The average interest rate for a 30-year fixed-rate conforming mortgage in the U.S. is 6.256%, according to mortgage data company Optimal Blue. This was down 4 basis points from the previous day's report and up about 2 basis points from a week ago. Read on to compare average interest rates for various conventional and government-backed mortgage types to see whether rates are increasing or decreasing.
Current mortgage rate data:
Notice wealth The latest available data from Optimal Blue was looked at on 13 October, which reflects home loans locked in as of 10 October.
What’s happening to mortgage rates in today’s market?
If 30-year mortgage rates seem to hover around 7% forever, that's not so far-fetched. Many market watchers expected rates to ease when the Fed began lowering the federal funds rate last year, but that didn't happen. Rates fell briefly ahead of the September 2024 Fed meeting, but then rebounded quickly.
In fact, by January 2025, the average interest rate on a 30-year fixed-rate mortgage will exceed 7% for the first time since May of last year, according to Freddie Mac. This is a significant increase from the historically low average of 2.65% observed in January 2021, when the government was still trying to boost the economy and prevent a pandemic-induced recession.
Experts say we won't see mortgage rates of 2% to 3% again in our lifetimes, barring another major crisis. And with the economic outlook clouded as President Donald Trump pursues policies such as tariffs and deportations, some analysts worry the labor market could contract and inflation could return. In this environment, U.S. homebuyers have long faced high mortgage rates, although some have found ways to make the purchase more manageable, such as negotiating lower rates with builders when buying new construction homes.
Those looking to buy a home or refinance a mortgage do have late August and early September 2025 to rejoice. Mortgage rates began falling significantly ahead of the Federal Reserve's Sept. 16-17 meeting, hitting their lowest point in nearly a year. As expected, the Fed lowered the federal funds rate by a quarter of a percentage point at that meeting.
How to get the best mortgage rate
While finances are beyond your control, your financial situation as an applicant can also have a significant impact on the mortgage interest rate you receive. With this in mind, the goal is to:
- Make sure your credit is in good standing. The minimum credit score for a conventional mortgage is typically 620 (for an FHA loan, you can go as high as 580 or as low as 500 with a 10% down payment). However, if you're hoping for a lower interest rate so you can save five or even six figures in interest over the life of your loan, you'll want a higher score. According to lender Blue Water Mortgage, the top score is 740 or higher.
- Keep your debt-to-income (DTI) ratio low. You can calculate your DTI by dividing your monthly debt payments by your gross monthly income and then multiplying by 100. For example, someone with a monthly income of $3,000 and a monthly debt payment of $750 would have a DTI of 25%. When applying for a mortgage, the best DTI is usually 36% or less, although you may be approved with a DTI as high as 43%.
- Get pre-qualified from multiple lenders. Consider trying a mix of big banks, local credit unions, and online lenders and compare offers. Additionally, speaking with loan officers from several different institutions can help you evaluate your needs from a lender and which one will best meet your needs. Just make sure when you compare rates, you do it in a consistent way – if one estimate involves buying mortgage discount points and another doesn't, it's important to realize that there are up-front costs associated with buying points to lower your interest rate.
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Mortgage Rate History Chart
Some context for the discussion of high mortgage rates is that today's rates around 7% feel high because rates of 2% to 3% are still such a recent memory. These ratios were made possible by unprecedented government action aimed at preventing a recession in response to the global pandemic.
Under more typical economic conditions, however, experts agree that we're unlikely to see rates this low again. Historically, interest rates around 7% are not unusually high.
Consider this St. Louis Federal Reserve (FRED) chart, which tracks data on Freddie Mac's average 30-year fixed-rate mortgage. Such ratios were more or less the norm from the 1970s to the 1990s, rising sharply in the early 1980s. In fact, mortgage rates were above 18% in September, October and November of 1981.
Of course, this historical perspective is of little comfort to homeowners who want to move but are stuck with once-in-a-lifetime low interest rates. This situation is common in the current market, where low pandemic-era interest rates prevent homeowners from moving without what they call “golden handcuffs.”
Factors Affecting Mortgage Interest Rates
The health of the U.S. economy may be the biggest driver of mortgage rates. When lenders worry about inflation, they can raise interest rates to protect future profits.
On a related note, the national debt is another important factor. When the government spends more than it takes in and has to borrow, it can push interest rates higher.
Demand for home loans is also important. When demand is low, lenders may lower interest rates to attract business. But if a lot of people seek mortgages, lenders may raise rates to handle the extra processing.
The Federal Reserve also plays a key role and can influence mortgage rates by changing the federal funds rate and buying and selling assets.
Changes in the federal funds rate attract a lot of attention. When interest rates rise or fall, mortgage rates usually rise or fall with them. But it's important to understand that the Federal Reserve does not set mortgage rates directly, and mortgage rates don't always sync perfectly with the federal funds rate.
The Fed also affects mortgage rates through its balance sheet. In times of economic hardship, it can buy assets such as mortgage-backed securities (MBS) to inject money into the economy.
But recently, the Fed has been shrinking its balance sheet, letting assets expire without replacing them. This tends to push mortgage rates higher. So while everyone is focused on a cut in the federal funds rate, what the central bank does with its balance sheet may be more important to the mortgage rate you might get.
Why it’s important to compare mortgage rates
Comparing interest rates on different types of loans and shopping around with different lenders are important steps in getting the best mortgage for your situation.
If you have good credit, choosing a conventional mortgage may be the right choice for you. However, if your score is below 600, an FHA loan may offer opportunities that traditional loans do not.
As you explore your options with different banks, credit unions, and online lenders, it can have a significant impact on your overall costs. Freddie Mac research shows that in high-interest-rate markets, homebuyers may save $600 to $1,200 per year if they apply to multiple mortgage lenders.
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