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The average rate on a 30-year fixed mortgage rose by 0.22 percentage points in the last week to 7.34%.
Meanwhile, the APR on a 15-year fixed mortgage climbed 0.27 percentage points during the same period to 6.50%.
For existing homeowners, compare your current mortgage rates with today’s refinance rates.
Current Mortgage Rates for January 22, 2024
| Loan term | Rate | Change | Rate last week | |||
|---|---|---|---|---|---|---|
| 30-Year Mortgage Rate | 7.34% | +0.22 | 7.12% | |||
| 15-Year Fixed Rate | 6.50% | +0.27 | 6.23% | |||
| 30-Year Jumbo Mortgage Rate | 7.27% | +0.07 | 7.20% | |||
| Source: Curinos | ||||||
30-Year Mortgage Rates
Today’s 30-year mortgage—the most popular mortgage product—is 7.34%, up 0.22 percentage point from a week earlier.
The interest rate is just one fee included in your mortgage. You’ll also pay lender fees, which differ from lender to lender. Both interest rate and lender fees are captured in the annual percentage rate, or the APR. This week the APR on a 30-year fixed-rate mortgage is 7.24%. Last week, the APR was 7.02%.
Let’s say your home loan is $100,000 and you have a 30-year, fixed-rate mortgage with the current rate of 7.34%, your monthly payment will be about $688, including principal and interest (taxes and fees not included), the Forbes Advisor mortgage calculator shows. That’s around $147,662 in total interest over the life of the loan.
15-Year Mortgage Rates
Today’s 15-year mortgage (fixed-rate) is 6.50%, up 0.27 percentage point from the previous week. The same time last week, the 15-year, fixed-rate mortgage was at 6.23%.
The APR on a 15-year fixed is 6.44%. It was 6.16% a week earlier.
A 15-year, fixed-rate mortgage with today’s interest rate of 6.50% will cost $871 per month in principal and interest on a $100,000 mortgage (not including taxes and insurance). In this scenario, borrowers would pay approximately $56,780 in total interest.
Jumbo Mortgage Rates
Today’s average interest rate on a 30-year fixed-rate jumbo mortgage climbed 0.07 point from last week to 7.27%.
Borrowers with a 30-year, fixed-rate jumbo mortgage with today’s interest rate of 7.27% will pay approximately $683 per month in principal and interest per $100,000. On a $750,000 jumbo mortgage, the monthly principal and interest payment would be approximately $5,126.
How to Calculate Mortgage Payments
Get to know your budget before you look for a house. This will give you an idea of the type of house you can afford. Start by using a mortgage calculator to get a rough estimate.
Simply input the following information:
- Home price
- Down payment amount
- Interest rate
- Loan term
- Taxes, insurance and any HOA fees
How Are Mortgage Rates Determined?
Mortgage interest rates are determined by several factors, including some that borrowers can’t control:
- Federal Reserve. The Fed rate hikes and decreases adjust the federal funds rate, which helps determine the benchmark interest rate that banks lend money at. As a result, mortgage rates tend to move in the same direction with the Fed’s rate decision.
- Bond market. Mortgages are also loosely connected to long-term bond yields as investors look for income-producing assets—specifically, the 10-year U.S. Treasury Bond. Home loan rates tend to increase as bond prices decrease, and vice versa.
- Economic health. Rates can increase during a strong economy when consumer demand is higher and unemployment levels are lower. Anticipate lower rates as the economy weakens and there is less demand for mortgages.
- Inflation. Banks and lenders may increase rates during inflationary periods to slow the rate of inflation. Additionally, inflation makes goods and services more expensive, reducing the dollar’s purchasing power.
While the above factors set the base interest rate for new mortgages, there are several areas that borrowers can focus on to get a lower rate:
- Credit score. Applicants with a credit score of 670 or above tend to have an easier time qualifying for a better interest rate. Typically, most lenders require a minimum score of 620 to qualify for a conventional mortgage.
- Debt-to-income (DTI) ratio. Lenders may issue mortgages to borrowers with a DTI of 50% or less. However, applying with a DTI below 43% is recommended.
- Loan-to-value (LTV) ratio. Conventional home loans charge private mortgage insurance when your LTV exceeds 80% of the appraisal value, meaning you need to put at least 20% down to avoid higher rates. Additionally, FHA mortgage insurance premiums expire after the first 11 years when you put at least 10% down.
- Loan term. Longer-term loans such as a 30-year or 20-year mortgage tend to charge higher rates than a 15-year loan term. However, your monthly payment can be more affordable over a longer term.
- Residence type. Interest rates for a primary residence can be lower than a second home or an investment property. This is because the lender of your primary mortgage receives compensation first in the event of foreclosure.
What Is the Best Type of Mortgage Loan?
Conventional home loans are issued by private lenders and typically require good or excellent credit and a minimum 20% down payment to get the best rates. Some lenders offer first-time home buyer loans and grants with relaxed down payment requirements as low as 3%.
For buyers with limited credit or finances, a government-backed loan is usually the better option as the minimum loan requirements are easier to satisfy.
For example, FHA loans can require 3.5% down with a minimum credit score of 580 or at least 10% down with a credit score between 500 and 579. However, upfront and annual mortgage insurance premiums can apply for the life of the loan.
Buyers in eligible rural areas with a moderate income or lower may also consider USDA loans. This program doesn’t require a down payment, but you pay an upfront and annual guarantee fee for the life of the loan.
If you come from a qualifying military background, VA loans can be your best option. First, you don’t need to make a down payment in most situations. Second, borrowers pay a one-time funding fee but don’t pay an annual fee as the FHA and USDA loan programs require.
Frequently Asked Questions (FAQs)
What is a good mortgage rate?
A competitive mortgage rate currently ranges from 6% to 8% for a 30-year fixed loan. Several factors impact mortgage rates, including the repayment term, loan type and borrower’s credit score.
How to get a lower mortgage interest rate?
Comparing lenders and loan programs is an excellent start. Borrowers should also strive for a good or excellent credit score between 670 and 850 and a debt-to-income ratio of 43% or less.
Further, making a minimum down payment of 20% on conventional mortgages can help you automatically waive private mortgage insurance premiums, which increases your borrowing costs. Buying discount points or lender credits can also reduce your interest rate.
How long can you lock in a mortgage rate?
Most rate locks last 30 to 60 days and your lender may not charge a fee for this initial period. However, extending the rate lock period up to 90 or 120 days is possible, depending on your lender, but additional costs may apply.
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Mortgage Rates and Calculations
The average rate on a 30-year fixed mortgage has risen by 0.22 percentage points to 7.34%, while the APR on a 15-year fixed mortgage climbed 0.27 percentage points to 6.50% in the last week. These rates directly impact the monthly payments and total interest paid over the life of the loan. For instance, a $100,000 30-year fixed-rate mortgage at 7.34% would result in a monthly payment of approximately $688, with a total interest of around $147,662. Similarly, a 15-year mortgage at 6.50% for the same amount would lead to a monthly payment of $871 and approximately $56,780 in total interest.
Factors Affecting Mortgage Rates
Mortgage interest rates are influenced by various factors, including the Federal Reserve's rate decisions, the bond market, economic health, and inflation. Additionally, individual borrower characteristics, such as credit score, debt-to-income ratio, loan-to-value ratio, loan term, and residence type, play a significant role in determining the interest rate offered by lenders.
Types of Mortgage Loans
Different types of mortgage loans cater to varying financial situations. Conventional home loans typically require good credit and a minimum 20% down payment for the best rates, while government-backed loans, such as FHA, USDA, and VA loans, offer more flexible requirements for buyers with limited credit or finances.
FAQs
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What is a good mortgage rate? A competitive mortgage rate currently ranges from 6% to 8% for a 30-year fixed loan, with factors such as repayment term, loan type, and borrower's credit score impacting the rates.
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How to get a lower mortgage interest rate? Comparing lenders and loan programs, maintaining a good credit score, managing debt-to-income ratio, and making a minimum down payment of 20% on conventional mortgages can help lower the interest rate.
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How long can you lock in a mortgage rate? Most rate locks last 30 to 60 days, with the possibility of extending the period up to 90 or 120 days, depending on the lender.
This comprehensive overview encompasses the concepts of mortgage rates, factors influencing them, types of mortgage loans, and common questions related to mortgage interest rates and payments.
