Average mortgage interest rates

Even a fraction of a percentage difference in APR can add up to tens of thousands over the life of a 30-year loan. Compare average market rates to make sure you’re getting the best deal.

Why do I need to know the average mortgage interest rate?

When you borrow money to finance the purchase of a home, banks don’t just hand the funds out for free. Not only will you have to pay back the money you borrow, but you’ll also have to repay the interest that accumulates on that principal amount.

Your lender sets the rate at which interest accumulates on the money you borrow. There can be substantial interest rate differences from one lender to the next, and they have a huge impact on the overall cost of your mortgage. Comparing the offered interest rate to the national average can help you quickly weed out the unfavorable options.

How much difference does a higher or lower interest rate make?

Even a slight variation in APR can add up to tens of thousands of dollars over the life of a mortgage. For example, let’s consider a $500,000 home loan with principal and interest payments and a loan term of 25 years. The table below shows the overall cost of this loan with an interest rate of 3.75% APR and 4.00% APR.

The 0.25% decrease in interest rate on Mortgage B adds up to over $20,000 saved over the life of the loan.

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Name	Product	Loan products offered	State availability	Min. credit score
Better.com (NMLS #330511)		Conventional, Jumbo, FHA, Refinance	Not available in: HI, MA, MN, NV, NH, VT, VA	620	Online preapproval in minutes and no origination fees with this direct lender.	See rates More Info		loading Fetching your data...
LendingTree (NMLS #1136)		Conventional, Jumbo, FHA, VA, USDA, Home Equity, HELOC, Reverse, Refinance	Available in all states	620	Connect with vetted home loan lenders quickly through this online marketplace.	See rates More Info		loading Fetching your data...
SoFi (NMLS #1121636)		Conventional, Home equity, Refinance	Not available in: AK, HI, MO, NH, NM, NY, SD, WV	620	No hidden fees, multiple loan terms, and member discounts available.	See rates More Info		loading Fetching your data...
Axos Bank (NMLS #524995)		Conventional, Jumbo, FHA, VA, Home Equity/HELOC, Refinance	Available in all states	620	Purchase, refinance, and home equity options available with lender fees as low as $0 (restrictions apply).	See rates More Info		loading Fetching your data...

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Features	Loan types: Conventional, Jumbo, FHA, VA, USDA, Home Equity, HELOC, Reverse, Refinance Minimum credit score: Conventional: 620 FHA: 500 VA: 620 USDA: 640 Jumbo: 800 Minimum down payment: 3%

What other factors affect mortgage affordability?

While interest rates are undoubtedly important, they’re not the only factor that determines whether a home loan meets your needs. Other issues to consider include:

• Fees. These include application fees, loan establishment fees, legal fees, ongoing fees, early repayment fees and more.
• Loan to valuation ratio (LVR). This refers to the amount of money you are allowed to borrow relative to the value of the property you want to buy. It has a direct impact on the down payment size you’ll need to save up.
• Payment flexibility. As well as choosing a payment schedule to suit your budget, some loans also allow you to make additional payments at any time so you can pay your loan off quicker.

Bottom line

Even a small difference in interest rate can have a big impact on how much your mortgage costs. Compare your options to find a lender with an APR, and other features, you’re happy with.

Frequently asked questions

• How can I save on interest?

  Aside from finding the lowest rate, you can cut interest costs by saving up a bigger down payment. You pay interest on the amount you borrow, not the home’s value, and a bigger down payment means a smaller loan.

• What's the difference between a fixed and variable rate mortgage?

  Interest rates are constantly fluctuating. With a variable rate mortgage, the interest rate you pay fluctuates with the bank’s rates. This means that you can save money when interest rates go down, but you’ll also have to pay more when interest rates rise.

  A fixed interest rate stays the same for an agreed-upon length of time. When the term is up, you’ll either need to sign a new term or it’ll revert to a variable rate. Check with your lender to find out what options you’ll have when your fixed-rate term is up.

• Should I refinance to get a lower interest rate?

  Refinancing can be a great financial move in some cases, but it isn’t always the best option. Read our guide to figuring out when it’s a good idea to refinance to learn more.