The 30-year mortgage rate has shifted dramatically the opposite direction after recently achieving their lowest average since October. For the fourth straight day, Friday’s flagship rate is now up at 6.77%. Most other types of mortgages also saw rates rise.
| National Averages of Lenders' Best Mortgage Rates | |
|---|---|
| Loan Type | New Purchase |
| The 30-Year Fixed | 6.77% |
| FHA 30 Year Fixed | 6.28% |
| 15-Year Fixed | 5.90% |
| Jumbo 30-Year Fixed | 6.75% |
| 5/6 ARM | 7.53% |
| Zillow Mortgage API provides access to the Zillow Mortgage API | |
No matter what kind of mortgage you want, compare rates frequently and always shop around to find the lowest rate.
Compare Mortgage Rates for Today, Dec. 16, 2020
Today's New Purchase Mortgage Rate Averages
On Friday, the 30-year average rate for new mortgages increased by 9 basis points. That’s a gain of 24 percentage points in four days. This brings the average up to 6.97%. Before the spike, rates on Monday averaged just 6.53%. This was the lowest level since October 16.
Mortgage rates fell to their lowest level in two years in September, but they surged to the highest rate in four months in November. Though today's average is lower, it's still nearly 90 basis points more expensive than the Sept. 17 low point of 5.89%.
However, if you go back a little further, rates on 30-year mortgages are still below the April high of 7.37 percent. And they're about 1.25 percentage points cheaper than the historic 23-year peak of 8.01% last October.
Mortgage rates for 15 years rose 6 basis point Friday to reach a new median of 5,90%. In September, the 15-year mortgage rates fell to their lowest level in two years, with a drop of as much as 4.97%. Though today's 15-year average is elevated, it remains about 1.2 percentage points below last fall's historic 7.08% reading—a high since 2000.
In the meantime, Jumbo 30-year rates rose 12 basis point Friday to reach 6.75%. The average jumbo 30 year rate had fallen to 6.24% in September. This was the lowest it has been for 19 months. Although daily historical jumbo rates weren't published before 2009, it's estimated that the 8.14% peak we saw last fall 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 | 6.77% | +0.09 |
| FHA 30 Year Fixed | 6.28% | No Change |
| VA Fixed 30-Year | 6.19% | +0.09 |
| The 20-Year Fixed Rate | 6.70% | +0.17 |
| Fixed 15 Year Term | 5.90% | +0.06 |
| FHA Fixed 15-Year Rate | 6.40% | No Change |
| Ten-Year Fixed | 5.77% | +0.08 |
| 7/6 Arm | 7.47% | +0.02 |
| 5/6 ARM | 7.53% | +0.01 |
| Jumbo 30-Year Fixed | 6.75% | +0.12 |
| Jumbo 15-Year Fixed | 6.75% | -0.01 |
| Jumbo 7/6 ARM | 7.14% | No Change |
| Jumbo 5/6 ARM | 7.21% | No Change |
| Zillow Mortgage API provides access to the Zillow Mortgage API | ||
The Weekly Freddie Mac Average
Every Thursday Freddie Mac publishes a 30-year average mortgage rate. Last week's reading fell 9 basis points to a weekly average of 6.60%. The average was as low as 6.08% as recently as September 26. But last October, Freddie Mac's average was on a historic rise, surging to a historic 23-year peak of 7.79%.
Freddie Mac uses a different average than what we use for our 30-year rates. This is because Freddie Mac computes a week-average by combining five days’ worth of previous 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.
Calculate the monthly payment for various loan scenarios using our Mortgage Calculator.
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.
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.
- Current monetary policies of the Federal Reserve, particularly in relation to government bond purchases and mortgage funding.
- 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.
The mortgage market remained relatively flat for most of the year 2021 due to macroeconomic conditions. The Federal Reserve bought billions in bonds to respond to economic pressures caused by the pandemic. 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.
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 rates at their peak for 14 months starting in July 2023. The Fed’s first rate reduction was announced on September 18th. This is the beginning of a downward trend that should continue through 2024, and possibly 2025. The first rate cut was 0.50 percent.
On November 7, the Fed announced a further rate reduction of 0.25 percentage point, which will bring the federal funds rates to 4.5% – 4.75%. This cut brings the federal funds rate to its lowest point since March 2023.
The Fed's next rate announcement will be made Dec. 18.
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.
Article sources Investopedia expects its writers to use original research to support their articles. 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 accurate and unbiased content. Editorial policy
Freddie Mac. “Mortgage Rates."
Congressional Research Service. "Federal Reserve: Tapering of Asset Purchases," Page 1.
Federal Reserve. "Federal Open Market Committee: Meeting Calendars, Statements, and Minutes (2019-2026)."
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