Getting the best 30-year mortgage rate possible can save you thousands of dollars a year. As the Federal Reserve has begun cutting interest rates, mortgage rates are finally starting to fall from the high 6-7% range they were at for most of 2023 and 2024.
While the Federal Reserve does not directly control mortgage rates, its actions do influence rates indirectly. After the Fed started cutting rates in September, average mortgage rates dipped to just above 6%. Mortgage rates are ending the year higher than that, at 6.85% according to Freddie Mac.
Nevertheless, there are hopes that the situation will improve in 2025 as the Fed continues its work. If mortgage rates lower, more people will be willing to move, making more homes available and potentially, eventually, unlocking the housing market. At that point, it's key to know where to go to find the best mortgage rate for you.
30-year mortgage rates
The average interest rate for a 30-year fixed mortgage is 6.85% as of December 26, and the interest rate for a 15-year fixed mortgage is 6%.
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. 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 6.85%, you'd be paying $2,201.67 on your monthly mortgage payment. But at 6.65%, you'd be paying $2,157 monthly — $536 less each year.
Use our tool, in partnership with Bankrate, to compare 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. See what the options are now for refinancing, with our tool, in partnership with Bankrate:
Four ways to get a lower mortgage rate
- 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 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.
Good luck, and happy hunting.
