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Today's Mortgage Rates For February 2023

A mortgage is a loan that could potentially impact your financial future for decades. It’s normally one of the largest loans that individuals take during their lifetime. If you’re thinking about getting a mortgage soon, it’s important to understand how mortgages work. Basic knowledge could help you find the best mortgage rates and terms available to you.

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Current Mortgage Rates

Mortgage Interest Rate
30-year fixed-rate 5.703%
20-year fixed-rate 5.349%
15-year fixed-rate 4.885%
10-year fixed-rate 4.949%
7-year ARM 5.655%
5-year ARM 5.508%

Last update: 03/02/23

Recent Mortgage Rate Trends

Become familiar with common types of loans and their respective distinctions to take advantage of your financial situation. Below is a short list of common terms that are used among mortgage trends. 

Below is a table displaying the recent average mortgage rate for various loans updated weekly.

Mortgage Historical and Current Rates

1-Month Trend30-Year Fixed Rate15-Year Fixed Rate30-Year Jumbo Rate5/1 ARM rates30-Year FHA Rate30-Year VA Rate

*Last update: 03/02/23

Mortgage Rate Industry Insights

Mortgage rates nearly doubled from their 2022 levels, increasing from 3.79% in Q1 2022 to 6.80% in Q4 2022. This is a big deal for those who are planning on buying a home in the near future. According to several institutions, rates may end in 2023 at approximately 5.4%, a significant decrease from the current rate.

The real estate industry has been very reactive to the changing environment. Some lenders have begun to offer mortgages with lower down payments and more flexible terms to compete with other lenders. Some lenders have created new products, such as reverse or adjustable-rate mortgages, for those needing them.

Best Rates For Today

Rates Differences

  • 30-year vs. 15-year – As the name suggests, a 30-year loan term is designed to be paid off over 30 years while a 15-year term is structured to be paid in full after 15 years. Although a 15-year mortgage has lower interest rates than a 30-year mortgage, 15-year mortgages have higher monthly payments because the same principle is paid in a shorter time frame.
  • APR – The annual percentage rate (APR) is a bottom-line rate that reflects the interest rate, mortgage insurance, closing costs, discount points, mortgage broker fees, and any other charges associated with the loan. Hence, APR is higher than the interest rates. 
  • ARM – Adjustable-rate mortgage (ARM) refers to a loan where the interest rates are subject to change. The interest rate normally adjusts in relation to an index interest rate; in turn, the monthly payments rise or decrease according to the loan’s index interest rate. 
  • Fixed-Rate Mortgage – A fixed-rate mortgage is repaid with a fixed interest rate. Unlike adjustable-rate mortgages, the interest rate is set from the start and does not change during the life of the loan. That doesn’t mean every repayment is the same; the amount paid towards principal and interest changes monthly. 
  • 5/1 Adjustable Rate Mortgage – Also referred to as a 5-year ARM, this is a mortgage loan in which “5” refers to the number of years the interest rate will remain fixed. The “1” refers to how often the interest rate will change after the initial five-year period. 

Read more: How Interest Rates Are Determined?

What Factors Determine a Mortgage Rate?

Credit Score

People with higher credit scores, for example, 720 and above, have access to favorable rates from almost any lender. Scores below 600 are perceived as risky by the lender and are likely to draw higher mortgage rate offers. 

Down Payment

The larger the down payment upon signing, the less risk the lender takes. A down payment shows the lender the level of commitment an individual has in seeing the deal through to its end because the borrower has more to lose. Thus, the larger the down payment, the better the offered interest rate.

Type of Loan Chosen

Numerous mortgage loans exist, such as FHA, conventional, VA, and USDA loans. The rates will differ based on the available loan types. Researching and talking to multiple lenders can help identify the best option and mortgage rate. 

Loan Term

The payment duration also affects the mortgage rates. For instance, lower interest rates are available for loans with shorter terms. The reason is that shorter-term loans indicate less risk for lenders because borrowers may have better means to pay back the debt owed. 

How to Qualify for Better Mortgage Rates

There are a few factors that contribute to the final mortgage rate. Before signing a mortgage loan agreement, most respectable lenders review your credit score, credit history, and more.

Financial behavior can be adjusted and improved to qualify for better mortgage rates. Getting better mortgage interest rates can be achieved by doing some of these things.

Credit Score Improvement

Credit Scores are powerful indicators to lenders about one’s financial history and trustworthiness. Since they hold a lot of weight, improving one’s Credit Score is a strong starting point for securing a better mortgage rate. Building up one’s Credit Score can be very valuable for financial health and well-being. 

Increase the Down Payment Size

Typical mortgages require a 20% down payment. Getting access to better rates may involve offering a larger down payment. By increasing the down payment size, the size of the loan principal will decrease, usually translating into savings.

Lower The Debt-to-Income Ratio

The Debt-to-Income Ratio is something that lenders look at when receiving applications for a loan. The chances of finding better mortgage rates may increase by paying off debt and lowering the debt-to-income ratio before shopping for mortgages.

How Does the Federal Reserve Affect Today’s Mortgage Rates?

Federal Open Market Committee members voted on Dec 4 to increase the overnight borrowing rate by half a percentage point. This takes it to a target range between 4.25% and 4.5%. Since the 1980s, this has been the most aggressive move.

The Federal Reserve is an organization that has a huge influence on mortgage rates. The Federal Reserve will increase the interest rates on mortgages and other loans if they believe the economy is in danger or if inflation has increased too much.

Though the Federal Reserve does not set the mortgage rates, they are the institution that determines the federal funds rate, which in turn impacts short-term and adjustable interest rates. This means that the Federal Reserve influences the rate at which financial institutions, such as banks, lend money to one another. Thus, when the federal funds rate spikes, banks find it expensive to borrow funds from other financial institutions. The result affects consumers with higher interest rates on lines of credit, auto loans, and mortgages. 

The Fed’s decision to increase rates is not just about how much you can borrow. It also affects what you pay for your existing mortgage.

Tips for Shopping and Comparing Mortgage Rates

We recommend keeping several things in mind when comparing mortgage rates.

  • Compare more lenders to find the best possible rates. Search for mortgages locally or from lenders in other states.
  • Credit Scores have an effect on the rates offered. Consider investing time in improving financial habits with the goal of obtaining a stronger credit rating.
  • Avoid Hard Credit Checks. In most cases, when applying for a mortgage, lenders will perform a “hard credit pull”. Meaning, credit scores may be negatively affected when multiple hard credit checks are made in a short period of time. Instead, inquire about your current credit score and ask lenders what rates they offer to borrowers with matching qualifications before applying. This will allow for rate shopping and comparison without causing credit score harm. It is possible to discover your current credit score for free via various financial institutions.
  • Consider Mortgage Rate Locks – If a borrower negotiates with the lender to lock in the interest rate on a mortgage for a certain duration, it may create more stability and predictability and, therefore, a better agreement. The borrower may be protected from an unwanted increase in the interest rate. In turn, however, this would mean that a borrower would be locked into a less-favorable interest rate in the event of more favorable economic conditions that cause a decrease in interest rates.
  • Mortgage Points are fees that a borrower pays to the lender for a reduction in the interest rates. They are also referred to as discount points, and they lower monthly mortgage payments. Each point purchased can translate into a reduction of up to 1 percent of the total loan amount. However, many individuals would consider the length of time they plan to own the home and the difficulty of recovering from the heavy purchases of said mortgage points. 

In Conclusion

When choosing a mortgage lender, there is plenty of information to cover and consider. For that reason, we recommend using a mortgage lender guide as a reference for clear, concise, and relevant information.

FAQ on Best Mortgage Rates

What is a Mortgage Rate?

How are Mortgage rates set?

What is a good mortgage interest rate?

What is a good rate for a Home Equity Loan?

When should I lock in my Mortgage Rate?

How Does the Federal Reserve Affect Mortgage Rates?

How to compare mortgage rates?

What type of Mortgage Should I get?

How Big a Mortgage Can I Afford?

What will I Need to Apply for a Mortgage?

What is the best credit score to have for a mortgage?

What is the difference between APR and Interest Rate?