connect with a local mortgage broker or search online. In order to find the best home mortgage, you'll need to take into account your goals and current finances.
A range of factors -- including your down payment, credit score, loan-to-value ratio and debt-to-income ratio -- will all affect your mortgage interest rate. Having a good credit score, a larger down payment, a low DTI, a low LTV or any combination of those factors can help you get a lower interest rate.
The interest rate isn't the only factor that affects the cost of your home. Be sure to also consider other factors such as fees, closing costs, taxes and discount points. Make sure to shop around with multiple lenders -- including credit unions and online lenders in addition to local and national banks -- in order to get a loan that works best for you.
What is a good loan term?
One important thing you should consider when choosing a mortgage is the loan term, or payment schedule. The most common loan terms are 15 years and 30 years, although 10-, 20- and 40-year mortgages also exist. Mortgages are further divided into fixed-rate and adjustable-rate mortgages. For fixed-rate mortgages, interest rates are the same for the life of the loan. Unlike a fixed-rate mortgage, the interest rates for an adjustable-rate mortgage are only fixed for a certain amount of time (typically five, seven or 10 years). After that, the rate fluctuates annually based on the market rate.
When deciding between a fixed-rate and adjustable-rate mortgage, you should think about how long you plan to stay in your home. For those who plan on staying long-term in a new house, fixed-rate mortgages may be the better option. Fixed-rate mortgages offer more stability over time in comparison to adjustable-rate mortgages, but adjustable-rate mortgages may offer lower interest rates upfront. However, you could get a better deal with an adjustable-rate mortgage if you only plan to keep your house for a few years. The best loan term depends on your personal situation and goals, so make sure to consider what's important to you when choosing a mortgage.