Today’s biggest mortgage savings? Shorter terms have the lowest rates | August 29, 2023
Mortgage purchase rates have either fallen or remained unchanged since yesterday, giving borrowers the chance to lock in their preferred terms without missing out on any savings
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Updated October 16, 2024, 2:57 AM EDT
- 30-year fixed mortgage rates: 8.125%, unchanged
- 20-year fixed mortgage rates: 8.125%, unchanged
- 15-year fixed mortgage rates: 6.500%, down from 6.625%, -0.125
- 10-year fixed mortgage rates: 6.500%, down from 6.875%, -0.375
Rates last updated on August 29, 2023. These rates are based on the assumptions shown here. Actual rates may vary. Credible, a personal finance marketplace, has 5,000 Trustpilot reviews with an average star rating of 4.7 (out of a possible 5.0).
What this means: Mortgage purchase rates continue to hold steady for 20- and 30-year terms, maintaining a rate of 8.125% for the past two weeks. Meanwhile, rates for 10- and 15-year terms have maintained a pattern of remaining in the 6% range since August 16. Today, rates for 10-year terms have dropped by over a quarter of a percentage point to 6.5%. Rates for 15-year terms have also fallen, edging down to meet 10-year terms at 6.5%. Borrowers interested in saving the most on interest rates should consider either 10- or 15-year terms, as 6.5% is today’s lowest purchase rate. Homebuyers who would rather have a smaller monthly payment should instead consider either of today’s longer terms.
- 30-year fixed-rate refinance: 6.990%, down from 7.125%, -0.135
- 20-year fixed-rate refinance: 6.750%, down from 6.875%, -0.125
- 15-year fixed-rate refinance: 6.375%, unchanged
- 10-year fixed-rate refinance: 6.625%, up from 6.500%, +0.125
Rates last updated on August 29, 2023. These rates are based on the assumptions shown here. Actual rates may vary. With 5,000 reviews, Credible maintains an "excellent" Trustpilot score.
What this means: Mortgage refinance rates continue to keep 10- and 15-year terms in the 6% range. For the past three days, rates for 20-year terms have joined the shorter terms in the 6% range. Today, rates for 20- and 30-year terms have edged down, hitting 6.75% and 6.99%, respectively. Meanwhile, rates for 15-year terms have remained unchanged at 6.375%. Additionally, rates for 10-year terms have edged up, rising to 6.625%. Homeowners looking to refinance into a lower monthly payment should consider 20-year terms, as their rates are nearly a quarter of a percentage point lower than those of 30-year terms. Borrowers who would rather maximize their interest savings should instead consider 15-year terms, as 6.375% is today’s lowest refinance rate.
How mortgage rates have changed over time
Today’s mortgage interest rates are well below the highest annual average rate recorded by Freddie Mac — 16.63% in 1981. A year before the COVID-19 pandemic upended economies across the world, the average interest rate for a 30-year fixed-rate mortgage for 2019 was 3.94%. The average rate for 2021 was 2.96%, the lowest annual average in 30 years.
The historic drop in interest rates means homeowners who have mortgages from 2019 and older could potentially realize significant interest savings by refinancing with one of today’s lower interest rates. When considering a mortgage or refinance, it’s important to take into account closing costs such as appraisal, application, origination and attorney’s fees. These factors, in addition to the interest rate and loan amount, all contribute to the cost of a mortgage.
How Credible mortgage rates are calculated
The rates assume a borrower has a 700 credit score and is borrowing a conventional loan for a single-family home that will be their primary residence. The rates also assume no (or very low) discount points and a down payment of 20%.
Factors that influence mortgage rates (and are in your control)
Many factors affect what mortgage interest rate you can qualify for, and some of them are within your control. Improving these factors could help you qualify for a lower interest rate.
- Credit score — Generally, the lowest interest rates go to borrowers with the highest credit scores.
- Debt-to-income ratio — DTI is a percentage that compares your total debts with your income. To calculate DTI, divide the total of all your monthly minimum debt payments by your gross monthly income. Generally, lenders prefer a DTI of 35% or less.
- Down payment amount — Generally, lenders (and many sellers) look favorably on a higher down payment amount. If you put down less than 20% of the home’s purchase price, many lenders will require you to pay for private mortgage insurance, which protects the lender (not you) if you fail to repay the mortgage.
- Home location/price — Interest rates can vary depending on what state you live in and where in the state you’re buying. Likewise, if you need to borrow a lot more than average (a jumbo loan) or very little, you may get a higher interest rate.
- Repayment term — The lowest rates typically come with 10- or 15-year terms, while 30-year terms usually have the highest interest rates.
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