Editor's Note: Investopedia did not publish daily mortgage rate news on Wednesday, Dec. 25, in observance of Christmas Day. We are, therefore, reporting today on Tuesday's rate averages.
The average rate for 30-year mortgages soared to 7.02 percent on Tuesday. This is the highest level since the beginning of July. The rate movement for other types of loans was mixed.
| National Averages of Lenders' Best Mortgage Rates | |
|---|---|
| Loan Type | New Purchase |
| The 30-Year Fixed | 7.02% |
| FHA 30 Year Fixed | 6.28% |
| Fixed 15 Year Term | 6.20% |
| Jumbo 30-Year Fixed | 6.94% |
| 5/6 AR | 7.43% |
| Zillow Mortgage API is available. | |
It’s important to keep an eye out for the lowest mortgage rates and make sure you compare your options regularly.
Compare Mortgage Rates Today, Dec. 26, 2020
Today's New Purchase Mortgage Rate Averages
Triggered by last week's Federal Reserve forecast of scaled-back interest rate cuts in 2025, mortgage rates surged to 6.98% and dipped slightly on Friday. The benchmark average rose again on Monday and Tuesday. Tuesday's 7 basis points brought the average to 7.02%.
Rates sunk to a two-year low of 5.89% in September, but they've soared by more than a percentage point over the past three months.
If you look further back in time, the 30-year mortgage rate is still well below its April high of 7.37%. And they're more than a percentage point cheaper than the historic 23-year peak of 8.01% reached in October 2023.
Mortgage rates for 15-year terms increased 6 basis point Tuesday. This new average of 6.20% is the highest since early July. The 15-year rates also dropped in September to their lowest point for two years. They fell as low as 4.97 percent. Though today's 15-year average is elevated, it remains significantly below last fall's historic 7.08% reading—a high since 2000.
The average rate for jumbo 30-year mortgages increased by 7 basis points on Tuesday. In September, the average rate for jumbo 30 year mortgages had dropped to 6.24%. It was their lowest level in over 19 months. Although daily historical jumbo rates weren't published before 2009, 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 | ||
|---|---|---|
| Loan Type | Get New Purchase Rates | Everyday Change |
| The 30-Year Fixed | 7.02% | +0.07 |
| FHA 30 Year Fixed | 6.28% | No Change |
| VA 30-Year Fixed | 6.53% | +0.05 |
| Fix 20 Year | 6.99% | +0.10 |
| 15-Year Fixed | 6.20% | +0.06 |
| FHA Fixed 15-Year Rate | 6.40% | No Change |
| 10 Year Fixed | 6.16% | No Change |
| 7/6 ARM | 7.24% | -0.14 |
| 5/6 AR | 7.43% | -0.01 |
| Jumbo 30-Year Fixed | 6.94% | +0.07 |
| Jumbo 15-Year Fixed | 6.74% | -0.01 |
| Jumbo 7/6 ARM | 7.17% | No Change |
| Jumbo 5/6 ARM | 7.16% | -0.04 |
| Zillow Mortgage API is available. | ||
The Weekly Freddie Mac Average
Every Thursday, Freddie Mac publishes a 30-year average mortgage rate. Thursday's reading jumped 13 basis points to a weekly average of 6.85%, following last week's 12 basis point hike. 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 30 year averages are daily and provide a much more accurate indication of changes in 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. Your rate will depend on your income and credit rating, as well as other factors.
What causes mortgage rates to 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 policy on 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 kept mortgage rates low. Federal Reserve purchased billions of dollar bonds as a response to pandemic-induced economic pressures. The Federal Reserve’s bond buying policy has a significant impact on mortgage rates.
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.
Fed increased federal funds rates aggressively from July 20, 2023 onwards to battle inflation. Although the Fed Funds Rate can affect mortgage rates indirectly, it does so indirectly. The fed funds rate can actually move the opposite direction of mortgage rates.
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. On Sept. 18, however, the Fed announced its first cut in interest rates of 0.50 percent points. This was followed by a quarter-point decrease on Nov. 7, and December 18.
However, the Fed's policy committee cautioned at its meeting last week that, due to stubborn inflation, further rate cuts may be fewer and farther between. In response to this revised 2025 forecast, 10-year Treasury yields increased.
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. Rates are based upon the qualifications of the borrower and may be different from those advertised in teaser offers. © Zillow, Inc., 2024. The Zillow terms of use apply.
Article Sources Investopedia asks writers to use primary resources to back up their writing. White papers, data from the government, interviews with experts, and original reporting are all examples. Where appropriate, we also refer to original research by other respected publishers. Our website contains more information about our standards for producing unbiased, accurate content. 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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