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Looking for today’s best mortgage rate? Consider short-term loans | July 25, 2023

By Sarah Maroney
Published  July 25, 2023 1:57pm EDT
Personal Finance
Content provided by Credible, which is majority owned by Fox Corporation. Credible is solely responsible for this content and the services it provides.

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, all opinions are our own.

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Check out the mortgage purchase rates for July 25, 2023, which are largely unchanged from yesterday. (Credible)

Based on data compiled by Credible, mortgage rates for home purchases have risen for one key term, while three others have remained unchanged since yesterday.

Rates last updated on July 25, 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 purchase rates have maintained their pattern of 15-, 20-, and 30-year terms remaining above 7%, while 10-year terms stay in the 5% range. Today, rates for 30-year terms have edged up to 7.5%. Meanwhile, rates for 15- and 20-year terms have remained unchanged at 7.125% and 7.875%, respectively. Additionally, rates for 10-year terms have stayed as the day’s lowest rate at 5.625%. Borrowers looking to maximize their interest rate savings should consider 10-year terms. Homebuyers who would rather have a smaller monthly payment should instead consider 30-year terms, as they have the lowest rates out of the two longer 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 risen for three key terms, while another has remained unchanged since yesterday.

Rates last updated on July 25, 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 refinance rates have maintained their pattern of longer terms having interest rates above 6%. Today, mortgage rates have remained unchanged for 30-year terms, keeping the rate at 6.625%. Meanwhile, rates for 15- and 20-year terms have edged up, hitting 6% and 6.625%, respectively. Additionally, rates for 10-year terms have jumped by a half of a percentage point to 6.125%. Homeowners looking to refinance into a lower monthly payment should consider 20-year terms, as their rates are lower than those of 30-year terms. Borrowers who would rather save the most on interest should instead consider today’s lowest mortgage refinance rate, 15-year terms at 6%.

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. 

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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 in your control)

Many factors affect what mortgage interest rate you can qualify for, and some of them are within your control. Improving these factors could help you qualify for a lower interest rate. 

  • Credit score — Generally, the lowest interest rates go to borrowers with the highest credit scores.
  • Debt-to-income ratio — DTI is a percentage that compares your total debts with your income. To calculate DTI, divide the total of all your monthly minimum debt payments by your gross monthly income. Generally, lenders prefer a DTI of 35% or less.
  • Down payment amount — Generally, lenders (and many sellers) look favorably on a higher down payment amount. If you put down less than 20% of the home’s purchase price, many lenders will require you to pay for private mortgage insurance, which protects the lender (not you) if you fail to repay the mortgage.
  • Home location/price — Interest rates can vary depending on what state you live in and where in the state you’re buying. Likewise, if you need to borrow a lot more than average (a jumbo loan) or very little, you may get a higher interest rate.
  • Repayment term — The lowest rates typically come with 10- or 15-year terms, while 30-year terms usually have the highest interest rates.

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 moneyexpert@credible.com and your question might be answered by Credible in our Money Expert column.