Want to save the most on today’s mortgage rates? Try shorter terms | September 14, 2023

• 30-year fixed mortgage rates: 7.500%, down from 7.625%, -0.125
• 20-year fixed mortgage rates: 7.875%, unchanged
• 15-year fixed mortgage rates: 7.125%, up from 6.375%, +0.750
• 10-year fixed mortgage rates: 6.250%, down from 6.625%, +0.375

Rates last updated on September 14, 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: For more than a month, mortgage purchase rates for 10-year terms have stayed within the 6% range. Today, rates for 30-year terms have edged down to 7.5%. Additionally, rates for 10-year terms have also fallen, dropping by more than a quarter of a percentage point to 6.25%. Meanwhile, rates for 15-year terms increased the most today, surging by three-quarters of a percentage point to 7.125%. Lastly, rates for 20-year terms have remained unchanged at 7.875%. Borrowers interested in a smaller monthly payment should consider 30-year terms over 20-year terms, as rates for 30-year terms are more than a quarter of a percentage point lower. Homebuyers who would rather maximize their interest savings should instead consider 10-year terms, as 6.25% is today’s lowest mortgage purchase rate.

• 30-year fixed-rate refinance: 7.000%, up from 6.990%, +0.010
• 20-year fixed-rate refinance: 6.875%, up from 6.750%, +0.125
• 15-year fixed-rate refinance: 6.375%, up from 6.250%, +0.125
• 10-year fixed-rate refinance: 6.625%, up from 6.375%, +0.250

Rates last updated on September 14, 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: For the past five days, mortgage refinance rates for 10-, 15-, and 20-year terms have stayed within the 6% range. Today, rates for 30-year terms have broken their pattern of staying within the 6% range by edging up to 7%. Additionally, rates for 15- and 20-year terms have also slightly increased, hitting 6.375% and 6.875%, respectively. Meanwhile, rates for 10-year terms have risen by a quarter of a percentage point to 6.625%. Homeowners interested in saving the most on interest rates should consider 15-year terms, as 6.375% is today’s lowest refinance rate. Borrowers who would rather have a lower monthly payment should instead consider 20-year terms, as their rates are lower than those of 30-year terms.

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%.

Why do mortgage rates fluctuate?

Here are some of the most common reasons why mortgage rates move frequently:

Employment patterns

The employment rate is an indicator of demand for mortgages. When more people are unemployed, fewer people will be looking to get a mortgage and buy a home — and that lower demand will push interest rates down. When the employment rate improves, demand for mortgages will likely keep pace. And as demand for mortgages rises, so will mortgage interest rates.

The bond market

Because bonds are a lower-risk type of investment, demand for bonds can increase when investors are wary of other investment vehicles, or fearful of the overall state of the economy. Increased demand for bonds causes their price to rise and their earnings — called their yield — to fall.

When bond yields fall, consumer interest rates generally do as well, including mortgage interest rates. When investors feel more confident about the economy, demand for bonds declines, bond prices drop, and yields rise. And interest rates tend to follow.

Federal Reserve System

"The Fed," as it’s commonly called, is the United States’ central bank. But it doesn’t actually set mortgage rates. Rather, multiple things the Fed does influence mortgage rates. For example, while mortgage rates don’t mirror the Fed funds rate — the rate banks apply when lending money to each other overnight — they do tend to follow it. If that rate rises, mortgage rates typically rise in tandem.

Global economy

Global banking systems and economies are closely interconnected. When economies in other parts of the world — especially Europe and Asia — experience a downturn, it affects investors and financial institutions in the United States. And, when foreign economies are doing well, they may attract more American investors — and divert those investment dollars out of the U.S. economy.

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