Current average mortgage rates

Loan Type Interest Rate
30-year fixed-rate mortgage 3.65%
15-year fixed-rate mortgage 3.09%
5/1 adjustable-rate mortgage 3.39%
Source: Freddie Mac Primary Mortgage Market Survey, Jan. 16, 2020.

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Rates decline for the first time since November

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Mortgage rates are lower this week.

Mortgage rates have slipped this week to the lowest levels in about a month. The average for a 30-year fixed-rate mortgage during New Year's week is 3.72%, down from last week's 3.74%, Freddie Mac says. The loans in the firm's survey come with an average 0.7 point.

One year ago, the benchmark mortgage rate was more than three-quarters of a percentage point higher, at an average 4.51%.

This week's decline is the first since mid-November, and the current rate is the lowest for any early January since 2013, a MoneyWise.com review of Freddie Mac's historical data finds.

“The combination of improved economic data and market sentiment has led to stability in mortgage rates, which have hovered around 3.7% for nearly the last two months,” says Sam Khater, Freddie Mac's chief economist.

Use the calculator below to see the kind of monthly payment you can expect from today's low rates:

Lenders are ready for borrowing to pick up

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Lending offices have been quiet during what's traditionally their slowest time of the year.

If you took out a mortgage as recently as 2018, you might chop your monthly payment by refinancing into a new loan at a lower rate. Compare refi offers from multiple banks by visiting LendingTree.

Homeowners who refinanced their mortgages during the spring of 2019 are now saving an average of about $140 a month, or $1,700 a year, Freddie Mac has said.

Borrowing has been going through its usual holiday season slowdown, but refinance activity should pick up as homeowners look for sources of savings, says Alan Rosenbaum, founder and CEO of GuardHill Financial Corp., a mortgage banker and brokerage firm in New York.

"We expect volume to increase significantly in January when everyone goes back to work and receives their credit card bills for their holiday shopping and vacations," says Rosenbaum.

The outlook for mortgage rates

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Freddie Mac sees even lower mortgage rates in the future.

Mortgage rates are likely to stay down, with 30-year fixed-rate mortgages averaging 3.8% throughout both 2020 and 2021, according to Freddie Mac's latest forecast.

"The low mortgage rate environment combined with the red-hot labor market is setting the stage for a continued rise in home sales and home prices," says Freddie Mac's Khater.

Going forward, he's not expecting a repeat of what he calls the "interest rate turbulence" of the past year. Average 30-year mortgage rates remained above 4% through late May of 2019 before tumbling as low as 3.49%, which was a new three-year low.

Tim Lucas, editor of the blog The Mortgage Reports, says rates could still move around in 2020, despite forecasts suggesting they're not going anywhere.

"That doesn’t tell you how high or low rates could go throughout the year," Lucas writes. "Rates could be 4% for six months and 3.4% for the next six months."

He says it's important to lock a good rate when you see one. Now is "an excellent time to lock in and eliminate the risk of higher rates later," Lucas says.

This week's other mortgage rates

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Borrowers are finding lower rates on 15-year mortgages.

Borrowers are finding lower rates this week for 15-year mortgages, which had held steady at 3.19% for three weeks in a row. The current average on those shorter-term home loans has dropped to 3.16%.

A year ago, 15-year fixed-rate mortgages were averaging 3.99%, Freddie Mac says.

Rates have ticked higher this week on 5/1 adjustable-rate mortgages, or ARMs, which are level for five years and then can adjust up — or down — every subsequent year.

ARMs are currently being offered at an average initial rate of 3.46%, up from last week's 3.45%. Last year at this time, the ARM starter rates were at 3.98%, on average.

About the Author

Doug Whiteman

Doug Whiteman

Editor-in-Chief

Doug Whiteman is the editor-in-chief of MoneyWise. He has been quoted by The Wall Street Journal, USA Today and CNBC.com and has been interviewed on Fox Business, CBS Radio and the syndicated TV show "First Business."