Today’s best mortgage deal? 15-year terms at lowest rate since last week | May 12, 2023

Based on data compiled by Credible, mortgage rates for home purchases have fallen for three key terms and risen for another since yesterday.

Rates last updated on May 12, 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 have edged down to 6.375% for 30-year terms. Additionally, rates for both 10- and 15-year terms have fallen by a quarter of a percentage point to 5.375%. Meanwhile, rates for 20-year terms have risen by a quarter of a percentage point to 6.125%. Borrowers looking for a smaller monthly payment should consider 20-year terms, as their rates are a quarter of a percentage point lower than those of 30-year terms. Homebuyers who would rather save on interest should instead consider either of today’s lowest rates, 10- or 15-year 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 fallen across all key terms since yesterday.

Rates last updated on May 12, 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 fallen across all key terms. Rates for both 20- and 30-year terms have edged down, hitting 5.5% and 5.875%, respectively. Meanwhile, rates for both 10- and 15-year terms have fallen to 5.25%. Homeowners looking to refinance into a smaller monthly payment should consider 20-year terms over 30-year terms, as their rates are over a quarter of a percentage point lower. Borrowers who would rather maximize their interest savings should instead consider 10- or 15-year terms.

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. 

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.

Can I get a mortgage with bad credit?

Credit scores are a snapshot of your credit history, and they usually range from 300 to 850. FICO, a widely used credit-scoring model, breaks down credit scores this way:

• Poor: 579 or less
• Fair: 580 to 669
• Good: 670 to 739
• Very good: 740 to 799
• Exceptional: 800 or more

To qualify for a conventional loan — one that’s not backed by any government agency — you’ll usually need a fair credit score of at least 620. But it’s possible to qualify for FHA loans, which are insured by the Federal Housing Administration, with a poor credit score as low as 500. 

And Veterans Administration loans, which are for veterans, active-duty service members and their spouses, have no minimum credit score requirements. USDA loans, which help very low-income Americans buy in certain rural areas, also have no minimum credit score requirements.

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.