Why Today's Mortgage Rates are Still Relatively Low

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It's no secret that the homebuying market looks a lot different than it did over the last two years. For one, continually increasing mortgage rates are making the process even less affordable and average home prices are still near all-time highs. Average rates for the ever-popular 30-year fixed-rate mortgage have been floating around the 5% mark since April this year — the first time in over a decade — with the most recent weekly average rate clocking in at 5.81% at the time of this writing. When comparing all this to 2020 and 2021, rates have certainly gone up. However, putting today's 30-year rate in context with how the average rate has trended over the last few decades shows us that it's still relatively low — and relatively affordable. According to Freddie Mac data going back to 1971, the long-term average for 30-year mortgage rates is just under 8%, with the record-high average reaching a whopping 16.64% in 1981. All in all, in context, today's 30-year 5.81% rate still falls below the historical average rate.

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What to keep in mind when looking at mortgage rates

Options to secure an affordable mortgage today

While financing a new home can certainly seem daunting, a mortgage is generally seen as "good debt" to take on. Real estate — or more specifically, the land it sits on — tends to appreciate over time, meaning it goes up in value over the long-term. Today's economic climate, however, rightfully makes it a bit harder to make a down payment on sa new home given the rising prices of everything else. That said, there are lenders who offer some good options. Chase Bank, for example, offers a DreaMaker℠ loan that allows homebuyers to make a down payment as low as 3% if they meet certain income requirements. This is an attractive financing option for those who want to make as small a down payment as possible in order to reserve more money for other expenses.

Chase Bank Learn More Annual Percentage Rate (APR) Apply online for personalized rates; fixed-rate and adjustable-rate mortgages included

Types of loans Conventional loans, FHA loans, VA loans, DreaMaker℠ loans and Jumbo loans

Terms 10 – 30 years

Credit needed 620

Minimum down payment 3% if moving forward with a DreaMaker℠ loan Terms apply.

Another solid option is SoFi, which offers homebuyers a number of discounts that can help them save as much money as possible throughout the homebuying process. If you lock in a 30-year rate for a conventional loan, you can receive a 0.25% discount on your interest rate. And when you purchase a home through the SoFi Real Estate Center, powered by HomeStory, you can receive up to $9,500 in cash back. Another appealing perk is that SoFi members can also get a $500 discount on their mortgage loan.

SoFi Learn More Annual Percentage Rate (APR) Apply online for personalized rates; fixed-rate and adjustable-rate mortgages included

Types of loans Conventional loans, jumbo loans, HELOCs

Terms 10 – 30 years

Credit needed 620

Minimum down payment 3% Terms apply.

Bottom line

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.

Mortgages

Mortgages Learn some of the basics about mortgages.

Mortgage Refinancing Refinancing your mortgage allows you to pay off your existing mortgage and take out a new mortgage on new terms. You may want to refinance your mortgage to take advantage of lower interest rates, to change your type of mortgage, or for other reasons. These resources will help you learn more about refinancing your mortgage: A Consumer's Guide to Mortgage Refinancings is your first place to look for an introduction to mortgage refinancing, including useful worksheets, a glossary of terms used in the industry, and more to help you decide if mortgage refinancing is right for you.

What type of mortgage should you choose? Get information about mortgage types and the settlement process in Shopping for Your Home Loan: Settlement Cost Booklet.

Veterans may be eligible for refinancing their VA mortgage using an Interest Rate Reduction Refinancing Loan (IRRRL).

Reverse Mortgages If you’re at least 62 years old, a reverse mortgage can let you turn part of the equity in your home into cash. You will not have to sell the home or take on additional monthly bills. The reverse mortgage does not have to be paid back as long as you live in your home. You only repay the loan when you sell your home or permanently leave it. Read more information about reverse mortgages. Types of Reverse Mortgages The three types of reverse mortgages include: Federally Insured Reverse Mortgages - Known as Home Equity Conversion Mortgages (HECM)

Proprietary Reverse Mortgages

Single Purpose Reverse Mortgages Be sure to watch for aggressive lending practices, advertisements that refer to the loan as "free money," or those that fail to disclose fees or terms of the loan. When finding a lender remember: Do not respond to unsolicited advertisements

Be suspicious of anyone claiming that you can own a home with no down payment

Seek out your own reverse mortgage counselor

Never sign anything you do not fully understand

Make sure the loan is federally insured Reporting Fraud or Abuse If you suspect fraud or abuse, let the counselor, lender, or loan servicer know. You may also want to file a complaint with: Federal Trade Commission (FTC)

State attorney general's office

State banking authority If you have questions, contact your local HUD Homeownership Center for advice.

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Last Updated: June 16, 2022

Current Mortgage Rates: Compare today’s rates

A BEGINNER’S GUIDE TO MORTGAGES

What is a mortgage?

Most people don't have the cash to simply buy a house. Instead, they use a mortgage, which is a loan to buy a home. After making a down payment of anywhere from 3% to 25%, they get a mortgage to cover the remaining costs of purchasing the home.

mortgage is set up so you pay off the loan over a specified period called the term. The most popular term is 30 years. Each payment includes a combination of principal and interest, as well as property taxes, and, if needed, mortgage insurance. (Homeowners insurance may be included, or the homeowner may pay the insurer directly.) Principal is the original amount of money you borrowed while interest is what you're being charged to borrow the money.

How do mortgage rates work?

The mortgage rate a lender offers you is determined by a mix of factors that are specific to you and larger forces that are beyond your control.

Lenders will have a base rate that takes the big stuff into account and gives them some profit. They adjust that base rate up or down for individual borrowers depending on perceived risk. If you seem like a safe bet to a lender, you're more likely to be offered a lower interest rate.

Factors you can change:

Forces you can't control:

The U.S. economy . Sure, this means Wall Street, but non-market forces (for example, elections) can also influence mortgage rates. Changes in inflation and unemployment rates tend to put pressure on interest rates.

. Sure, this means Wall Street, but non-market forces (for example, elections) can also influence mortgage rates. Changes in inflation and unemployment rates tend to put pressure on interest rates. The global economy . What's happening around the world will influence U.S. markets. Global political worries can move mortgage rates lower. Good news may push rates higher.

. What's happening around the world will influence U.S. markets. Global political worries can move mortgage rates lower. Good news may push rates higher. The Federal Reserve

How (and why) to compare mortgage rates

Mortgage rates like the ones you see on this page are sample rates. In this case, they're the averages of rates from multiple lenders, which are provided to NerdWallet by Zillow. They let you know about where mortgage rates stand today, but they might not reflect the rate you'll be offered.

When you look at an individual lender's website and see mortgage rates, those are also sample rates. To generate those rates, the lender will use a bunch of assumptions about their “sample” borrower, including credit score, location and down payment amount. Sample rates also sometimes include discount points , which are optional fees borrowers can pay to lower the interest rate. Including discount points will make a lender's rates appear lower.

To see more personalized rates, you'll need to provide some information about you and about the home you want to buy. For example, at the top of this page, you can enter your ZIP code to start comparing rates. On the next page, you can adjust your approximate credit score, the amount you're looking to spend, your down payment amount and the loan term to see rate quotes that better reflect your individual situation.

Whether you're looking at sample rates on lenders' websites or comparing personalized rates here, you'll notice that interest rates vary. This is one reason why it's important to shop around when you're looking for a mortgage lender. Fractions of a percentage might not seem like they'd make a big difference, but you aren't just shaving a few bucks off your monthly mortgage payment, you're also lowering the total amount of interest you'll pay over the life of the loan.

It's a good idea to apply for mortgage preapproval from at least three lenders. With a preapproval, the lenders verify some of the details of your finances, so both the rates offered and the amount you're able to borrow will be real numbers. Each lender will provide you with a Loan Estimate . These standardized forms make it easy to compare interest rates as well as lender fees.