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Current mortgage and refinance interest rates

Mortgage and refinance interest rates vary based on loan term, type and other factors.

Many factors influence mortgage rates — some you can control, and some you can’t. Here are the key factors you should understand to make the best decision for your own situation.

Factors you can control

• Your income, debt and credit score: Lenders give their best rates to borrowers who pose the least amount of risk. That means individuals with stable incomes, low debt-to-income (DTI) ratios and high credit scores. Improving your credit score before you apply for a mortgage can lead to lower overall costs.
• Your down payment: A larger down payment means you'll need to borrow less, leading to a smaller overall loan. For a lender, this means you have more skin in the game and pose less risk, which will likely lead to a lower rate offer.
• Your loan type: Generally, well-qualified buyers with a low DTI can find competitive rates regardless of the kind of loan they have — but each loan type has its own pricing structure and level of risk. Rates for 15-year mortgages are typically lower than those on 30-year loans.

Factors outside of your control

• The 10-year Treasury bond yield: Thirty-year mortgage rates directly correspond to movement in the 10-year Treasury bond yield. As investors buy the 10-year Treasury bond — often to hedge against economic uncertainty — it drives down the yield, taking the 30-year rate with it.
• The spread: Mortgage rates don't exactly match the 10-year yield. There's what's called a “spread” between the two. This spread is typically around 2% to 3% on top of the 10-year yield. It’s not stagnant, though; it grows and contracts as lenders price in perceived risk.
• Federal Reserve decisions: The Fed doesn’t directly control mortgage rates, but their decisions can have a trickle-down effect. Mortgage lenders pay close attention to what the Fed says and does, and may respond by raising or lowering rates after Fed decisions.
• The global economy: Global trade issues, from conflicts to tariffs, can impact the decisions investors make. If this leads to buying or selling Treasury bonds, it will move mortgage rates.

How are 30-year mortgage rates determined?

Many variables go into the cost of a 30-year mortgage, including:

• The individual mortgage lender
• Your credit score
• Your debt-to-income (DTI) and loan-to-value (LTV) ratios
• The loan amount
• The type of property being financed
• 10-Year Treasury yield 
• Economic or geopolitical influences
• Inflation

How to get the best 30-year mortgage rate

If you compare loan offers from a few mortgage lenders, you’ll have a better chance of landing a competitive rate. Here's how:

• Get preapproved: Get rate quotes from at least three mortgage lenders, ideally on the same day so you have the most accurate basis for comparison. 
• Compare both the interest rate and APR: The interest rate is the cost of borrowing, while the APR includes the interest rate as well as any applicable fees. This makes the APR a more complete picture of the cost of the loan.
• Consider the lender’s ratings and your experience: Aside from the numbers, evaluate lenders for convenience and responsiveness. Take a look at what other borrowers have said about the lender, too.

Should you get a 30-year mortgage?

Thanks to a more affordable monthly payment, the 30-year loan term appeals to a wide range of borrowers. It also works well for borrowers who would prefer to use a loan to invest their home's equity elsewhere.

Pros of a 30-year mortgage

• Lower monthly payment: Repaying a mortgage over 30 years means you’ll have lower, more affordable payments spread out over time compared to shorter-term loans, like 15-year mortgages.
• Ability to afford more house: With lower payments, you may qualify for a larger loan amount and be able to afford a more expensive home.
• More financial flexibility: Lower payments can also provide more cushion in your budget for other goals, like saving for emergencies, retirement, college tuition or home repairs and maintenance.
• Stability: Having a consistent principal and interest payment helps you plan your housing expenses over the long term. (Your overall monthly housing expenses can change, however, if your homeowners insurance and property taxes go up or down.) Of course, this is only true if your mortgage has a fixed rate. An adjustable-rate mortgage won’t give you this same benefit for the whole life of the loan.

Cons of a 30-year mortgage

• More total interest paid: Stretching out repayment over 30 years means you’ll pay much more in interest over the life of the loan than you would with a shorter-term option.
• Higher mortgage rates: Lenders usually charge higher interest rates for 30-year loans, because they’re taking on risk for a longer amount of time.
• Becoming house poor: Just because you might be able to afford more house with a 30-year loan doesn’t mean you should overstretch your budget. Give yourself some breathing room for other financial goals and unexpected expenses.
• Slower equity growth: It will take longer to build equity in your home with a longer-term loan, because most of your initial mortgage payments will go toward interest rather than paying down your principal amount.

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