Right now, a good mortgage rate for a 15-year fixed loan could be in the high -3% range or below -4%, while a good rate for a 30-year mortgage is generally in the range. A “good interest” is different for everyone. People with a lower credit rating may not be able to get the best interest rates. In addition, your location will affect the range of rates available to you.
With mortgage rates rising rapidly, homeowners are rushing to save money on refinancing. Currently, the average rate of a 30-year fixed mortgage is around 5.3%. This leaves less than a million homeowners able to refinance their mortgage, according to Black Knight, a data analysis firm. Anything equal to or less than 3% is an excellent mortgage rate.
And the lower your mortgage rate, the more money you can save over the life of the loan. In a growing economy where spending is increasing and more people are buying homes, this can increase demand for mortgages and rates. One of the things that matter most to prospective homebuyers and current homeowners is mortgage rates. Setting low mortgage and refinance rates can save you thousands of dollars over the life of your loan.
You can explore mortgage rates for multiple lenders on Credible without affecting your credit rating. Mortgage interest rates generally move independently and in advance of the federal funds rate, or the amount banks pay to borrow. When the Federal Reserve lowers the federal funds rate, it also lowers borrowing costs for banks, who can then extend those benefits to lenders by offering better mortgage rates. This is how the average mortgage interest rate has changed over time, according to data from Freddie Mac.
Black Knight defines borrowers eligible for refinancing as having a minimum credit score of 720, 20% equity in their home, and the ability to reduce at least 0.75% of their interest rate by refinancing on a 30-year fixed mortgage. If you're told that you can get a 4% rate with a 760 credit rating or a 4.5% rate with a 660 rating, you'll know how much marginal or bad credit can actually cost. Your best mortgage rate will depend on your personal credit profile, down payment amount, income, and current debt burden. Mortgage lenders customize your interest rates based on your credit history and other details about your financial life.
When interest rates rise, reflecting changes in the economy and financial markets, so do mortgage rates and vice versa. There are several different types of mortgages available and they generally differ depending on the length of the loan in years and whether the interest rate is fixed or adjustable. Once you've checked your credit, see if you can improve your score to ensure you get a lower interest rate on your mortgage. They also often include discount points, which lower the mortgage interest rate but increase your upfront charges.
For the past few years, mortgage rates have remained historically low, around 3% to 4% for a 30-year fixed-rate mortgage, according to Freddie Mac.