Editor's Note: Investopedia did not publish daily mortgage rate news on Wednesday, Jan. 1, in observance of New Year's Day. As a result, today we report on Tuesday’s average mortgage rates.
The 30-year mortgage rate average rose to 6.96% on Tuesday after a two-day dip. It is close to the highest rate for 30 year mortgages since early July. Other mortgage types also saw a mixed rate trend.
| National Averages of Lenders' Best Mortgage Rates | |
|---|---|
| Loan Type | New Purchase |
| The 30-Year Fixed | 6.96% |
| FHA Fixed 30-Year Rate | 6.28% |
| Fixed-Term 15 Years | 6.21% |
| Jumbo 30-Year Fixed | 6.88% |
| 5/6 ARM | 7.34% |
| Zillow Mortgage API is available. | |
For the best rates, you should always shop around and compare mortgage rates, regardless of what kind of loan you want.
Compare current mortgage rates today – January 2, 2025
Today's New Purchase Mortgage Rate Averages
The average rate on new 30-year purchase mortgages rose by 3 basis points to 6.96%, recovering some of the two-day drop. A week ago, rates surged to 7.02%, triggered by the Federal Reserve's December forecast of scaled-back interest rate cuts in 2025. The flagship average, though slightly lower at the moment, is still near its highest level since last July.
In September rates fell to their lowest level in two years, falling down as low as 5.89%. 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.
The average rate for 15-year mortgages increased by 3 basis points on Tuesday, to 6.21%. 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.
The average rate for jumbo 30-year mortgages increased by 2 basis points on Tuesday to 6.88%. 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 | ||
|---|---|---|
| Loan Type | Get New Purchase Rates | Weekly Change |
| The 30-Year Fixed | 6.96% | +0.03 |
| FHA Fixed 30-Year Rate | 6.28% | No Change |
| VA Fixed 30-Year | 6.50% | +0.05 |
| The 20-Year Fixed Rate | 6.86% | +0.02 |
| 15-Year Fixed | 6.21% | +0.03 |
| FHA 15 Year Fixed | 6.40% | No Change |
| Ten-Year Fixed | 6.23% | +0.06 |
| 7/6 Arm | 7.28% | -0.02 |
| 5/6 ARM | 7.34% | -0.03 |
| Jumbo 30-Year Fixed | 6.88% | +0.02 |
| Jumbo 15-Year Fixed | 6.73% | -0.07 |
| Jumbo 7/6 ARM | 7.04% | +0.06 |
| Jumbo 5/6 ARM | 7.12% | -0.01 |
| Zillow Mortgage API is available. | ||
The Weekly Freddie Mac Average
Every Thursday Freddie Mac (a government-sponsored mortgage buyer) publishes a week’s average 30-year mortgage interest rates. The reading for today increased by 6 basis points, to 6.91%. This follows a 25-basis point increase in the two previous weeks. 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.
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. Rates will vary depending on factors such as your credit score and income.
Why do mortgage rates rise or fall?
Rates of mortgage are determined by macroeconomic and industrial factors such as
- This is the level and direction in which bond yields, particularly those on 10-year Treasury bonds, are moving.
- Federal Reserve’s current policy on monetary affairs, including bond purchasing and government-backed loans.
- Mortgage lenders compete with each other for different 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. 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. 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 kept federal funds rates at their highest level for nearly 14 months starting in 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 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. The Fed’s revised forecast has led to a rise in mortgage rates as a result of the 10-year Treasury yields.
The Mortgage Rate Tracker
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. Zillow’s Terms and Conditions of Use apply.
Article sources Investopedia expects its writers to use original research to support their articles. 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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