In 2023, mortgage rates were up year over year—a trend that continued from 2021. Rising rates from 2021 through 2023 were due to rate hikes introduced by the Federal Reserve as part of economic strategies to try to combat inflation.
Since current mortgage rates can be a huge factor in your ability to get a mortgage and the total cost of owning a home over time, prospective home buyers should educate themselves on this topic. Learn more about mortgage rates, how rates impact your home loan, and how to improve your chances of getting a good rate below.
What Is a Mortgage Rate?
Your mortgage rate is a reflection of the amount of interest you agree to pay a lender on your home loan. There are many mortgage rate structures, including fixed and variable rates. It’s critical to learn more about rate types and discuss the fine print with your mortgage broker or lender so you understand exactly how much your loan might cost.
To demonstrate how mortgage rates work to impact the total cost of your home, consider some hypothetical situations below.
For a fixed-rate, 30-year loan on a $300,000 home with a down payment of $60,000:
| Interest Rate | Monthly Payment | Total Loan Cost |
| 5% | $1,552 | $463,990 |
| 6% | $1,702 | $518,605 |
| 7% | $1,806 | $585,446 |
| 8% | $2,025 | $635,012 |
Note that this hypothetical situation takes into account property tax and homeowner’s insurance, which is typically added into the monthly payment. It’s also calculated based on a randomly selected zip code in Virginia. Your location and other factors can change how your monthly payment is calculated.
Will Mortgage Rates Go Up or Down in 2024?
Mortgage rates rise and fall with the market, changes made by the Federal Reserve and other factors. Here’s a look at some mortgage rate trends to help you understand how the figures have changed historically:
| Date for rate reported by Freddie Mac | U.S. 30-year fixed rate | U.S. 15-year fixed rate | U.S. 5/1 adjusted rate |
| 1/10/13 | 3.40 | 2.66 | 2.67 |
| 1/9/14 | 4.51 | 3.56 | 3.15 |
| 1/8/15 | 3.73 | 3.05 | 2.98 |
| 1/7/16 | 3.97 | 3.26 | 3.09 |
| 1/12/17 | 4.12 | 3.37 | 3.23 |
| 1/11/18 | 3.99 | 3.44 | 3.46 |
| 1/10/19 | 4.45 | 3.89 | 3.83 |
| 1/9/20 | 3.64 | 3.07 | 3.30 |
| 1/7/21 | 2.65 | 2.16 | 2.75 |
| 1/13/22 | 3.45 | 2.62 | 2.57 |
| 1/12/23 | 6.33 | 5.52 | not included on report |
By mid-2023, rates for a U.S. 30-year fixed rate mortgage averaged over 7%. Most economic experts indicate that rates are expected to go down, at least slightly, through 2024. That’s according to predictions from organizations such as Fannie Mae and the National Association of Realtors.
How Can You Find Out About Current Mortgage Rates?
As you can see, the current mortgage rates at the time this article was written are unlikely to be relevant when you’re ready to get a home loan. You may want to research mortgage rates before you buy a home to understand the market, and you can find current rates by searching for them online. Sources such as Freddie Mac and Fannie Mae are reliable, and major news outlets tend to provide ongoing reporting on interest rates as well.
How to Improve Your Chances of Getting a Good Mortgage Rate
Of course, average mortgage interest rates at any given time only provide a baseline from which you can start your financial research. You may end up paying a rate that’s more or less than the average depending on factors such as your creditworthiness and the type of mortgage loan you decide to go with. Here are some tips for improving your chances of getting a good rate.
Improve Your Credit
No matter what the average is, the best mortgage rates tend to be reserved for those with excellent credit. Before you begin the hunt for a new home, order your free credit reports and get a look at your credit score. This reduces the chance of being surprised during the mortgage application process.
Once you have your credit reports, go through them and look for any potential errors. If you see anything that could impact your credit health negatively, such as a misreported balance or a late payment you actually made on time, you can dispute the information. The credit bureaus must investigate disputes, and if the information turns out to be incorrect, they must make edits to your report. That can help improve your credit.
Save for a Bigger Down Payment
When you make a bigger down payment, you reduce how much of the home price a lender has to fund. That creates a lower loan amount, which might help you get a lower rate. In part, this is because the lender has less risk. If you don’t pay the loan as agreed and the lender forecloses on your home, it’s more likely to be able to sell the house and cover its losses.
Choose the Right Mortgage Type
As you can see from the historical rate information in the table above, interest rates are different, given different types of loans and terms. Rates are typically lower on 15-year fixed rate mortgages, for example. However, paying your entire mortgage back over 15 years rather than 30 does mean you’ll pay a much larger monthly payment, so make sure you consider all the financial factors before you make a decision.
Buy Down Your Rate
You may be able to buy down your mortgage rate by paying for discounts up front. This can temporarily or permanently reduce the amount of interest you pay, which could reduce the total cost of your home.
Start Your Mortgage Rate Research Now
Take time to compare your options before you apply for a mortgage loan. You may also want to do the work to get preapproved before you start house shopping, as preapproved buyers tend to be more attractive to sellers during the bidding process.
