Mortgage Rates 19 Month Low: A Guide to Understanding the Market

Mortgage rates have hit a 19-month low, offering a great opportunity for homebuyers and refinancers to secure a good deal. This is a significant drop from the recent highs, with rates now at their lowest point since last year.

The average 30-year fixed mortgage rate is now at 3.75%, down from 4.08% just a few months ago. This means that homeowners can save thousands of dollars over the life of their loan.

For those considering refinancing, this is a great time to act. With rates this low, it's possible to save a significant amount of money on interest payments each month.

Mortgage rates can be confusing, but they're determined by a combination of macroeconomic and industry factors. The bond market, especially 10-year Treasury yields, plays a significant role in determining mortgage rates.

The Federal Reserve's monetary policy, particularly its bond buying and funding government-backed mortgages, also influences mortgage rates. In fact, the Fed's decision to taper its bond purchases downward in 2021 led to a significant increase in mortgage rates.

To get the best mortgage rate, it's essential to shop around and compare rates from multiple lenders. According to Example 1, using the lender your real estate agent typically works with doesn't guarantee the best mortgage rate, so ask around for recommendations or use an online tool to find a lender who can provide you with a loan that's best for your situation.

Here's a breakdown of the factors that can affect your mortgage rate:

Your credit score may also affect the mortgage rate you're offered, with generally lower interest rates available for those with higher credit scores. According to Example 4, a good mortgage interest rate will depend on your financial situation, so it's essential to consider your options carefully.

A good interest rate is one that balances your financial situation with your long-term goals.

For example, a 7-year ARM (adjustable-rate mortgage) has a set rate for the initial 7 years.

Home loans with shorter terms may have lower interest rates, but higher monthly payments.

A 30-year fixed-rate mortgage has a rate that stays the same over the loan term, providing predictability.

Adjustable interest rates, like those in 7-year ARMs, can change annually after a set period of time.

The Freddie Mac average is a weekly reading of 30-year mortgage rates, published every Thursday. It's a significant indicator of market trends and can give you an idea of where rates are headed.

Freddie Mac's average fell 15 basis points to 6.20% this week, the lowest weekly average since February 2023. This reading is based on a blend of five previous days of rates.

The Freddie Mac average can differ from other 30-year rate averages, like the one we publish, because of differences in methodology and criteria for included loans. For example, Freddie Mac's average includes loans with varying down payments, credit scores, and discount points.

To give you a better idea of how the Freddie Mac average compares to other rates, here's a comparison of the weekly average to our daily reading:

Keep in mind that the rates we publish are based on daily readings, offering a more precise and timely indicator of rate movement.

Mortgage rates are influenced by a complex mix of factors, including the bond market and the Federal Reserve's monetary policy.

The bond market, specifically 10-year Treasury yields, plays a significant role in determining mortgage rates.

In 2021, the Federal Reserve's bond-buying policy kept mortgage rates relatively low, but this changed in November 2021 when the Fed began tapering its bond purchases downward.

The Fed's decision to raise the federal funds rate to fight inflation had an indirect influence on mortgage rates, despite not directly affecting them.

Between March 2022 and July 2023, the Fed aggressively raised the federal funds rate by 5.25 percentage points over 16 months, resulting in a significant upward impact on mortgage rates.

Since July 2023, the Fed has maintained the federal funds rate at its current level, but has signaled its readiness to cut rates due to cooling inflation.

We track mortgage rates using data from reputable sources.

Our national and state averages are provided by the Zillow Mortgage API, which assumes a loan-to-value ratio of 80% and a credit score in the 680–739 range.

These averages represent the rates borrowers can expect when receiving quotes from lenders, which may differ from advertised teaser rates.

We rely on data from the following sources:

With mortgage rates at a 19-month low, it's a great time to explore your options.

Conventional loans are a popular choice, allowing borrowers to put down as little as 3% for a mortgage.

For those with a bit more to put down, a 20% down payment can make a big difference in monthly payments.

FHA loans, on the other hand, require a lower down payment of just 3.5%.

To get the best rate, you need to shop around and compare rates from multiple lenders. The lender your real estate agent typically works with may not always offer the best rate, so it's essential to ask around for recommendations or use an online tool to find a lender who can provide you with a loan that's best for your situation.

Mortgage rates can vary widely depending on your personal situation, and the difference can mean spending tens of thousands of dollars more in interest over the life of the loan. To avoid this, compare official Loan Estimates from at least three different lenders, paying attention to which has the lowest rate and lowest APR.

Increasing your down payment can also lower your mortgage rate. Typically, lower rates are available for those with a down payment of 20% or more. If possible, check with your lender to see if increasing your down payment will lower your mortgage interest rate.

Your credit score can also impact the mortgage rate you're offered. Generally, the higher your credit score, the lower the interest rate will be on your home loan. Review your credit score and get it in the best shape possible before applying for a mortgage.

Here's a quick rundown of the factors that can affect your mortgage rate:

By understanding these factors and shopping around, you can find the best mortgage rate for your situation and save thousands of dollars in interest over the life of the loan.

A 30-year fixed-rate mortgage is a popular home loan option that offers stability and predictability. The interest rate remains the same for the life of the loan, which is 30 years.

For example, on a 30-year mortgage for a home valued at $300,000 with a 20% down payment and an interest rate of 3.75%, the monthly payments would be about $1,111 (not including taxes and insurance).

One of the main advantages of a 30-year fixed-rate mortgage is that it has relatively low monthly payments compared to shorter term loans like a 15-year fixed-rate mortgage.

Here are some key points to consider:

It's worth noting that while a 30-year fixed-rate mortgage may have a higher interest rate than a 15-year mortgage, the monthly payments are lower, making it a more affordable option for many homeowners.