Looking for the most up-to-date mortgage rates to empower your purchasing or refinancing decisions? We’ve got you covered.
Here, you can view today’s mortgage interest rates, updated daily according to data from Bankrate, so you can have the most current data when purchasing or refinancing your home.
30-year fixed rate mortgages
The average mortgage interest rate for a standard 30-year fixed mortgage is 6.98%, an increase of 0.10 percentage points from last week’s 6.88%.
Thirty-year fixed mortgages are the most commonly sought out loan term. A 30-year fixed rate mortgage has a lower monthly payment than a 15-year one, but usually has a higher interest rate.
15-year fixed rate mortgages
The average mortgage interest rate for a standard 15-year fixed mortgage is 6.47%, an increase of 0.06 percentage points from last week’s 6.41%.
Fifteen-year fixed rate mortgages come with a higher monthly payment compared to its 30-year counterpart. However, usually interest rates are lower and you will pay less total interest because you are paying off your loan at a faster rate.
5/1 adjustable rate mortgages
The average rate on a 5/1 adjustable rate mortgage (ARM) is 6.51%, an increase of 0.13 percentage points from last week’s 6.38%. With an ARM, you will most often get a lower interest rate than a fixed mortgage for say, the first five years.
But you could end up paying more or less after that time depending on your loan terms and how that rate follows the market.
What is the best term for a loan?
When picking a mortgage, it is important to pick out a loan term or payment schedule. Usually you will be offered a 15 or 30-year loan term, but it is not uncommon to see 10, 20, or 40-year mortgages, according to CNET.
Mortgages can be fixed-rate or adjustable-rate. Interest rates in fixed-rate mortgages are set in stone for the duration of the loan.
Adjustable-rate mortgages only have interest rates set for a certain period of time before the rate adjusts annually based on the market.
Our journalism needs your support. Please subscribe today to NJ.com.
Katherine Rodriguez can be reached at [email protected]. Have a tip? Tell us at nj.com/tips.
Mortgage demand remained subdued for the second consecutive week despite slightly lower mortgage rates.
Mortgage applications decreased by 0.7% on a seasonally adjusted basis during the week ending March 22, according to the Mortgage Bankers Association’s (MBA) weekly mortgage applications survey.
“Purchase applications were essentially unchanged, as homebuyers continue to hold out for lower mortgage rates and for more listings to hit the market,” Joel Kan, MBA’s vice president and deputy chief economist, said in a statement. “Lower rates should help to free up additional inventory as the lock-in effect is reduced, but we expect that will only take place gradually, as we forecast that rates will move toward 6% by the end of the year. Similarly, with rates remaining elevated, there is very little incentive right now for rate/term refinances.”
Both purchase and refinance activity decreased during the week. Purchase loan application volume dropped by 0.2% from one week earlier. Meanwhile, refinance volume fell by 2% from the prior week.
As of Wednesday, the 30-year fixed rate on HousingWire’s Mortgage Rates Center stood at 7.16%.
The MBA survey shows that the average mortgage rate for 30-year fixed loans with conforming balances ($766,550 or less) decreased to 6.93%, down from 6.97% last week. Meanwhile, rates on jumbo loans (balances greater than $766,550) remained unchanged week over week at 7.14%.
The Federal Housing Administration (FHA) share of total applications decreased to 12% last week, down from 12.1% the week before. The U.S. Department of Veterans Affairs (VA) share fell to 12%, down from 12.1% the week before. And the U.S. Department of Agriculture (USDA) share remained unchanged at 0.5%.
The MBA survey, conducted weekly since 1990, covers more than 75% of all U.S. retail residential mortgage applications.
If you’re in the market for a home, here are today’s mortgage rates compared to last week’s.
Loan term
Today’s Rate
Last week
Change
30-year mortgage rate
6.98%
6.88%
+0.10
15-year fixed rate
6.47%
6.41%
+0.06
10-year fixed
6.40%
6.26%
+0.14
5/1 ARM
6.51%
6.38%
+0.13
30-year jumbo mortgage rate
7.09%
6.98%
+0.11
30-year mortgage refinance rate
6.99%
6.87%
+0.12
Average rates offered by lenders nationwide as of March 25, 2024. We use rates collected by Bankrate to track daily mortgage rate trends.
Mortgage rates change every day. Experts recommend shopping around to make sure you’re getting the lowest rate. By entering your information below, you can get a custom quote from one of CNET’s partner lenders.
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.
Mortgage rate news
Over the last few years, high inflation and the Federal Reserve’s aggressive interest rate hikes pushed up mortgage rates from their record lows around the pandemic. Since last summer, the Fed has consistently kept the federal funds rate at 5.25% to 5.5%. Though the central bank doesn’t directly set the rates for mortgages, a high federal funds rate makes borrowing more expensive, including for home loans.
Mortgage rates change daily, but average rates have been moving between 6.5% and 7.5% since late last fall. Today’s homebuyers have less room in their budget to afford the cost of a home due to elevated mortgage rates and steep home prices. Limited housing inventory and low wage growth are also contributing to the affordability crisis and keeping mortgage demand down.
What to expect from mortgage rates in 2024
Mortgage forecasters base their projections on different data, but most housing market experts predict rates will move toward 6% by the end of 2024. Ultimately, a more affordable mortgage market will depend on how quickly the Fed begins cutting interest rates. Most economists predict that the Fed will start lowering interest rates later this summer.
Since mortgage rates fluctuate for many reasons — supply, demand, inflation, monetary policy and jobs data — homebuyers won’t see lower rates overnight, and it’s unlikely they’ll find rates in the 2% range again.
“We are expecting mortgage rates to fall to around 6.5% by the end of this year, but there’s still a lot of volatility I think we might see,” said Daryl Fairweather, chief economist at Redfin.
Every month brings a new set of inflation and labor data that can change how investors and the market respond and what direction mortgage rates go, said Odeta Kushi, deputy chief economist at First American Financial Corporation. “Ongoing inflation deceleration, a slowing economy and even geopolitical uncertainty can contribute to lower mortgage rates. On the other hand, data that signals upside risk to inflation may result in higher rates,” Kushi said.
Here’s a look at where some major housing authorities expect average mortgage rates to land.
Mortgage terms and types
When picking a mortgage, consider the loan term, or payment schedule. The most common mortgage terms are 15 and 30 years, although 10-, 20- and 40-year mortgages also exist. You’ll also need to choose between a fixed-rate mortgage, where the interest rate is set for the duration of the loan, and an adjustable-rate mortgage. With an adjustable-rate mortgage, the interest rate is only fixed for a certain amount of time (commonly five, seven or 10 years), after which the rate adjusts annually based on the market’s current interest rate. Fixed-rate mortgages offer more stability and are a better option if you plan to live in a home in the long term, but adjustable-rate mortgages may offer lower interest rates upfront.
30-year fixed-rate mortgages
The 30-year fixed-mortgage rate average is 6.98%, which is a growth of 10 basis points from one week ago. (A basis point is equivalent to 0.01%.) A 30-year fixed mortgage is the most common loan term. It will often have a higher interest rate than a 15-year mortgage, but you’ll have a lower monthly payment.
15-year fixed-rate mortgages
The average rate for a 15-year, fixed mortgage is 6.47%, which is an increase of 6 basis points from seven days ago. Though you’ll have a bigger monthly payment than a 30-year fixed mortgage, a 15-year loan usually comes with a lower interest rate, allowing you to pay less interest in the long run and pay off your mortgage sooner.
5/1 adjustable-rate mortgages
A 5/1 ARM has an average rate of 6.51%, an uptick of 13 basis points compared to last week. You’ll typically get a lower introductory interest rate with a 5/1 ARM in the first five years of the mortgage. But you could pay more after that period, depending on how the rate adjusts annually. If you plan to sell or refinance your house within five years, an ARM could be a good option.
What affects mortgage rates?
While it’s important to monitor mortgage rates if you’re shopping for a home, remember that no one has a crystal ball. It’s impossible to time the mortgage market, and rates will always have some level of volatility because so many factors are at play.
“Mortgage rates tend to follow long-date Treasury yields, a function of current inflation and economic growth as well as expectations about future economic conditions,” says Orphe Divounguy, senior macroeconomist at Zillow Home Loans.
Here are the factors that influence the average rates on home loans.
Federal Reserve monetary policy: The nation’s central bank doesn’t set interest rates, but when it adjusts the federal funds rate, mortgages tend to go in the same direction.
Inflation: Mortgage rates tend to increase during high inflation. Lenders usually set higher interest rates on loans to compensate for the loss of purchasing power.
The bond market: Mortgage lenders often use long-term bond yields, like the 10-Year Treasury, as a benchmark to set interest rates on home loans. When yields rise, mortgage rates typically increase.
Geopolitical events: World events, such as elections, pandemics or economic crises, can also affect home loan rates, particularly when global financial markets face uncertainty.
Other economic factors: The bond market, employment data, investor confidence and housing market trends, such as supply and demand, can also affect the direction of mortgage rates.
Calculate your monthly mortgage payment
Getting a mortgage should always depend on your financial situation and long-term goals. The most important thing is to make a budget and try to stay within your means. CNET’s mortgage calculator below can help homebuyers prepare for monthly mortgage payments.
How to get the lowest mortgage rates
Though mortgage rates and home prices are high, the housing market won’t be unaffordable forever. It’s always a good time to save for a down payment and improve your credit score to help you secure a competitive mortgage rate when the time is right.
Save for a bigger down payment: Though a 20% down payment isn’t required, a larger upfront payment means taking out a smaller mortgage, which will help you save in interest.
Boost your credit score: You can qualify for a conventional mortgage with a 620 credit score, but a higher score of at least 740 will get you better rates.
Pay off debt: Experts recommend a debt-to-income ratio of 36% or less to help you qualify for the best rates. Not carrying other debt will put you in a better position to handle your monthly payments.
Research loans and assistance: Government-sponsored loans have more flexible borrowing requirements than conventional loans. Some government-sponsored or private programs can also help with your down payment and closing costs.
Shop around for lenders: Researching and comparing multiple loan offers from different lenders can help you secure the lowest mortgage rate for your situation.
Mortgage rates rose this week as the yield on the benchmark 10-year Treasury note inched up. As of Monday, the yield on the 10-year U.S. Treasury note was about 4.25%, according to Tradeweb, up from 3.86% at the end of last year.
As a result, HousingWire’s Mortgage Rates Center showed the average 30-year fixed rate for conventional loans at 7.16% on Tuesday, up from 7.07% one week earlier. At the same time one year ago, the 30-year fixed rate averaged 6.53%. Meanwhile, the 15-year fixed rate averaged 6.51% on Tuesday, up from 6.5% one week earlier.
“The 10-year yield is up a few basis points this week as the market gets ready to digest the next big piece of economic data: Friday’s PCE inflation report. As the 10-year yield moves higher, mortgage pricing should move with it, but the mortgage spreads are having a good week, which is encouraging news,” HousingWire lead analyst Logan Mohtashami said.
“The following week, we have jobs week with four economic labor reports for the bond market to focus on.”
As of March 22, there were 513,000 single-family homes unsold on the market, up 1.1% from the week prior and up 24% from the same week one year ago. At the same period last year, inventory was declining, according to Mike Simonsen, founder and president of Altos Research.
“We’ll finish the year with over 600,000 homes on the market unless rates reverse and fall quickly,” Simonsen wrote on Monday.
More inventory on the market means that more sales can take place. But, on the other hand, it can also mean that demand is weakening.
“The longer mortgage rates stay higher, the more inventory will grow closer to the old levels,” Simonsen wrote. “If you’re a homebuyer and you’re waiting for mortgage rates to fall before you swoop in for a deal, recognize that even slightly lower rates will spur demand more than supply so inventory will start falling and selection and competition will be worse.”
If you are offered a relatively low mortgage rate, locking it in can secure it and potentially save you a bundle of money over the life of your loan. In other words, it can be a smart move.
That said, when applying for a mortgage, you only have so much control over the mortgage rate, as lenders will consider your credit score, income, and assets to determine your risk as a borrower. What’s more, mortgage rates change daily based on external economic factors like investment activity and inflation.
Read on to learn how a mortgage rate lock works and the benefits and downsides of using this option.
What Is a Mortgage Rate Lock?
A mortgage rate lock is an agreement between a borrower and lender to secure an interest rate on a mortgage for a set period of time. Locking in your mortgage rate safeguards you from market fluctuations while the lender underwrites and processes your loan.
Interest rates can rise and fall significantly between mortgage preapproval and closing on a property.
Remember that in the home-buying process, when you’re pre-approved for a mortgage, you will know exactly how much you most likely can borrow, and then you can shop for a home in that range.
So when can you lock in a mortgage rate? Depending on the lender, you may have the option to lock in the rate any time between preapproval and when underwriting begins.
Before preapproval and locking in, it’s recommended to get multiple offers when shopping for a mortgage to find a competitive rate. 💡 Quick Tip: Want the comforts of home and to feel comfortable with your home loan? SoFi has a simple online application and a team dedicated to closing your loan on time. No surprise SoFi has been named a Top Online Lender in 2024 by LendingTree/Newsweek.
How a Mortgage Rate Lock Works
Mortgage rate locks are more complicated than simply securing a set rate in perpetuity. How the rate lock works in practice will vary among lenders, loan terms, different types of mortgages, and geographic locations.
Once you lock a mortgage rate, there are three possible scenarios: Interest rates will increase, decrease, or stay the same. The ideal outcome is securing a lower rate than the prevailing market interest rate at the time of closing.
Here are some key points to know if you are considering a rate lock:
• Rate locks are sometimes free but often cost between 0.25% and 0.50% of the loan amount.
• When you choose to lock in your rate, it’s stabilized for a set period of time — usually for 30 to 60 days, but up to 120 days may be available.
• If the rate lock expires before closing on the property, the ability to extend is subject to the lender.
• Time it right. The average mortgage took 44 days to close as of February 2024, according to ICE Mortgage Technology, underscoring the importance of timing a mortgage rate lock with your expected closing date. Otherwise, you could face fees for extending the rate lock or have to settle for a new, potentially higher rate.
• Whether borrowers are charged for a rate lock depends on the lender. It could be baked into the cost of the offer or tacked on as a flat fee or percentage of the loan amount. The longer the lock period, the higher the fees, generally speaking.
• Lenders have the discretion to void the rate lock and change your rate based on your personal financial situation. Say you take out a new line of credit to cover an emergency expense during the mortgage underwriting process. This could affect your credit and debt-to-income ratio, causing the lender to reevaluate your eligibility for the offered rate and financing.
• Lenders also determine the mortgage rate based on the types of houses a borrower is looking at: A primary residence vs. a vacation home or investment property, for example, would influence the interest rate.
Recommended: A Guide to Buying a Duplex
Consequences of Not Locking in Your Mortgage Rate
There are risks to not locking in a mortgage rate before closing.
If you don’t lock in a rate, it can change at any time. An uptick in interest rates would translate to a higher monthly mortgage payment. Granted, a slight bump to your monthly payment may not lead to mortgage relief, but it could cost thousands over time.
Example: The monthly payment on a $300,000 loan at a 30-year fixed rate would go up by $88 if the interest rate increased from 4% to 4.5%. This would add up to an extra $31,611 in interest paid over the life of the loan.
You can use a mortgage calculator tool to see how much a rise in rates could affect your mortgage payment.
Furthermore, a higher monthly payment might potentially disqualify you from financing, depending on the impact on your debt-to-income ratio. After a jump in interest rates, borrowers may need to make a larger down payment or buy mortgage points upfront to obtain financing.
Even if you lock in a mortgage rate early on, you could face these consequences if it expires before closing. Deciding when to lock in a mortgage rate should account for any potential contingencies that could delay the process. If you’re unsure, ask your lender for guidance on when you should lock in. 💡 Quick Tip: Generally, the lower your debt-to-income ratio, the better loan terms you’ll be offered. One way to improve your ratio is to increase your income (hello, side hustle!). Another way is to consolidate your debt and lower your monthly debt payments.
What to Do if Interest Rates Fall After Your Rate Lock
The main concern with mortgage rate locks is that you could miss out on a lower rate. In most cases, buyers will pay the rate they are locked in at if the prevailing interest rate is less.
A float-down option, however, protects you from rate increases while letting you switch to the lower interest rate at closing.
• Float-down policies vary by lender but generally cost more than a conventional rate lock for the added flexibility and assurance.
• It’s also possible that a float-down option won’t be triggered unless a certain threshold is met for the drop in rates.
• It’s worth noting that borrowers aren’t committed to the mortgage lender until closing, so reapplying elsewhere is an option if rates change considerably.
Pros and Cons of Mortgage Rate Lock
Back to the big question: Should I lock my mortgage rate today? It’s important to weigh the pros and cons to decide when to lock in a mortgage rate.
Pros
Cons
Locking in a rate you can afford can lessen money stress during the closing process
A rate lock might prevent you from getting a better deal if rates fall later on
You could save money on interest if you lock in before rates go up
If a rate lock expires, you may have to pay for an extension or get stuck with a potentially higher rate
Lenders may offer a short-term rate lock for free, providing a window to close the deal if rates spike but an opportunity to wait it out if they drop
Rate locks can involve a fee of 0.25% to 0.50% of the loan amount.
The Takeaway
A favorable interest rate can make a difference in your home-buying budget. If you’re considering a rate lock because you’re concerned that rates will be rising, it’s important to choose a lock period that gives the lender ample time to process the loan to avoid extra fees or a potentially higher rate.
Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% – 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It’s online, with access to one-on-one help.
SoFi Mortgages: simple, smart, and so affordable.
FAQ
How long does a rate lock period last?
Rate locks usually last 30 to 60 days but can be shorter or longer depending on the agreement. It’s not uncommon for lenders to offer a free rate lock for a designated time frame.
Should you use a mortgage rate “float-down”?
If you’re worried about missing out on low interest rates, a mortgage rate float-down option could let you secure the current rate with the option to take a lower one if rates drop. Take note that these agreements usually outline a specified period and minimum amount the rate must drop to activate the float-down.
How much does a rate lock cost?
Lenders don’t always charge for a rate lock. If they do, you can expect costs to range from 0.25% to 0.50% of the loan amount for a lock period (usually 30 to 60 days). A longer lock period or adding a float-down option typically increases the rate lock cost.
What happens if my rate lock expires?
If your rate lock expires before you’ve finalized the deal, you can choose to extend the lock period (usually for a fee) or take the prevailing rate when you close on the loan.
Photo credit: iStock/Vertigo3d
*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.
SoFi Loan Products SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.
SoFi Mortgages Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility for more information.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.
Affiliate links for the products on this page are from partners that compensate us (see our advertiser disclosure with our list of partners for more details). However, our opinions are our own. See how we rate mortgages to write unbiased product reviews.
Mortgage rates increased this week. But the latest news from the Federal Reserve suggests that we could see them start to tick down in the coming months.
On Wednesday, the Fed announced that it will keep the federal funds rate steady as it waits for more data showing that inflation is nearing its 2% goal. The central bank also released the latest Summary of Economic Projections, which showed that Fed officials still expect to cut rates three times this year. This would likely lead to lower mortgage interest rates as well.
Average 30-year mortgage rates increased 13 basis points to 6.87% this week, according to Freddie Mac. Average 15-year rates also inched up to 6.21%.
“After decreasing for a couple of weeks, mortgage rates are once again on the upswing,” Sam Khater, Freddie Mac’s chief economist, said in a press release. “As the spring homebuying season gets underway, existing home inventory has increased slightly and new home construction has picked up. Despite elevated rates, homebuilders are displaying renewed confidence in the housing market, focusing on the fact that there is a good amount of pent-up demand, an ongoing supply shortage, and expectations that the Federal Reserve will cut rates later in the year.”
The Fed could start cutting rates as soon as its June meeting, according to the CME FedWatch Tool. This would remove some of the upward pressure off of mortgage rates and allow them to trend down a bit.
But it will likely be a while before we see affordability improve significantly. If you’re waiting for rates to drop before you start the homebuying process, you may have better luck later this year or in 2025.
Mortgage Rates Today
Mortgage type
Average rate today
This information has been provided by
Zillow. See more
mortgage rates on Zillow
Real Estate on Zillow
Mortgage Refinance Rates Today
Mortgage type
Average rate today
This information has been provided by
Zillow. See more
mortgage rates on Zillow
Real Estate on Zillow
Mortgage Calculator
Use our free mortgage calculator to see how today’s interest rates will affect your monthly payments.
Mortgage Calculator
$1,161 Your estimated monthly payment
Total paid$418,177
Principal paid$275,520
Interest paid$42,657
Paying a 25% higher down payment would save you $8,916.08 on interest charges
Lowering the interest rate by 1% would save you $51,562.03
Paying an additional $500 each month would reduce the loan length by 146 months
By clicking on “More details,” you’ll also see how much you’ll pay over the entire length of your mortgage, including how much goes toward the principal vs. interest.
30-Year Fixed Mortgage Rates
Last week’s average 30-year fixed mortgage rate is 6.87%, according to Freddie Mac. This is a 13-basis-point increase from the previous week.
The 30-year fixed-rate mortgage is the most common type of home loan. With this type of mortgage, you’ll pay back what you borrowed over 30 years, and your interest rate won’t change for the life of the loan.
The lengthy 30-year term allows you to spread out your payments over a long period of time, meaning you can keep your monthly payments lower and more manageable. The trade-off is that you’ll have a higher rate than you would with shorter terms or adjustable rates.
15-Year Fixed Mortgage Rates
Average 15-year mortgage rates inched up to 6.21% last week, according to Freddie Mac data. This is a five-point increase since the week before.
If you want the predictability that comes with a fixed rate but are looking to spend less on interest over the life of your loan, a 15-year fixed-rate mortgage might be a good fit for you. Because these terms are shorter and have lower rates than 30-year fixed-rate mortgages, you could potentially save tens of thousands of dollars in interest. However, you’ll have a higher monthly payment than you would with a longer term.
How Do Fed Rate Hikes Affect Mortgages?
The Federal Reserve has increased the federal funds rate dramatically to try to slow economic growth and get inflation under control. So far, inflation has slowed significantly, but it’s still a bit above the Fed’s 2% target rate.
Mortgage rates aren’t directly impacted by changes to the federal funds rate, but they often trend up or down ahead of Fed policy moves. This is because mortgage rates change based on investor demand for mortgage-backed securities, and this demand is often impacted by how investors expect Fed hikes to affect the broader economy.
The Fed has indicated that it’s likely done hiking rates and that it could start cutting soon. This will likely allow mortgage rates to trend down later this year.
When Will Mortgage Rates Go Down?
Mortgage rates increased dramatically over the last two years, but they’ve moderated somewhat in recent months, and are expected to drop further this year.
In February 2024, the Consumer Price Index rose 3.2% year-over-year. Inflation has slowed significantly since it peaked last year, which is good news for mortgage rates. But it has to slow further before rates will begin to fall.
For homeowners looking to leverage their home’s value to cover a big purchase — such as a home renovation — a home equity line of credit (HELOC) may be a good option while we wait for mortgage rates to ease. Check out some of our best HELOC lenders to start your search for the right loan for you.
A HELOC is a line of credit that lets you borrow against the equity in your home. It works similarly to a credit card in that you borrow what you need rather than getting the full amount you’re borrowing in a lump sum. It also lets you tap into the money you have in your home without replacing your entire mortgage, like you’d do with a cash-out refinance.
Current HELOC rates are relatively low compared to other loan options, including credit cards and personal loans.
Looking for the most up-to-date mortgage rates to empower your purchasing or refinancing decisions? We’ve got you covered.
Here, you can view today’s mortgage interest rates, updated daily according to data from Bankrate, so you can have the most current data when purchasing or refinancing your home.
30-year fixed rate mortgages
The average mortgage interest rate for a standard 30-year fixed mortgage is 6.99%, an increase of 0.13 percentage points from last week’s 6.86%.
Thirty-year fixed mortgages are the most commonly sought out loan term. A 30-year fixed rate mortgage has a lower monthly payment than a 15-year one, but usually has a higher interest rate.
15-year fixed rate mortgages
The average mortgage interest rate for a standard 15-year fixed mortgage is 6.46%, an increase of 0.06 percentage points from last week’s 6.40%.
Fifteen-year fixed rate mortgages come with a higher monthly payment compared to its 30-year counterpart. However, usually interest rates are lower and you will pay less total interest because you are paying off your loan at a faster rate.
5/1 adjustable rate mortgages
The average rate on a 5/1 adjustable rate mortgage (ARM) is 6.36%, an increase of 0.16 percentage points from last week’s 6.20%. With an ARM, you will most often get a lower interest rate than a fixed mortgage for say, the first five years.
But you could end up paying more or less after that time depending on your loan terms and how that rate follows the market.
What is the best term for a loan?
When picking a mortgage, it is important to pick out a loan term or payment schedule. Usually you will be offered a 15 or 30-year loan term, but it is not uncommon to see 10, 20, or 40-year mortgages, according to CNET.
Mortgages can be fixed-rate or adjustable-rate. Interest rates in fixed-rate mortgages are set in stone for the duration of the loan.
Adjustable-rate mortgages only have interest rates set for a certain period of time before the rate adjusts annually based on the market.
Our journalism needs your support. Please subscribe today to NJ.com.
Katherine Rodriguez can be reached at [email protected]. Have a tip? Tell us at nj.com/tips.
Mortgage rates dipped to their lowest level last week since early February, according to the Mortgage Bankers Association’s weekly survey, a welcome milestone for prospective homebuyers plagued by high borrowing costs that have surged in the past two years.
Key Facts
The average 30-year fixed rate last week was 6.84% for home loans less than $766,550, according to the poll of American mortgage brokers, down 18 basis points from last week’s 7.02% and dipping below 7% for the first time since the first week of February.
Mike Fratantoni, the Mortgage Bankers Association’s chief economist, explained in a statement the downward move in mortgage rates came as recent data painted a far more encouraging economic picture for the Federal Reserve to bring down interest rates.
That would likely cause mortgage rates to fall as the central bank’s rates strongly influence the rates set by lenders.
Homebuying activity ramped up as mortgage rates declined, as the Mortgage Bankers Association reported a 7% increase in national mortgage applications, though Fratantoni noted total volume is down about 11% year-over-year.
Key Background
Mortgage rates remain significantly elevated from where they stood for much of the last two decades. The average 30-year fixed mortgage rate was about 3.8% in March 2022 and 3% in March 2021, according to federal mortgage lender Freddie Mac, with the low interest rates coming as the Fed held its target federal funds rate at close to zero in its bid to stimulate the economy in the wake of the Covid-19 pandemic. Still, mortgage rates are significantly below their 23-year peak of 7.8% hit last October. Though individual brokers actually set mortgage rates for individual applicants, the Fed’s monetary policy heavily influences mortgage rates as its target federal funds rate determines the costs at which banks can borrow from one another, setting a standard for the cost of borrowing throughout the economy.
Contra
Last week’s monthly jobs update revealed the highest unemployment rate since January 2022 and lower job growth than previously reported, while Tuesday’s inflation report indicated a significant decline in inflation in the services sector. Though some experts, such as Fratantoni, viewed the weak spots in the reports as a boon, the market remains unconvinced, as 10-year Treasury yields are up as hopes for an interest rate cut in the first half of this year declined.
Surprising Fact
The spread between mortgage rates (about 7%) and U.S, government bond yields (about 4.2%) sits at close to its highest level in more than three decades, an indication that institutional investors are less attracted to the prospect of holding riskier mortgages when safer government bonds are available at high yields.
Building your dream home from the ground up is a great way to make sure it meets all your expectations. Securing a home construction loan can assist you in realizing your plans, but you need to know the specifics that come with these types of loans.
Here’s an overview of what you should know when obtaining a construction loan.
What is a construction loan?
A construction loan is a type of loan specifically designed to finance the cost of building a new home or renovation of an existing property. It’s a short-term loan with a variable interest rate, and is typically used during the construction phase of a project.
Unlike a traditional mortgage, construction loans are disbursed in installments as the construction progresses, rather than as a lump sum. This helps to minimize the risk for both the lender and the borrower, as the loan amount is based on the actual costs of construction.
How do construction loans work?
Construction loans are typically offered by specialized lenders or banks and are often secured by the property being built. Borrowers are usually required to provide a detailed construction plan, as well as a budget and timeline for the project. The lender will then release funds as each construction milestone is completed and inspected.
At the end of the construction process, the construction loan will typically be converted into a permanent mortgage. This conversion process can occur automatically or require a separate application and approval process, depending on the lender’s requirements.
3 Types of Home Construction Loans
There are three main types of home construction loans: construction-to-permanent, construction-only, and renovation.
Construction-to-Permanent Loan
With this type of home construction loan, once the home is built, the loan converts to a permanent mortgage. You typically only have to pay closing costs once, which can save you money.
You can also choose to pay interest during the building phase. However, it’s typically a variable interest rate, so your payments will fluctuate. After the home is built, and your construction loan converts to a permanent mortgage, you might be able to choose whether you want a variable rate or a fixed rate.
You may want to consider this type of loan if you have a feasible plan for your house’s construction, and you want to pay it back over time with a reliable monthly payment.
Construction-Only Loan
This type of loan requires full repayment at the end of the construction phase, rather than automatic conversion to a mortgage. This means that you’ll incur two sets of closing costs and have to secure approval for two separate loans.
However, a construction-only loan may require a smaller down payment compared to a construction-to-permanent loan. If you already own a home, you may consider obtaining a construction-only loan initially and waiting to sell your current home to accumulate a larger down payment for a mortgage.
Construction-only loans can be a suitable option for individuals who currently have limited funds but expect to have more in the future. After completing construction, you can apply for a mortgage to pay off the loan.
One potential drawback of this type of loan is that if your financial or credit situation changes during construction, you may not qualify for a mortgage large enough to repay the loan. This can lead to new problems, including the possibility of losing your home before you even move in.
Renovation Construction Loan
Rather than helping you build something new, a renovation loan is designed to help you cover the costs of a major remodel. If you want to turn a fixer-upper into the home of your dreams, but aren’t sure if you have the money for renovations, this type of loan can help.
It’s important to note that these aren’t home improvement loans. A home improvement loan often deals with smaller remodels and is based on how much equity you currently have in the home. Renovation construction loans are about major overhauls.
Typically, you’ll get a loan big enough to cover the costs of renovations as a mortgage. You only apply for one loan, and it’s based on the likely value of the home after the remodel is finished. This can be a big help if you don’t want to try to finance the cost of upgrades after you buy the house.
Expenses Covered by Construction Loans
In general, you’ll find that most construction loans pay for various aspects of a project, including:
Obtaining the land (or the fixer-upper if you’re getting a renovation loan)
Getting the plans for the home
Applying for the permits
Paying the fees associated with construction
Contingency reserves for covering unexpected costs
Closing costs
You might also be able to have interest reserves built into your construction loan if you would rather not make interest payments while your home is being built or renovated.
The idea is that everything you need to complete your home, whether new-built or a renovation, is wrapped up in the loan.
Create a Plan for Your Custom Home
When building a home, you can’t just ask a lender for an appraisal or just get approved for a certain amount. Construction loan lenders expect to see a plan for the construction of the home.
When you apply for a home construction loan, you’ll need to let your lender know the following information:
Size of the home and the lot
Placement of the lot
Home plans (possibly include blueprints)
Materials used to build the home
Types of renovations you plan to make (for an applicable loan)
Timeline for completing the home
Contractors that will be hired
Lenders will dig into this information to decide if you’re a good risk. They want to know that the home, or the lot, will at least be worth something if you default on the loan. Part of the process is understanding that the home will at least be worth what you’re borrowing once it’s finished.
At each stage of construction, and before disbursement is made, the work will have to be inspected. If you choose a general contractor that’s experienced and respected, they can help you provide needed information to your lender, and you can be reasonably assured that they will do good work.
Qualifying for a Home Construction Loan
Now that you have a plan for your new home, it’s time to qualify for your construction loan. In many ways, the process is the same as qualifying for a traditional mortgage loan. The construction loan lender will review your financial situation and decide if you present a relatively low risk. Some of the things that a construction loan provider looks at include:
Credit score: This is the most important element of any home loan, and it’s no different with construction loans. In fact, because there might not be anything of tangible value before construction, you might need an even higher credit score. You typically need a minimum credit score of 680 to qualify, so you need to improve your credit score if you’re not there yet.
Debt-to-income (DTI) ratio: As with a regular mortgage, the lower your debt-to-income ratio, the better off you’ll be. Most lenders require that your DTI be no more than 45% of your gross monthly income.
Down payment: While you might be able to get by with 5% or less for a down payment with traditional mortgages (FHA, USDA, and VA loans famously come with much lower down payments), construction loans are a different story. You’ll likely have to put down at least 20% to make it happen. In some cases, though, as with a renovation loan, you might get away with a lower down payment.
By planning ahead and making sure your finances are in order, you have a better chance of qualifying for a construction loan.
Prepare for a Longer Closing Period
Realize that there are many moving parts to your home construction loan. It’s not just you and your lender involved. You’ve got a builder or contractor as part of the arrangement, and you’re not going to get a lump sum. Instead, the lender will evaluate you and the contractor you choose separately.
Additionally, a timeline for disbursements needs to be set up. Moreover, a lender might need to consider insurance related to the process. Plus, whether you choose a construction-to-permanent or construction-only loan matters a great deal as you negotiate with a lender about your terms.
As a result of these different aspects of construction loans, you might have to allow for a longer closing period. Additionally, you’re likely to see delays and additional costs during the building portion, so making sure you have adequate contingency reserves built into your new home is vital.
Bottom Line
With a construction loan, you can turn your dream home vision into a reality, whether building from the ground up or renovating a fixer-upper. Be aware, however, that a construction loan entails different terms and conditions.
Your lender will not simply grant you the entire loan amount without first ensuring your ability to use it responsibly. You must prove your financial capability and the viability of your construction project. Your lender will keep a close eye on the allocation of funds as the project progresses.
If you have a good understanding of how a construction loan operates, it can be a valuable tool in ensuring you achieve the home of your dreams.
See also: Is It Cheaper to Build or Buy a House?
Frequently Asked Questions
How do I qualify for a construction loan?
To qualify for a construction loan, you will typically need to have a good credit score and a sufficient amount of equity in your property (if you are building on land that you already own). You will also need to provide a detailed construction plan and budget, as well as proof of your ability to repay the loan.
How long does it take to get a construction loan?
The process of getting a construction loan can vary in length depending on the lender and the specifics of your situation. In general, it can take several weeks or even months to complete the application process and receive approval for a construction loan.
How much can I borrow with a construction loan?
The loan amount you can obtain through a construction loan is based on various factors including your credit score, the worth of the property, and your equity in the property. Usually, borrowers can expect to secure up to 80% of the property value. However, the loan amount can differ based on the lender’s policies.
How are funds from a construction loan distributed?
The distribution of funds from a construction loan is typically done in stages, based on the progress of the construction project. The lender will release funds as specific milestones are reached, such as the completion of the foundation, the rough framing, or the final inspection. This process helps to ensure that the funds are used for the intended purposes and that the construction project is proceeding as planned.
Before each release of funds, the lender may require an inspection to verify that the work has been completed to their satisfaction. The exact terms of the distribution of funds may vary based on the lender and the specifics of the loan agreement.
Are construction loans more expensive than other types of loans?
Construction loans can carry higher interest rates and fees due to the higher risk for the lender. However, the total cost of the loan will vary based on the lender, loan type, and loan terms.
Can I use a construction loan to remodel my existing home?
Yes, construction loans can be utilized for renovating an existing home too. Normally, those borrowing must present a comprehensive renovation plan, cost estimate, and demonstrate their repayment capability.
Editor’s Note: Parts of this story were auto-populated using data from Curinos, a mortgage research firm that collects data from more than 250 lenders. For more details on how we compile daily mortgage data, check out our methodology here.
Mortgage rates continue to hover around 7%, according to data from Curinos analyzed by MarketWatch Guides. The 30-year fixed-rate mortgage is 7.38% today, up+0.18 percentage points from last week.
In response to lower rates, mortgage applications rose for the first time in six weeks, according to data released by Freddie Mac on Thursday. A Mortgage Bankers Association (MBA) report published Wednesday showed that the volume of FHA loans strongly increased for the previous week, an indicator that first-time home buyers are getting back into the market – a potentially optimistic sign for the spring buying season.
Another potential good omen: Former Federal Reserve official James Bullard said he thinks the likelihood of another rate cut in the near future is strong, given the announcement in February’s job report that the unemployment rate has risen slightly. The Federal Reserve board will meet again next week.
Here are today’s average mortgage rates:
30-year fixed mortgage rate: 7.38%
15-year fixed mortgage rate: 6.69%
5/6 ARM mortgage rate: 7.05%
Jumbo mortgage rate: 7.19%
Current Mortgage Rates
Product
Rate
Last Week
Change
30-Year Fixed Rate
7.38%
7.20%
+0.18
15-Year Fixed Rate
6.69%
6.54%
+0.15
5/6 ARM
7.05%
6.92%
+0.13
7/6 ARM
7.26%
7.08%
+0.18
10/6 ARM
7.30%
7.16%
+0.14
30-Year Fixed Rate Jumbo
7.19%
7.05%
+0.14
30-Year Fixed Rate FHA
7.12%
6.94%
+0.18
30-Year Fixed Rate VA
7.14%
6.97%
+0.17
Disclaimer: The rates above are based on data from Curinos, LLC. All rate data is accurate as of Tuesday, March 19, 2024. Actual rates may vary.
>> View historical mortgage rate trends
Mortgage Rates for Home Purchase
30-year fixed-rate mortgages are up, +0.18
The average 30-year fixed-mortgage rate is 7.38%. Since the same time last week, the rate is up, changing +0.18 percentage points.
At the current average rate, you’ll pay $691.02 per month in principal and interest for every $100,000 you borrow. You’re paying more compared to last week when the average rate was 7.20%.
15-year fixed-rate mortgages are up, +0.15
The average rate you’ll pay for a 15-year fixed-mortgage is 6.69%, an increase of+0.15 percentage points compared to last week.
Monthly payments on a 15-year fixed-mortgage at a rate of 6.69% will cost approximately $881.59 per $100,000 borrowed. With the rate of 6.54% last week, you would’ve paid $873.31 per month.
5/6 adjustable-rate mortgages are up, +0.13
The average rate on a 5/6 adjustable rate mortgage is 7.05%, an increase of+0.13 percentage points over the last seven days.
Adjustable-rate mortgages, commonly referred to as ARMs, are mortgages with a fixed interest rate for a set period of time followed by a rate that adjusts on a regular basis. With a 5/6 ARM, the rate is fixed for the first 5 years and then adjusts every six months over the next 25 years.
Monthly payments on a 5/6 ARM at a rate of 7.05% will cost approximately $668.66 per $100,000 borrowed over the first 5 years of the loan.
Jumbo loan interest rates are up, +0.14
The average jumbo mortgage rate today is 7.19%, an increase of+0.14 percentage points over the past week.
Jumbo loans are mortgages that exceed loan limits set by the Federal Housing Finance Agency (FHFA) and funding criteria of Freddie Mac and Fannie Mae. This generally means that the amount of money borrowed is higher than $726,200.
Product
Monthly P&I per $100,000
Last Week
Change
30-Year Fixed Rate
$691.02
$678.79
+$12.23
15-Year Fixed Rate
$881.59
$873.31
+$8.28
5/6 ARM
$668.66
$659.94
+$8.72
7/6 ARM
$682.85
$670.68
+$12.17
10/6 ARM
$685.57
$676.08
+$9.49
30-Year Fixed Rate Jumbo
$678.11
$668.66
+$9.45
30-Year Fixed Rate FHA
$673.38
$661.28
+$12.10
30-Year Fixed Rate VA
$674.73
$663.29
+$11.44
Note: Monthly payments on adjustable-rate mortgages are shown for the first five, seven and 10 years of the loan, respectively.
Factors That Affect Your Mortgage Rate
Mortgage rates change frequently based on the economic environment. Inflation, the federal funds rate, housing market conditions and other factors all play into how rates move from week-to-week and month-to-month.
But outside of macroeconomic trends, several other factors specific to the borrower will affect the mortgage interest rate. They include:
Financial situation: Mortgage lenders use past financial decisions of borrowers as a way to evaluate the risk of loaning money.
Loan amount and structure: The amount of money that bank or mortgage lender loans and its structure (including both the term and whether its a fixed-rate or adjustable-rate).
Location: Mortgage rates vary by where you are buying a home. Areas with more lenders, and thus more competition, may have lower rates. Foreclosure laws can also impact a lender’s risk, affecting rates.
Whether borrowers are first-time homebuyers: Oftentimes first-time homebuyer programs will offer new homeowners lower rates.
Lenders: Banks, credit unions and online lenders all may offer slightly different rates depending on their internal determination.
How To Shop for the Best Mortgage Rate
Comparison shopping for a mortgage can be overwhelming, but it’s shown to be worth the effort. Homeowners may be able to save between $600 and $1,200 annually by shopping around for the best rate, researchers found in a recent study by Freddie Mac. That’s why we put together steps on how to shop for the best mortgage rate.
1. Check credit scores and credit reports
A borrower’s credit situation will likely determine the type of mortgage they can pursue, as well as their rate. Conventional loans are typically only offered to borrowers with a credit score of 620 or higher, while FHA loans may be the best option for borrowers with a FICO score between 500 and 619. Additionally, individuals with higher credit scores are more likely to be offered a lower mortgage interest rate.
Mortgage lenders often review scores from the three major credit bureaus: Equifax, Experian and TransUnion. By viewing your scores ahead of lenders considering you for a loan, you can check for errors and even work to improve your score by paying down balances and limiting new credit cards and loans.
2. Know the options
There are four standard mortgage programs: conventional, FHA, VA and USDA. To get the best mortgage rate and increase your odds of approval, it’s important for potential borrowers to do their research and apply for the mortgage program that best fits their financial situation.
The table below describes each program, highlighting minimum credit score and down payment requirements.
Though conventional mortgages are most common, borrowers will also need to consider their repayment plan and term. Rates can be either fixed or adjustable and terms can range from 10 to 30 years, though most homeowners opt for a 15- or 30-year mortgage.
3. Compare quotes across multiple lenders
Shopping around for a mortgage goes beyond comparing rates online. We recommend reaching out to lenders directly to see the “real” rate as figures listed online may not be representative of a borrower’s particular situation. While most experts recommend getting quotes from three to five lenders, there is no limit on the number of mortgage companies you can apply with. In many cases, lenders will allow borrowers to prequalify for a mortgage and receive a tentative loan offer with no impact to their credit score.
After gathering your loan documents – including proof of income, assets and credit – borrowers may also apply for pre-approval. Pre-approval will let them know where they stand with lenders and may also improve negotiating power with home sellers.
4. Review loan estimates
To fully understand which lender is offering the cheapest loan overall, take a look at the loan estimate provided by each lender. A loan estimate will list not only the mortgage rate, but also a borrower’s annual percentage rate (APR), which includes the interest rate and other lender fees such as closing costs and discount points.
By comparing loan estimates across lenders, borrowers can see the full breakdown of their possible costs. One lender may offer lower interest rates, but higher fees and vice versa. Looking at the loan’s APR can give you a good apples-to-apples comparison between lenders that takes into account both rates and fees.
5. Consider negotiating with lenders on rates
Mortgage lenders want to do business. This means that borrowers may use competing offers as leverage to adjust fees and interest rates. Many lenders may not lower their offered rate by much, but even a few basis points may save borrowers more than they might think in the long run. For instance, the difference between 6.8% and 7.0% on a 30-year, fixed-rate $100,000 mortgage is roughly $5,000 over the life of the loan.
Expert Forecasts for Mortgage Rates
Mortgage rates have cooled significantly over the past several months. After the 30-year fixed-rate mortgage hit 8% last October, it ended 2023 closer to 7%. In fact, the average for Q4 2023 was 7.3%.
Analysts with Fannie Mae and the Mortgage Bankers Association (MBA) both project that rates will fall going into 2024 and throughout next year.
Fannie Mae economists expect rates to drop more quickly, falling below 6% by Q4 2024. Meanwhile, the MBA’s forecast for Q4 2024 is 6.1% and 5.9% for Q1 2025.
More Mortgage Resources
Methodology
Every weekday, MarketWatch Guides provides readers with the latest rates on 11 different types of mortgages. Data for these daily averages comes from Curinos, LLC, a leading provider of mortgage research that collects data from more than 250 lenders. For more details on how we compile daily mortgage data, check out our comprehensive methodology here. Editor’s Note: Before making significant financial decisions, consider reviewing your options with someone you trust, such as a financial adviser, credit counselor or financial professional, since every person’s situation and needs are different.