Rates for 30-year-old new mortgages have dropped back to 6.94% on average, after rising slightly just before Christmas. Other mortgage types also saw a mixed rate trend.
| National Averages of Lenders' Best Mortgage Rates | |
|---|---|
| Loan Type | New Purchase |
| 30 Year Fixed | 6.94% |
| FHA 30 Year Fixed | 6.28% |
| Fixed 15 Year Term | 6.15% |
| Jumbo 30-Year Fixed | 6.87% |
| 5/6 AR | 7.35% |
| Zillow Mortgage API provides access to the Zillow Mortgage API | |
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Compare Mortgage Rates Today, Jan. 3, 2020
Today's New Purchase Mortgage Rate Averages
The average rate for 30-year mortgages was reduced by 2 basis point on Thursday, to 6.94%. A week ago, rates surged to 7.02%, triggered by the Federal Reserve's December forecast of scaled-back interest rate cuts in 2025. Although slightly lower, the benchmark average remains close to its high level from July 2.
Rates had fallen to as little as 5.89% in September. But they've soared by more than a percentage point over the past three months.
Looking further back, 30-year mortgage rates hit a high 7.37% in April, so today's rates are still improved versus last spring. They're also about a percentage point cheaper than the historic 23-year peak of 8.01% reached in October 2023.
On Thursday, rates on 15-year loans dropped 6 basis point to an average of 6.15 percent. The 15-year mortgage average also fell in September to its lowest level for two years, dropping below 5% to just 4.97%. Though today's 15-year average is elevated, it remains significantly below October 2023's historic 7.08% reading—a high since 2000.
Rates for jumbo 30-year loans fell by 1 basis point on Thursday to a new, average rate of 6.87%. In September, the jumbo 30-year rate average dropped to 6.24%. This was their lowest level in over 19 months. Meanwhile, it's estimated that the 8.14% peak we saw in October 2023 was the most expensive jumbo 30-year average in 20-plus years.
| National Averages of Lenders' Best Rates – New Purchase | ||
|---|---|---|
| Len Type | Buy New Rates | Everyday Change |
| 30 Year Fixed | 6.94% | -0.02 |
| FHA 30 Year Fixed | 6.28% | No Change |
| VA Fixed 30-Year | 6.48% | -0.02 |
| Fix 20 Year | 6.88% | +0.02 |
| Fixed-Term 15 Year | 6.15% | -0.06 |
| FHA 15 Year Fixed | 6.40% | No Change |
| Ten-Year Fixed | 6.18% | -0.05 |
| 7/6 Arm | 7.29% | +0.01 |
| 5/6 AR | 7.35% | +0.01 |
| Jumbo 30-Year Fixed | 6.87% | -0.01 |
| Jumbo 15-Year Fixed | 6.80% | +0.07 |
| Jumbo 7/6 ARM | 6.97% | -0.07 |
| Jumbo 5/6 ARM | 7.16% | +0.04 |
| Zillow Mortgage API provides access to the Zillow Mortgage API | ||
The Weekly Freddie Mac Average
Every Thursday, Freddie Mac (a government-sponsored mortgage buyer) publishes a week’s average 30-year mortgage interest rates. After a rise of 25 basis point over the past two weeks, yesterday’s average rate was 6.91%. The average was as low as 6.08% as recently as September 26. Back in October 2023, however, Freddie Mac's average saw a historic rise, surging to a 23-year peak of 7.79%.
Freddie Mac's average differs from what we report for 30-year rates because Freddie Mac calculates a weekly average that blends five previous days of rates. Investopedia’s 30-year average, on the other hand, is a reading taken daily, which provides a better and more timely indication of rates. In addition, the criteria for included loans (e.g., amount of down payment, credit score, inclusion of discount points) varies between Freddie Mac's methodology and our own.
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The rates we publish won’t compare directly with teaser rates you see advertised online since those rates are cherry-picked as the most attractive vs. the averages you see here. Teaser rates may involve paying points in advance or may be based on a hypothetical borrower with an ultra-high credit score or for a smaller-than-typical loan. Rates will vary depending on factors such as your credit score and income.
Why do mortgage rates rise or fall?
The mortgage rate is determined by the complex interplay of macroeconomic factors and industry-specific variables, including:
- This is the level and direction in which bond yields, particularly those on 10-year Treasury bonds, are moving.
- Federal Reserve monetary policy as it currently exists, notably in terms of bond purchasing and government-backed loans.
- There is fierce competition between lenders of mortgages and loan types.
Because any number of these can cause fluctuations simultaneously, it's generally difficult to attribute the change to any one factor.
For most of 2021, macroeconomic factors will keep the mortgage market at a relatively low level. Federal Reserve purchased billions of dollar bonds as a response to pandemic-induced economic pressure. Mortgage rates are heavily influenced by this bond-buying strategy.
The Fed will begin to taper its purchases of bonds in November 2021. Each month, it will make significant reductions until the net is zero by March 2022.
The Fed raised its federal funds rate aggressively between July 2020 and 2023 to combat inflation that has been high for decades. The fed funds rate does not directly affect mortgage rates. Mortgage rates and the Fed funds rate may even move in opposite directions.
But given the historic speed and magnitude of the Fed's 2022 and 2023 rate increases—raising the benchmark rate 5.25 percentage points over 16 months—even the indirect influence of the fed funds rate has resulted in a dramatic upward impact on mortgage rates over the last two years.
Fed held the Federal Funds Rate at its highest level, starting July 2023. The central bank cut the rate by 0.50 percentage point on September 18, and followed it up with a quarter-point drop on November 7 and December 18
However, the Fed's policy committee cautioned at its December meeting that further rate cuts may be fewer and farther between—with just two 2025 rate cuts projected instead of the previously predicted four reductions. In response to this revised estimate for 2018, 10-year Treasury rates have risen, causing mortgage interest rates to rise.
What We Do to Track Mortgage Rates
The national and state averages cited above are provided as is via the Zillow Mortgage API, assuming a loan-to-value (LTV) ratio of 80% (i.e., a down payment of at least 20%) and an applicant credit score in the 680–739 range. These rates are what you can expect to receive from lenders when they give quotes based on your qualifications. They may differ from teaser rate advertisements. © Zillow, Inc., 2024. The Zillow terms of use apply.
Investopedia’s Article Sources requires that writers use primary sources in order to back up their writing. This includes white papers, official government data, reporting original and interviews conducted with industry experts. When appropriate, we reference the original research of other publishers. Learn more about how we produce accurate, unbiased material in our Editorial policy
Freddie Mac. “Mortgage Rates."
Congressional Research Service. "Federal Reserve: Tapering of Asset Purchases," Page 1.
Department of The Treasury of The United States. "Daily Treasury Par Yield Curve Rates."
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