Today’s best mortgage deal? 15-year terms have the lowest rates | May 18, 2023

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Our goal here at Credible Operations, Inc., NMLS Number 1681276, referred to as “Credible” below, is to give you the tools and confidence you need to improve your finances. Although we do promote products from our partner lenders who compensate us for our services, all opinions are our own.

Based on data compiled by Credible, mortgage rates for home purchases have held steady for two key terms, fallen for one, and risen for another since yesterday.

Rates last updated on May 18, 2023. These rates are based on the assumptions shown here. Actual rates may vary. Credible, a personal finance marketplace, has 5,000 Trustpilot reviews with an average star rating of 4.7 (out of a possible 5.0).

What this means: Mortgage rates have held steady for 15- and 30-year terms, staying at 5.625% and 6.625%, respectively. Meanwhile, rates for 20-year terms have fallen by over a half of a percentage point to 5.875%. Additionally, rates have edged up for 10-year terms, hitting 5.875%. Borrowers looking to maximize their interest savings should consider today’s lowest rate, 15-year terms at 5.625%. Homebuyers who would rather have a smaller monthly payment should instead consider a 20-year term, as their rates are over a half of a percentage point lower than those of 30-year terms.

To find great mortgage rates, start by using Credible’s secured website, which can show you current mortgage rates from multiple lenders without affecting your credit score. You can also use Credible’s mortgage calculator to estimate your monthly mortgage payments.

Based on data compiled by Credible, mortgage refinance rates have held steady across all key terms since yesterday.

Rates last updated on May 18, 2023. These rates are based on the assumptions shown here. Actual rates may vary. With 5,000 reviews, Credible maintains an “excellent” Trustpilot score.

What this means: Mortgage rates have remained unchanged across all key terms. Rates for 30-year terms stayed as today’s highest rate at 6.125%, while rates for 15-year terms stayed as today’s lowest rate at 5.5%. Rates for both 10- and 20-year terms stayed at 5.75% and 5.875%, respectively. Borrowers looking for a smaller monthly payment should consider 20-year terms over 30-year terms, as their rates are a quarter of a percentage point lower. Homeowners who would rather save the most on interest should instead consider 15-year terms.

How mortgage rates have changed over time

Today’s mortgage interest rates are well below the highest annual average rate recorded by Freddie Mac — 16.63% in 1981. A year before the COVID-19 pandemic upended economies across the world, the average interest rate for a 30-year fixed-rate mortgage for 2019 was 3.94%. The average rate for 2021 was 2.96%, the lowest annual average in 30 years.

The historic drop in interest rates means homeowners who have mortgages from 2019 and older could potentially realize significant interest savings by refinancing with one of today’s lower interest rates. When considering a mortgage or refinance, it’s important to take into account closing costs such as appraisal, application, origination and attorney’s fees. These factors, in addition to the interest rate and loan amount, all contribute to the cost of a mortgage. 

How Credible mortgage rates are calculated

Changing economic conditions, central bank policy decisions, investor sentiment and other factors influence the movement of mortgage rates. Credible average mortgage rates and mortgage refinance rates reported in this article are calculated based on information provided by partner lenders who pay compensation to Credible.

The rates assume a borrower has a 700 credit score and is borrowing a conventional loan for a single-family home that will be their primary residence. The rates also assume no (or very low) discount points and a down payment of 20%.

Credible mortgage rates reported here will only give you an idea of current average rates. The rate you actually receive can vary based on a number of factors.

Factors that influence mortgage rates (and are out of your control)

Many factors influence the interest rate a lender may offer you. Some — such as your credit score — are in your control. But others you have no ability to affect, such as:

  • The economy — During financial downturns, the Fed may lower interest rates to try to stimulate the economy. And when the economy is doing well, interest rates can rise.
  • Inflation Interest rates tend to move with inflation. When the overall cost of goods and services increases, interest rates are also likely to rise.
  • The Federal Reserve The Fed may choose to lower interest rates to stimulate a struggling economy, or raise rates in an attempt to put the brakes on inflation.
  • Macro employment trends When many people are out of work, as they were during the months of pandemic lockdown, mortgage rates may fall. As employment increases, interest rates typically also increase.

If you’re trying to find the right mortgage rate, consider using Credible. You can use Credible’s free online tool to easily compare multiple lenders and see prequalified rates in just a few minutes.

Have a finance-related question, but don’t know who to ask? Email The Credible Money Expert at [email protected] and your question might be answered by Credible in our Money Expert column.

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