New year, new savings opportunity: Today’s 30-year mortgage rates plunge a quarter point | Jan. 3, 2023

• 30-year fixed mortgage rates: 6.375%, down from 6.625%, -0.250
• 20-year fixed mortgage rates: 6.500%, up from 6.125%, +0.375
• 15-year fixed mortgage rates: 5.875%, down from 6.250%, -0.375
• 10-year fixed mortgage rates: 5.875%, down from 5.990%, -0.115

Rates last updated on Jan. 3, 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: Rates for a 30-year mortgage fell a quarter point over the weekend, bringing rates for this popular repayment term to their lowest levels in four days. Borrowers who want to save the most on interest may want to consider 10- and 15-year rates, which are the lowest available at 5.875%. But with 30-year rates now lower than 20-year rates, borrowers who want a longer repayment term should stick with a 30-year mortgage.

• 30-year fixed-rate refinance: 6.375%, down from 6.625%, -0.250
• 20-year fixed-rate refinance: 6.500%, up from 6.125%, +0.375
• 15-year fixed-rate refinance: 5.875%, down from 6.250%, -0.375
• 10-year fixed-rate refinance: 5.875%, down from 5.990%, -0.115

Rates last updated on Jan. 3, 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 fell across three key terms today, giving homeowners another opportunity to save on interest. At 6.375%, a 30-year term offers a desirable blend of a relatively low interest rate and manageable monthly payments. Homeowners looking to refinance to a longer term may want to lock in a rate now, ahead of likely increases.

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 refinance or purchase, 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.

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How Credible mortgage rates are calculated

The rates assume a borrower has a 740 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 your monthly gross income by the total of all your monthly minimum debt payments. 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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