A variety of important mortgage rates went higher over the last seven days. The average interest rates for both 15-year fixed and 30-year fixed mortgage rates both drifted higher. For variable rates, the 5/1 adjustable-rate mortgage also ticked up.
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.
After hiking interest rates 11 times since March 2022, the Federal Reserve opted to skip another increase during its September meeting. However, the Fed hasn’t ruled out the possibility of additional increases if inflation doesn’t continue to moderate.
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.
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.
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 and the Fed chooses to hike rates further, 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 30-year fixed mortgage interest rate is 7.64%, which is a growth of 9 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 often 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 6.86%, which is an increase of 6 basis points from the same time last week. Compared to a 30-year fixed mortgage, a 15-year fixed mortgage with the same loan value and interest rate will have a larger monthly payment. But a 15-year loan will usually be the better deal, as long as you can afford the monthly payments. These include typically being able to get a lower interest rate, paying off your mortgage sooner, and paying less total interest in the long run.
5/1 adjustable-rate mortgages
A 5/1 ARM has an average rate of 6.61%, an addition of 8 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 ARM in the first five years of the mortgage. However, you could end up paying more after that time, depending on the terms of your loan and how the rate adjusts with the market rate. If you plan to sell or refinance your house before the rate changes, an adjustable-rate mortgage may make sense for you. But if that’s not the case, you could be on the hook for a significantly higher interest rate if the market rates shift.
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 7.1%.
We use rates collected by Bankrate to track changes in these daily rates. 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||7.64%||7.55%||+0.09|
|15-year fixed rate||6.86%||6.80%||+0.06|
|30-year jumbo mortgage rate||7.65%||7.58%||+0.07|
|30-year mortgage refinance rate||7.83%||7.73%||+0.10|
Rates as of Sept. 25, 2023.
How to find the best mortgage rates
You can get a personalized mortgage rate by connecting with your local mortgage broker or using an online calculator. When researching home mortgage rates, think about your goals and current financial situation.
A range of factors — including your down payment, credit score, loan-to-value ratio and debt-to-income ratio — will all affect the interest rate on your mortgage. Having a good credit score, a higher 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 you talk to multiple lenders — like local and national banks, credit unions and online lenders — and comparison shop to find the best loan for you.
How does the loan term affect my mortgage?
One important thing to keep in mind when choosing a mortgage is the loan term, or payment schedule. The mortgage terms most commonly offered are 15 years and 30 years, although you can also find 10-, 20- and 40-year mortgages. Mortgages are further divided into fixed-rate and adjustable-rate mortgages. For fixed-rate mortgages, interest rates are stable for the life of the loan. For adjustable-rate mortgages, interest rates are stable for a certain number of years (typically five, seven or 10 years), then the rate fluctuates annually based on the current interest rate in the market.
When choosing between a fixed-rate and adjustable-rate mortgage, you should take into consideration how long you plan to stay in your house. Fixed-rate mortgages might be a better fit if you plan on staying in a home for quite some time. While adjustable-rate mortgages may offer lower interest rates upfront, fixed-rate mortgages are more stable in the long term. If you don’t plan to keep your new home for more than three to 10 years, though, an adjustable-rate mortgage might give you a better deal. The best loan term depends on your situation and goals, so make sure to take into consideration what’s important to you when choosing a mortgage.