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The current average mortgage rate on a 30-year fixed mortgage is 7.13%, compared to 7.22% a week earlier.
For borrowers who want a shorter mortgage, the average rate on a 15-year fixed mortgage is 6.29%, down 0.06 percentage points from the previous week.
Homeowners who want to lock in a lower rate by refinancing should compare their existing mortgage rate to today’s refinance rates.
Current Mortgage Rates for December 28, 2023
| Loan term | Rate | Change | Rate last week | |||
|---|---|---|---|---|---|---|
| 30-Year Mortgage Rate | 7.13% | -0.09 | 7.22% | |||
| 15-Year Fixed Rate | 6.29% | -0.06 | 6.35% | |||
| 30-Year Jumbo Mortgage Rate | 7.18% | -0.04 | 7.22% | |||
| Source: Curinos | ||||||
30-Year Mortgage Rates
Today, the average rate on a 30-year mortgage is 7.13%, compared to last week when it was 7.22%.
The annual percentage rate (APR) on a 30-year, fixed-rate mortgage is 7.03%. The APR was 7.11% last week. APR is the all-in cost of your loan.
With today’s interest rate of 7.13%, a 30-year fixed mortgage of $100,000 costs approximately $674 per month in principal and interest (taxes and fees not included), the Forbes Advisor mortgage calculator shows. Borrowers will pay about $142,563 in total interest over the life of the loan.
15-Year Mortgage Rates
Today’s 15-year mortgage (fixed-rate) is 6.29%, down 0.06 percentage point from the previous week. The same time last week, the 15-year, fixed-rate mortgage was at 6.35%.
The APR on a 15-year fixed is 6.22%. It was 6.29% a week earlier.
A 15-year, fixed-rate mortgage with today’s interest rate of 6.29% will cost $860 per month in principal and interest on a $100,000 mortgage (not including taxes and insurance). In this scenario, borrowers would pay approximately $54,719 in total interest.
Jumbo Mortgage Rates
The current average interest rate on a 30-year fixed-rate jumbo mortgage is 7.18%. Last week, the average rate was 7.22%.
If you lock in today’s rate of 7.18% on a 30-year, fixed-rate jumbo mortgage, you will pay $677 per month in principal and interest per $100,000 in financing. That means that on a $750,000 loan, the monthly principal and interest payment would be around $5,079, and you’d pay around $1.08 million in total interest over the life of the loan.
How to Calculate Mortgage Payments
Mortgages and mortgage lenders are often a part of purchasing a home, but it can be tricky to understand what you’re paying for—and what you can truly afford.
Using a mortgage calculator can help you estimate your monthly mortgage payment based on your interest rate, purchase price, down payment and other expenses.
Here’s what you’ll need in order to calculate your monthly mortgage payment:
- Home price
- Down payment amount
- Interest rate
- Loan term
- Taxes, insurance and any HOA fees
How Much House Can I Afford?
Everyone’s budget and financial goals vary. How much house you can afford comes down to a number of factors, including what you earn and what you owe. You’ll also want to consider how much you want to save for retirement, school and other expenses down the road.
Here are a few basic factors that go into what you can afford:
- Income
- Debt
- Debt-to-income ratio (DTI)
- Down payment
- Credit score
How Are Mortgage Rates Determined?
Multiple factors affect the interest rate for a mortgage, including the economy’s overall health, benchmark interest rates and borrower-specific factors.
The Federal Reserve’s rate decisions and inflation can influence rates to move higher or lower. Although the Fed raising rates doesn’t directly cause mortgage rates to rise, an increase to its benchmark interest rate makes it more expensive for banks to lend money to consumers. Conversely, rates tend to decrease during periods of rate cuts and cooling inflation.
Home buyers can make several moves to improve their finances and qualify for competitive rates. One is having a good or excellent credit score, which ranges from 670 to 850. Another is maintaining a debt-to-income (DTI) ratio below 43%, which implies less risk of being unable to afford the monthly mortgage payment.
Further, making a minimum 20% down payment can help you avoid private mortgage insurance (PMI) on conventional home loans. If you can afford the larger monthly payment, 15-year home loans have lower rates than a 30-year term.
What Is the Best Type of Mortgage Loan?
Many home buyers are eligible for several mortgage loan types. Each program can have its own advantages:
- Conventional mortgage. A conventional home loan is ideal for borrowers with good or excellent credit to qualify for competitive rates. Additionally, making a minimum 20% down payment helps you waive private mortgage insurance premiums.
- FHA loan. An FHA home loan is best when applying with imperfect credit or a low down payment. You can put as little as 3.5% down with a credit score above 580. A minimum 10% down payment is necessary for credit scores ranging from 500 to 579.
- VA loan. Borrowers with a qualifying military background may prefer a VA loan for its flexibility. A down payment may not be required. While you pay a one-time funding fee, there are no ongoing mortgage insurance premiums or service fees.
- USDA loan. Applicants in eligible rural areas can buy or build a home with no down payment, although an upfront and annual guarantee fee applies. Additionally, income requirements apply and this program requires a moderate income or lower.
- Jumbo loan. Homebuyers in a high-cost-of-living area will need to apply for a jumbo loan when the loan amount exceeds the Federal Housing Finance Agency’s conforming loan limits. The limit in most municipalities is $726,200 in 2023.
Frequently Asked Questions (FAQs)
What is a good mortgage rate?
A competitive mortgage rate currently ranges from 6% to 8% for a 30-year fixed loan. Several factors impact mortgage rates, including the repayment term, loan type and borrower’s credit score.
How to get a lower mortgage interest rate?
Comparing lenders and loan programs is an excellent start. Borrowers should also strive for a good or excellent credit score between 670 and 850 and a debt-to-income ratio of 43% or less.
Further, making a minimum down payment of 20% on conventional mortgages can help you automatically waive private mortgage insurance premiums, which increases your borrowing costs. Buying discount points or lender credits can also reduce your interest rate.
How long can you lock in a mortgage rate?
Most rate locks last 30 to 60 days and your lender may not charge a fee for this initial period. However, extending the rate lock period up to 90 or 120 days is possible, depending on your lender, but additional costs may apply.
As an expert in the field of mortgage rates and real estate finance, I bring a wealth of knowledge and experience to guide you through the complexities of the current market. I have an in-depth understanding of the various mortgage terms, rates, and factors that influence them, enabling me to provide valuable insights for both potential homebuyers and those considering refinancing.
Let's delve into the concepts covered in the provided article:
1. Mortgage Rates Overview: The article discusses the current average mortgage rates as of December 28, 2023. Specifically, it mentions the rates for 30-year fixed mortgages, 15-year fixed mortgages, and 30-year jumbo mortgages. These rates are crucial for individuals looking to buy a home or refinance their existing mortgage.
2. Understanding APR (Annual Percentage Rate): The APR is highlighted as the all-inclusive cost of a loan. It represents the true cost of borrowing, including interest rates and additional fees. The article emphasizes that knowing the APR is essential for borrowers to have a comprehensive understanding of their financial commitment.
3. Mortgage Calculations: The article provides examples of mortgage calculations using different loan terms and interest rates. It demonstrates how a change in interest rates can significantly impact monthly payments and the total interest paid over the life of the loan. The Forbes Advisor mortgage calculator is referenced to illustrate these calculations.
4. Factors Affecting Mortgage Rates: The piece explains the various factors influencing mortgage rates, including the overall health of the economy, benchmark interest rates, and borrower-specific factors. It emphasizes the role of the Federal Reserve's rate decisions and inflation in influencing mortgage rates.
5. Types of Mortgage Loans: The article touches upon different types of mortgage loans, such as conventional mortgages, FHA loans, VA loans, USDA loans, and jumbo loans. It provides a brief overview of each type, highlighting eligibility criteria and key features.
6. Determining Affordability: The article discusses how to calculate how much house one can afford, considering factors like income, debt, debt-to-income ratio (DTI), down payment, and credit score. It emphasizes the importance of these factors in determining affordability.
7. FAQ Section: The FAQs cover common questions related to mortgage rates, including what constitutes a good mortgage rate, how to secure a lower mortgage interest rate, and the duration for which one can lock in a mortgage rate. These answers provide practical guidance for individuals navigating the mortgage market.
In conclusion, my expertise in real estate finance allows me to interpret and analyze the intricacies of the current mortgage landscape, providing you with valuable information to make informed decisions about your home financing options.
