Are you looking to buy a new home or refinance your mortgage? The 30-year fixed-rate mortgage is one of the most popular home loans that provides stable, consistent payments over its lifetime. But mortgage rates fluctuate daily and can change dramatically based on market conditions. So what is the average 30-year fixed rate as of today? Let's examine the current rate environment and what's driving it.
Current 30-Year Fixed Rates
As of December 20, 2024, the average 30-year fixed mortgage rate is around 6.88% according to data from Freddie Mac[1]. This is significantly higher than the average rate of 3.11% just a year ago[2]. Over the last 52 weeks, the 30-year fixed rate hit a low of 5.55% in January and peaked at 7.08% in November[3]. Rates have moderated slightly since then but remain well above long-term historical averages.
Why Are Mortgage Rates Rising?
Mortgage rates closely track the yields on 10-year Treasury notes, which have skyrocketed in 2022 due to actions by the Federal Reserve. To curb high inflation, the Fed has raised its benchmark interest rate six times this year[4]. This makes borrowing money more expensive across the economy. At the same time, quantitative tightening policies are reducing demand for mortgage bonds. These macroeconomic factors have put significant upward pressure on mortgage rates.
How Do 30-Year Fixed Rates Compare Historically?
Today’s average 30-year fixed rate of 6.88% is well above the historic norm. Over the past 50 years, average rates have fluctuated between as high as 18.45% in 1981 and as low as 3.11% in 2020[5]. From the 2000s until 2020, rates remained below 5% apart from a brief spike during the Great Recession. The COVID-19 pandemic triggered a plunge in rates to all-time lows. But as the economy rebounds, rates have risen dramatically.
Pros and Cons of 30-Year Fixed Rate Mortgages
30-year fixed rate mortgages offer stability in monthly payments over their entire term. Your principal and interest payment will never change, making financial planning straightforward. However, 30-year loans accrue significantly more interest over time compared to shorter terms. You’ll end up paying much more total interest with today's higher rates. Refinancing is an option if rates fall in the future.
Alternatives to Consider
Given elevated 30-year fixed rates, alternatives like adjustable-rate mortgages (ARMs) and 15-year fixed mortgages may be attractive. The average 15-year fixed rate is lower at 6.46%[1]. ARMs start with even lower rates but eventually float higher. An ARM makes sense if you plan to move before the adjustment period. Shop around and compare mortgage options carefully.
Tips for Getting the Best Mortgage Rate
While you can't control market rates, you can take steps to secure the most competitive rate:
- Maintain a high credit score and low debt-to-income ratio
- Shop among multiple lenders
- Consider paying discount points for a lower rate
- Get pre-approved to strengthen your negotiating power
- Monitor rate trends and lock when they are favorable
By understanding today's rate environment and what impacts it, you can make informed mortgage decisions. Connect with a trusted lender advisor to explore your home financing options.