30-year mortgage rates — and how to find a low APR for your home loan
Updated 4:13 AM EDT, Thu October 3, 2024
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Prospective homebuyers can expect an average fixed rate of 6.08% on a 30-year conventional mortgage, according to late September data from the Federal Reserve Bank of St. Louis. Rates are expected to continue their downward trajectory after the Federal Reserve’s Sept. 18 decision to cut the federal funds rate by a whopping 50 basis points (or half of a percentage point).
While financing a home remains more costly than it was in 2021, when mortgage rates hit record lows, you can get the most competitive 30-year fixed mortgage rates available today by increasing the size of your down payment and comparing multiple loan options.
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Current 30-year mortgage rates
The average 30-year fixed mortgage rate in late September was down from 6.46% one month prior. Rates have cooled from their late 2023 high of 7.79%.
Rates on conventional and jumbo 30-year mortgages remained above 6.00%, but government-backed loans have fallen below that mark for the first time in nearly two years. Following the Fed’s Sept. 18 decision to cut the federal funds rate for the first time in over four years, rates on all consumer lending types are expected to fall — including mortgage rates.
| 30-year fixed rate loan type | Average interest rate |
|---|---|
| Conventional | 6.08% |
| 5.88% | |
| 5.63% | |
| 6.42% | |
| 5.98% |
How mortgage rates for 30-year terms are trending
In August 2023, 30-year fixed mortgage rates rose above 7%, according to data from Freddie Mac. After dropping below that threshold in December 2023 and remaining beneath it throughout early 2024, the average 30-year mortgage rate climbed back above 7% in mid-April. But following the Fed’s rate cut of 50 basis points in Sept. 2024, mortgage rates are expected to fall.
Still, rates are well above the all-time low of 2.65% set in early 2021. The increase in interest rates is due to multiple factors — inflation and the Federal Reserve’s policymaking kept the cost of consumer borrowing high. But with inflation cooling and the Fed signaling increased confidence in its economic outlook, borrowers can expect rates to finally come down, easing the strain on budgets and pocketbooks.
“We’ve been pleased to see mortgage rates recently trending lower,” said Christopher Davis, an assistant vice president at Navy Federal Credit Union. “This is important to our members and to all buyers currently in the market for a home in giving them more affordability. As interest rates drop, monthly payment costs for new mortgages are coming down.”
Related >> Historical mortgage rate trends
Will 30-year mortgage rates drop?
A much-anticipated rate cut came on Sept. 18, 2024, when the central bank dropped its target rate by half a percentage point. Fed chair Jerome Powell indicated that another cut is likely by the end of the year.
While the Federal Reserve doesn’t establish mortgage rates, its federal funds rate influences the rates lenders charge consumers.
The Federal Reserve raised its target interest rate 11 times in 2022 and 2023 to combat inflation, and the last rate increase came in July 2023. The dramatic increase in 30-year mortgage rates, high home prices and low inventory of for-sale properties (not to mention overburdened homebuilders) have caused many prospective buyers to delay their home purchases in anticipation of more favorable conditions.
| Year | Prime rate effective date | Prime rate |
|---|---|---|
| 2024 | September 19 | 8.00% |
| 2023 | July 27 | 8.50% |
| May 4 | 8.25% | |
| March 23 | 8.00% | |
| February 2 | 7.75% | |
| 2022 | December 15 | 7.50% |
| November 3 | 7.00% | |
| September 22 | 6.25% | |
| July 28 | 5.50% | |
| June 16 | 4.75% | |
| May 5 | 4.00% | |
| March 17 | 3.50% |
Borrowers set on the dream of homeownership have, however, continued to beat the odds and buy homes, despite the challenging housing market in recent years.
“Some buyers, like our members, are forced to move due to job transfers or other factors and are surprised to learn that even with today’s rates and the increases in housing costs it still works out well for them,” said Davis. “We work with buyers every day that are still finding the way to homeownership.”
Further rate cuts would provide even more breathing room, opening up the market to those who have been reluctant to sell homes they bought at record low rates and buyers who have been awaiting lower borrowing costs.
How far will 30-year mortgage rates drop?
Members of the Federal Open Market Committee project a federal funds rate of 4.4% by the end of 2024 and 3.4% by the end of 2025, according to Powell’s statement following the Sept. 18 rate cut. He noted that this forecast could change based on economic conditions.
The federal funds rate is just one element of how mortgage rates are determined. Inflation, the labor market, the bond market and other factors also contribute to the rates lenders charge. Individual borrower characteristics like credit score, debt-to-income ratio (DTI) and down payment size also affect the rates offered to applicants within the lender’s range.
The Mortgage Bankers Association (MBA) predicted that mortgage rates would fall to 6.5% by the end of 2024, but by late September, rates were already down to 6.08%. As lenders react to the lower rate (and watch for another potential cut), you can expect to see mortgage rates continue to drop. But just how far they’ll fall is up for debate.
With its September decision, the Fed “signaled that this is the first cut in a series that should bring rates down by about two percentage points by the end of 2025,” said MBA chief economist Mike Fratantoni. That means we may see 30-year fixed mortgage rates trending toward 4% this time next year.
8 tips for scoring competitive rates for 30-year mortgages
If you’re in the market for a home loan, some factors that impact interest rates are beyond your control, like economic conditions such as inflation and the labor market. However, there are steps you can take to qualify for a competitive interest rate:
1. Familiarize yourself with mortgage options
The type of mortgage you get directly impacts your interest rate. For example, FHA loans and VA loans, which are backed by the federal government, typically have lower interest rates than conventional (non-government) loans. However, both loan types have fees, such as mortgage insurance (FHA loans) and funding fees (VA), that factor into the overall loan cost.
Understanding your mortgage options is an essential step toward getting the best rate.
2. Comparison shop
Interest rates and loan features vary by lender, so comparing rates and mortgage programs from multiple lenders can reveal the most competitive offer. It’s wise to review quotes from different types of lenders, including traditional banks, credit unions and online mortgage lenders.
When reviewing quotes, compare APRs, not just the interest rate, to understand the total cost of borrowing.
3. Know your financial situation
Your credit scores and other aspects of your financial profile help to determine your interest rate. Before applying, review your credit reports at AnnualCreditReport.com to ensure that everything is accurate.
To maintain or improve your credit scores, dispute errors on your reports, make debt payments on time, keep your debt-to-income ratio (DTI) low by paying down debt and avoid opening new credit before applying for a mortgage. You may want to avoid closing any long-standing credit accounts in the leadup to applying for a mortgage, too. That can increase your credit utilization and lower the average age of your accounts, which can negatively affect your credit scores.
4. Increase your down payment
The size of your down payment determines the loan type you’re eligible for and impacts your interest rate. Generally, saving a larger down payment can help you qualify for a more competitive rate.
5. Check local homebuyer programs
Many states and localities have programs that can make your mortgage more affordable, which are often specifically geared toward first-time homebuyers. Some offer lower interest rates to buyers who meet income guidelines. Contact your state housing agency (via the National Council of State Housing Agencies) to explore options.
6. Opt for a shorter loan term
Shorter terms are less risky for a lender, since it’s less likely your ability to pay will change over 15 years than over 30 years. As a result, lenders typically charge lower interest rates on 15-year loans than on 30-year loans. But your total monthly payment would be higher, so use an online mortgage calculator to confirm it’s within your monthly budget.
7. Buy mortgage points
You can also pay less interest by buying mortgage points (also known as discount points). When you buy a point or percentage of a point, you pay for a certain amount of mortgage interest upfront, lowering the overall interest rate and your monthly payments. Points are most effective when you plan to stay in your home long-term, since that leads to more savings.
8. Consider your location
Rates can vary by state, due to factors including regulatory differences and the range of financial institutions competing for borrowers in that state. If you have the flexibility to compare rates across locations, you might find lower rates in another housing market altogether.
What the current 30-year mortgage rates mean for your wallet
Elevated interest rates directly impact mortgage affordability. At the current average 30-year fixed rate (6.08%), a $350,000 mortgage carries a monthly principal-and-interest payment of $2,116 and total interest of $411,926.
Compare that to what homebuyers paid for the same mortgage when rates were at the record-breaking low of 2.65% in 2021. At the time, a $350,000 loan had a $1,410 monthly payment and $157,734 in total interest. Today’s rates result in well-qualified borrowers paying $706 more in monthly dues and nearly triple the interest.
While it's unlikely that rates will return to the 3% mark in the near future (unless an unforeseen economic event occurs), we’re finally seeing them come down from their 2023 highs.
“The decrease in rates may provide a bit more wiggle room in the budgets of prospective homebuyers,” said Sam Khater, chief economist for Freddie Mac.
Below, compare the monthly dues and overall interest charges of a 30-year $350,000 mortgage at varying interest rates:
| Interest rate | Principal and interest payment | Total interest |
|---|---|---|
| 7.50% | $2,447 | $531,010 |
| 7.00% | $2,329 | $488,281 |
| 6.50% | $2,212 | $446,406 |
| 6.00% | $2,098 | $405,434 |
Pros and cons of a 30-year mortgage
While a 30-year fixed-rate mortgage is the most common type of home loan and offers many benefits to homebuyers, it also has drawbacks.
| Pros | Cons |
|---|---|
|
|
With interest rates that don’t change for the life of the loan, 30-year fixed-rate mortgages provide stability, which may be especially attractive if you’re a first-time homebuyer or older homeowner living on a fixed income. The longer term also provides lower monthly loan payments, which can help you juggle multiple financial goals.
On the other hand, the stability of 30-year fixed mortgages also makes them inflexible. If interest rates decrease, you must refinance the mortgage to lower your interest rate. An adjustable-rate mortgage, on the other hand, comes with a rate that periodically adjusts with the market, allowing you to capitalize on falling rates (though you’d wind up paying more if rates climb).
The longer loan term also means paying more in total interest. Shorter loan terms, such as 15- or 20-year mortgages, could be a better option for homeowners looking for the lowest cost of borrowing and older buyers who may want a shorter repayment period. (Plus, 15-year mortgage rates are often lower than those on 30-year terms.)
What about refinancing a 30-year mortgage?
Refinancing an existing 30-year mortgage can be a good move when it lowers your interest rate (without extending your repayment term) and reduces the total cost of the loan.
But with refinance rates at high levels, securing a lower rate on an existing loan will be challenging. The majority of homeowners have mortgage rates significantly lower than today’s averages. In fact, more than six out of ten mortgages have rates below 4%, according to Freddie Mac data.
However, you might consider refinancing to achieve other objectives, such as lowering your monthly payment by extending the repayment period, switching loan types or leveraging improved credit.
Example of a 30-year mortgage refinance
Let’s say you wanted to reduce your monthly payment three years into a 15-year mortgage for $350,000 at 4.00%. By refinancing to a 30-year mortgage at 6.08%, you’d lower your payment by $801.
However, extending the loan term to lower your monthly payment means paying an additional $270,909 in interest with the new 30-year loan, which could significantly affect your ability to meet other financial obligations.
You’ll also need to consider the cost of refinancing — fees can be as much as 2% to 6% of the principal amount. A mortgage refinance calculator can be a helpful tool to estimate the monthly payment and closing costs (plus potential savings) of a refinance loan.
“Often the most valuable housing asset people have is their current low-interest-rate mortgage,” said Mike Calhoun, president of the Center for Responsible Lending. “You’re giving up a hugely valuable asset when you refinance and give up that low-rate mortgage.”
Calhoun’s advice: Hold on to your low mortgage rate unless you’re refinancing for the most compelling reason and have no other option.
Related >> The best mortgage lenders for refinancing
Additional reporting by Brianna McGurran
Frequently asked questions (FAQs)
Economic forces like inflation, Federal Reserve policy and investor activity can cause 30-year fixed mortgage rates to fluctuate. However, other factors impact mortgage interest rates, such as mortgage type, your credit history and the size of the down payment.
Mortgage interest rates vary by loan type and term. Average 30-year mortgage rates generally refer to conventional, fixed-rate mortgages and can differ from rates for other loan types and repayment terms.
Yes. The best way to do that is to compare loans from multiple lenders and use the quotes to negotiate rates and terms. Research shows that getting quotes from two to four lenders could save you $600 to $1,200 annually over your loan term. Negotiations are more likely to be successful if you have excellent credit scores, a low DTI and a large down payment.
Refinancing an existing 30-year mortgage is best when interest rates are lower than the rate on the original loan. However, homeowners looking to decrease their monthly payments could accomplish this by refinancing and extending the loan term — even if rates have increased. Other reasons to refinance include removing private mortgage insurance, changing loan types or leveraging an improved financial profile.
Taking on a 30-year fixed-rate mortgage can provide you with housing cost certainty because the principal and interest payments remain set for the entire loan. The extended repayment term also offers smaller monthly payments than shorter loans. On the other hand, 30-year fixed mortgage rates are typically higher than shorter-term loans, and the long repayment term means you’ll pay more interest overall.
Yes, mortgage rates depend on where you live because of differences in state laws and local economic factors. To find your state’s best 30-year fixed mortgage rates, compare loan products and lenders to determine which options give you the most competitive rates.
Editorial Disclaimer: Opinions expressed here are the author's alone, not those of any bank, credit card issuer, airlines, hotel chain, or other commercial entity and have not been reviewed, approved or otherwise endorsed by any of such entities.
This content is for educational purposes only and is not intended and should not be understood to constitute financial, investment, insurance or legal advice. All individuals are encouraged to seek advice from a qualified financial professional before making any financial, insurance or investment decisions.
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