You may have expected mortgage rates to drop after the Federal Reserve announced a 50 basis point cut in the benchmark interest rate yesterday – but that didn’t happen. According to Zillow data, almost all mortgage rates have risen since the Fed’s announcement. The 30-year fixed mortgage rate has risen six basis points to 5.64%The 15-year fixed rate rose by 11 basis points to 4.97%and the 5/1 ARM rate is also up 11 basis points to 6.09%.

Many factors other than the Fed Funds Rate affect mortgage rates. It’s possible that mortgage lenders don’t want to cut their rates too suddenly and trigger a flood of mortgage applications all at once. Regardless, even though rates are up slightly today, it shouldn’t be long before mortgage rates start to fall again. When the Fed cuts the Fed Funds Rate, mortgage rates tend to follow suit.

While it may not be the right day to lock in a mortgage rate, it could be a good time to start looking for a home.

Learn more: Fed cuts key interest rate by half a percentage point and announces two more cuts this year

Current mortgage interest rates

Here are the current mortgage rates according to the latest Zillow data:

• 30 years solid: 5.64%

• 20 years solid: 5.42%

• 15 years fixed: 4.97%

• 5/1 ARM: 6.09%

• 7/1 ARM: 6.02%

• 5/1 FHA: 4.69%

• 30 years VA: 5.04%

• 15 years VA: 4.68%

• 5/1VA: 5.61%

Please note that these are national averages and are rounded to the nearest hundredth.

Learn more: 5 Strategies to Get the Lowest Mortgage Rates

Today’s mortgage refinancing rates

Here are the current mortgage refinance rates according to the latest data from Zillow:

• 30 years solid: 5.91%

• 20 years solid: 5.84%

• 15 years fixed: 5.12%

• 5/1 ARM: 6.03%

• 7/1 ARM: 5.88%

• 5/1 FHA: 4.51%

• 30 years VA: 5.18%

• 15 years VA: 5.00%

• 5/1VA: 5.39%

As with purchase mortgage rates, these are national averages that we’ve rounded to the nearest hundredth. Keep in mind that refinance rates are typically higher than purchase mortgage rates.

Monthly mortgage payment calculator

Yahoo Finance offers a free mortgage payment calculator that lets you see how different mortgage rates will affect your monthly payments.

Our calculator goes even deeper and includes factors like homeowner’s insurance and property taxes in your calculation. You can even add private mortgage insurance costs and HOA dues if they apply to you. These monthly expenses, along with your mortgage principal and interest rate, will give you a realistic idea of ​​what your monthly payment might be.

What influence does the Federal Reserve have on mortgage rates?

The Federal Reserve and the Fed Funds Rate do not directly influence mortgage rates like they do savings account, personal loan, or auto loan rates. That’s because mortgages are longer-term financial products – typically 15, 20, or 30 years.

The key interest rate is more closely aligned with the yield on 10-year U.S. Treasury bonds, which in the past has moved in step with longer-term interest rates such as – you guessed it – mortgage rates.

When the Federal Reserve cuts interest rates, mortgage rates usually follow. Economists had expected the Fed to cut interest rates at yesterday’s meeting, so 10-year Treasury yields and mortgage rates have been falling for weeks.

Now that the Fed has cut its interest rate more than expected—by 50 basis points instead of 25—mortgage rates overall are likely to continue to fall. The Fed has also announced that it will cut rates two more times in 2024, another sign that mortgage rates are likely to fall.

Dig deeper: What impact does the Federal Reserve’s interest rate decision have on mortgage interest rates?

How are mortgage interest rates determined?

Mortgage rates are determined by two categories: those you can control and those you can’t.

What factors can you influence? First, you can compare the best mortgage lenders to find the one that offers you the lowest interest rates and fees.

Second, lenders typically give lower interest rates to people with higher credit scores, lower debt-to-income (DTI) ratios, and significant down payments. If you can save more or pay down debt before taking out a mortgage, a lender will likely offer you a better rate.

What factors are beyond your control? In short, the economy. (And yes, this is where the Fed and the federal funds rate come into play.)

The list of how the economy affects mortgage rates is long, but here are the basic details. When the economy is weak — think of the employment rate, for example — mortgage rates are lowered to encourage credit, which in turn stimulates the economy. When the economy is strong, mortgage rates are raised to discourage spending.

All other things being equal, mortgage refinance rates are usually a bit higher than purchase rates, so don’t be surprised if your refinance rate is higher than expected.

30-year vs. 15-year fixed mortgage rates

Two of the most common mortgage terms are 30-year and 15-year fixed-rate mortgages. With both, your interest rate is fixed for the entire life of the loan.

A 30-year mortgage is popular because it requires relatively low monthly payments. However, the interest rate is higher than shorter terms, and since you’re accumulating interest over three decades, you’ll pay a lot of interest over the long term.

A 15-year mortgage can be great because it has a lower interest rate than longer terms, so you’ll pay less interest over the years. You’ll also pay off your mortgage much faster. However, your monthly payments will be higher because you’re paying off the same loan amount in half the time.

Generally, 30-year mortgages are more affordable month-to-month, while 15-year mortgages are cheaper in the long run.

Current mortgage rates: FAQs

Which bank offers the lowest mortgage interest rates?

According to 2023 Home Mortgage Disclosure Act (HMDA) data, Citibank, Wells Fargo, and USAA are some of the banks with the lowest average mortgage rates. However, it’s a good idea to shop around for the best rate not only at banks, but also at credit unions and companies that specialize in mortgage loans.

Is 2.75% a good mortgage rate?

Yes, 2.75% is a fantastic mortgage rate. You’re unlikely to get a 2.75% rate in today’s market unless you take over an assumable mortgage from a seller who locked in that rate in 2020 or 2021 when interest rates were at historic lows.

What is the lowest mortgage rate ever?

According to Freddie Mac, the lowest interest rate ever recorded for a 30-year mortgage was 2.65%, which was the national average in January 2021.

What interest rate should you refinance your mortgage at?

Some experts say that refinancing is worth it if you can get an interest rate that is 2% less than your current mortgage rate. Others say 1% is the magic number. It all depends on what your financial goals are for refinancing and when your break-even point would be after paying the closing costs of refinancing.