Getting the best 30-year mortgage rate possible can save you thousands of dollars a year. So it's vital to stay informed about economic factors that influence rates.
While the Fed does not directly control mortgage rates, its actions influence them indirectly by affecting the broader economic environment and lender borrowing costs. When the Fed signals potential rate cuts or hikes, mortgage rates often respond accordingly, as lenders adjust to expectations of future inflation and economic growth.
At the May Federal Reserve meeting, the Fed maintained its benchmark federal funds rate at 4.25% to 4.5% for the third consecutive meeting, citing heightened risks of inflation and unemployment due to ongoing trade tensions and tariffs.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Mortgage rates, which hovered in the high 6% to 7% range throughout most of 2024, experienced a brief decline before rising again amid economic tensions. In April, the average rate on a 30-year fixed mortgage climbed to 7.22%, according to Freddie Mac.
While the Federal Reserve has yet to begin cutting rates this year, many experts anticipate reductions later in 2025. A decline in mortgage rates could encourage more homeowners to sell, increasing the housing supply and potentially helping to unlock the housing market.
With these shifts on the horizon, it's important to know where to find the best mortgage rate for your situation.
30-year mortgage rates
If you're looking for the lowest mortgage rate, you should shop around. The financial institution you usually work with may not have the best rate available, so you should look at multiple options before deciding where to go. And mortgage rates have a massive impact on your monthly cash flow and what you overall end up paying.
For example, let's take the median American home sale price of $420,000.
Assume you put down 20% ($84,000) and get a $336,000 mortgage. At 6.9%, you'd be paying $2,212.90 on your monthly mortgage payment. But at 6.5%, you'd be paying $2,123.75 monthly — $1,069.77 less each year.
Use the tool below, in partnership with Bankrate, to see current mortgage rates available for purchase:
If you already have a mortgage, remember that you can refinance. This was a plan for many people who bought while interest rates were high. The expectation was that when rates went down, they'd be able to refinance and get a better deal. Read more on how refinancing a mortgage works and what it costs.
Rates haven't gone down quite enough to make this an entirely attractive prospect yet, but the expectation is that in the future they will.
Check out the latest refinancing options with the tool below, provided in partnership with Bankrate.
Four ways to get a lower mortgage rate
Market conditions influence mortgage rates, but you can take several proactive steps to improve your chances of securing a lower interest rate. Here are four key strategies to help you save on your mortgage.
Raise your credit score
One of the best and most effective ways to save on your mortgage is to raise your credit score, the biggest factor in determining your mortgage rate. Upping your FICO credit score, which ranges from 300 to 850, by just 20 points can save you hundreds of dollars by lowering your mortgage.
So, while you’ll likely need at least a 620 FICO score in order to qualify for a mortgage at any rate, you'll need a higher score to get approved for the best rates. Raising your credit score can be done in a number of ways, including making card payments on time and keeping credit card balances low.
Increase your down payment
In order to get the best rates on a conventional mortgage loan from Fannie Mae or Freddie Mac, you'll need to make at least a 20% down payment. In fact, the bigger your down payment is, the better your rate will likely be. You'll have to repay less principal and less interest over the life of the loan.
Get multiple quotes
Different lenders may offer different rates. Because of this, it's important to get multiple quotes to ensure you're getting the lowest interest rates available for you.
Consider an adjustable-rate mortgage (ARM)
If you know you're going to sell your home in the near future, opting for an ARM could be a good decision. For example, if you're going to sell your home in four years, choosing a 5 year ARM could save you a lot in interest.
You'll be able to take advantage of the lower interest rates associated with this kind of mortgage, and won't have to worry about your rate changing before you sell.
Locking for the best 30-year mortgage rate can save you thousands over the life of your loan. By boosting your credit score, making a larger down payment and shopping around for quotes, you can put yourself in a better position to get a lower rate.
Good luck, and happy hunting.
Related Content
-
Cord Cutting Could Help You Save Over $10,000 in 10 YearsHow cutting the cord can save you money and how those savings can grow over time.
-
The '8-Year Rule of Social Security' — A Retirement RuleThe '8-Year Rule of Social Security' holds that it's best to be like Ike — Eisenhower, that is. The five-star General knew a thing or two about good timing.
-
How to Choose a Mortgage Lender in Five StepsNot all lenders are created equal — here’s how to compare offers, rates and terms with confidence.
-
How the Federal Reserve Affects Mortgage Rates — and What It Means for Homebuyers in 2025Mortgage rates are still fluctuating in 2025 as the Fed holds steady — for now. Learn how interest rate changes affect your monthly payments and what buyers should watch for this year.
-
Why Canadian Snowbirds Are Ditching Their US HomesFrom rising costs to political tensions, here’s why foreign homeowners are selling and what it could mean for the American economy.
-
Check Your Mailbox: Wells Fargo Settlement Payments Have BegunWells Fargo settlement customers whose mortgages were placed in forbearance without their permission should keep an eye on the mail, as checks are going out.
-
How Does the 10-Year Treasury Yield Affect Mortgage Rates?Where the 10-year treasury yield goes, so do mortgage rates. Learn why they're connected and how it impacts homebuyers.
-
What It Really Takes to Buy a Home in 2025: Affordability, Income and Market ChallengesHome prices are up, mortgage rates are high and buyers are getting older. Here's what it really takes to afford a house in today's market.
-
The True Cost of Owning a Second Home: What to Consider Before You Buy A Vacation HomeWhat to consider before buying a vacation home, including mortgages, insurance, taxes, and upkeep.
-
5 Reasons Millionaires are Renting Instead of BuyingHomeownership isn’t for everyone, even millionaires. Discover why wealthy individuals choose to rent instead of buy, from financial flexibility to investment strategies.
