Fixed mortgage interest rates have risen across the board. According to Freddie Mac, the 30-year fixed rate rose six basis points this week and the 15-year fixed rate rose 10 points. While these aren’t drastic jumps, it can still be discouraging when many potential home buyers were hoping that rates would go down in 2024.
However, when you look at longer-term interest rates, the picture doesn’t seem so bad. In mid-October, the 30-year interest rate was 69 basis points higher than it is now and well over 7%. The 15-year interest rate was 73 basis points higher. Even though interest rates may not go down this week, they are still lower now than they would have been if you had bought a home six months ago.
If the Federal Reserve lowers the federal funds rate, mortgage rates will likely fall in response. However, according to the CME FedWatch tool, there is about a 98% chance that the Fed will leave its key interest rate unchanged at its next meeting on May 1. So we probably won’t see any drastic changes in the near future. If you’re ready to buy a home but are waiting for prices to drop first, it may not be worth the wait.
Learn more: What the Fed’s interest rate decision means for bank accounts, CDs, loans and credit cards
Current mortgage rates
The national average fixed interest rate for 30-year mortgages is 6.88%said Freddie Mac. This is a slight increase from last week when the rate was 6.82%.
The average interest rate for 15-year fixed-rate mortgages has also increased. The 15 year rate is 6.16%an increase from last week’s 6.06%.
Read more: Is it a good time to buy a home?
30-year mortgage rates today
Today’s average 30-year mortgage rate is 6.88%. A 30-year mortgage is the most popular type of mortgage because your monthly payments are relatively low by spreading your payments over 360 months.
If you had a $300,000, 30-year mortgage with an interest rate of 6.88%, you would pay $1,971.79 each month toward principal and interest on your mortgage. Additionally, you would pay $409,844 in interest over the life of your loan, making a $300,000 mortgage total $709,844.
15 year mortgage rates today
The average 15-year mortgage rate today is 6.16%. There are several factors to consider when deciding between a 15-year or 30-year mortgage.
A 15-year mortgage comes with a lower interest rate than a 30-year mortgage. This is great in the long run because you pay off your loan 15 years early and the interest accrues for 15 years less.
However, because you limit the same debt repayments to half the time, your monthly payments will be higher.
Let’s say you get the same $300,000 mortgage, but this time with a 15-year term and an interest rate of 6.16%. Your monthly payment for principal and interest would be $2,557.58 – but you would only pay $160,364 in interest over 15 years. Ultimately, you would save almost $250,000 in interest on your mortgage.
Dig deeper: What house I can afford?
Adjustable mortgage interest rates
With an adjustable rate mortgage, your interest rate is fixed for a specific period of time and then increases or decreases periodically. For example, with a 5/1 ARM, your rate stays the same for the first five years and then changes every year.
Adjustable rates typically start lower than fixed rates, but you run the risk of your rate increasing once the rate lock-in period has passed. However, an ARM could be a good solution if you plan to sell the home before the interest rate lock-in period expires. This way, you pay a lower interest rate without having to worry about the interest rate going up later.
How to get a low mortgage rate
Mortgage lenders typically give the lowest mortgage rates to people with larger down payments, excellent credit and a low debt-to-income ratio. So if you want a lower interest rate, try saving more, improving your credit score, or paying off some debt before you start buying a home.
Learn more: How to get the lowest mortgage rates
You can also permanently lower your interest rate by paying discount points at closing. A temporary interest buyback is also an option. For example, you might get a 7% interest rate on a 2:1 buyback. Your interest rate would start at 5% in the first year, rise to 6% in the second year, and then settle at 7% for the remainder of your term.
Just consider whether those buybacks are worth the extra money at closing — earlier this month, the Consumer Financial Protection Bureau (CFPB) reported that the number of homebuyers paying for discount points increased dramatically from 2021 to 2023, especially among people with lower creditworthiness. Before you make your decision, ask yourself whether you will be staying in the house long enough for the amount you save with a lower plan to offset the cost of purchasing a lower plan.