Today’s 20-year mortgage rates emerge as best money-saving opportunity | Feb. 27, 2023

Based on data compiled by Credible, mortgage rates for home purchases have risen for three key terms and remained unchanged for one term since last Friday.

Rates last updated on Feb. 27, 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 rates for home purchases rose for three key repayment terms over the weekend, while 20-year rates held steady. Buyers looking for a longer repayment term stand to see greater interest savings with a 20-year mortgage. Rates for this term are holding at 6.375% for the third day in a row, and offer the combination of a low interest rate and manageable monthly payments.

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 across all terms since last Friday.

Rates last updated on Feb. 27, 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 edged up across all repayment terms over the weekend, bringing 30-year rates up to 6.49%. Still, homeowners looking to refinance into a longer repayment term may want to consider 20-year rates: At 6.125%, this longer repayment term offers the combination of a relatively low interest rate and manageable monthly payments. But homeowners who can manage a larger monthly payment may want to consider locking in a 15-year term while rates are still under 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 refinance or purchase, 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.

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 740 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.

How my credit score affects my rate

Many factors can affect the interest rate you receive on a mortgage. Your credit score is an important one.

A higher credit score indicates to lenders that you know how to use credit responsibly. It can boost their confidence that you’ll make your mortgage payments on time and won’t default. Applying for a mortgage with a high credit score could help you qualify for lower interest rates, and give you a wider array of loan types to choose from.

Conversely, a low credit score may make lenders think you’ll have difficulty managing your mortgage, and may miss payments or even go into foreclosure. A low credit score likely means you’ll qualify for higher interest rates, and your loan choices will be more limited.

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.

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