Mortgage Rates: Current Rates, Trends, and How to Get the Best Deal

Current Mortgage Rate Overview

The mortgage rate landscape in February 2026 reflects a market in transition. After the Federal Reserve's aggressive rate-hiking cycle pushed borrowing costs to two-decade highs in 2023, a series of Fed rate cuts beginning in late 2024 has brought some relief to homebuyers. However, mortgage rates remain elevated compared to the historically low environment that defined the 2020-2021 pandemic era.

The benchmark 30-year fixed-rate mortgage currently averages approximately 6.5-7.0% nationally, down from the peak of nearly 8% reached in late 2023 but still roughly double the 3% rates that borrowers enjoyed just a few years ago. The 15-year fixed-rate mortgage, popular among homeowners who want to build equity faster and pay less total interest, sits in the 5.7-6.2% range. Adjustable-rate mortgages, particularly the 5/1 ARM, offer slightly lower initial rates around 6.0-6.5% in exchange for the risk that rates will adjust after the initial fixed period.

These rate ranges are approximate national averages and will vary based on your individual circumstances. Your actual rate depends on your credit score, down payment amount, debt-to-income ratio, loan amount, property location, and the specific lender you choose. Borrowers with excellent credit (740+) and substantial down payments (20% or more) consistently qualify for rates at the lower end of these ranges, while those with lower credit scores, minimal down payments, or higher debt loads may see rates 0.5-1.5% above the averages shown. Always obtain personalized quotes from multiple lenders to find the best rate available for your situation.

It is also worth noting that advertised rates often include discount points — upfront fees paid to reduce the interest rate. When comparing offers, make sure to look at the annual percentage rate (APR), which incorporates both the interest rate and all associated fees to give a more complete picture of borrowing costs.

What Drives Mortgage Rate Changes?

Mortgage rates do not move in isolation. They are shaped by a complex interplay of economic forces, government policy, and market sentiment. Understanding these drivers can help you time your mortgage application and anticipate future rate movements.

Federal Reserve policy. The Fed does not set mortgage rates directly, but its decisions have an outsized influence on borrowing costs across the economy. The federal funds rate — the overnight rate at which banks lend to each other — affects short-term interest rates and sets the floor for borrowing costs. When the Fed raises the federal funds rate (as it did aggressively in 2022-2023), borrowing becomes more expensive throughout the financial system, and mortgage rates tend to rise. When the Fed cuts rates, as it began doing in late 2024, downward pressure on mortgage rates follows. However, the relationship is indirect: mortgage rates are more closely tied to long-term bond yields than to the Fed's short-term rate.

The 10-year Treasury yield. This is the single most important market indicator for predicting mortgage rate movements. Mortgage-backed securities compete with Treasury bonds for investor capital, so mortgage rates typically track the 10-year Treasury yield with a spread of 1.5-3.0 percentage points. When Treasury yields rise (due to higher inflation expectations, increased government borrowing, or reduced demand for safe-haven assets), mortgage rates rise in tandem. When Treasury yields fall, mortgage rates tend to follow.

Inflation. Inflation is the arch-enemy of fixed-rate lending. When inflation rises, the real return on a fixed-rate mortgage declines, so lenders demand higher nominal rates to compensate. The Fed's primary tool for fighting inflation is raising interest rates, which puts additional upward pressure on mortgage costs. The path of inflation — tracked through indicators like the Consumer Price Index (CPI) and the Personal Consumption Expenditures (PCE) index — is the single biggest factor that determines whether the Fed will cut, hold, or raise rates.

Economic indicators. Job market data, GDP growth, consumer spending, and manufacturing activity all influence rate expectations. A strong economy tends to push rates higher because it signals potential inflation and reduces demand for safe-haven bonds. A weakening economy has the opposite effect, as investors flock to the safety of Treasuries, pushing yields (and by extension mortgage rates) lower. The monthly jobs report and quarterly GDP releases are particularly watched by mortgage markets.

Housing market demand. Supply and demand dynamics within the mortgage market itself also play a role. When demand for mortgages is high, lenders have less incentive to offer competitive rates. When demand cools — as it did sharply in 2023-2024 when rates spiked — lenders may sharpen their pricing to attract borrowers. Seasonal patterns also matter: mortgage activity typically picks up in spring and summer, which can modestly affect rate competitiveness.

Global events. Geopolitical crises, trade wars, pandemics, and international financial instability all influence mortgage rates through their effect on investor behavior and capital flows. When global uncertainty rises, investors often move money into U.S. Treasury bonds (a "flight to safety"), which pushes yields down and can lower mortgage rates. Conversely, events that increase inflation expectations or reduce foreign demand for U.S. debt can push rates higher.

How to Get the Best Mortgage Rate

While you cannot control the broader economic forces that determine the general level of mortgage rates, you have significant influence over the rate you personally receive. The difference between a well-prepared borrower and an average one can easily be 0.5-1.0% — which on a $400,000 loan translates to $120-$250 per month and tens of thousands of dollars over the life of the mortgage. Here are the most effective steps you can take.

1. Raise your credit score to 740 or higher. Your credit score is the single biggest factor that determines your individual mortgage rate. Borrowers with scores above 740 consistently receive the best available rates, while those in the 620-679 range may pay 0.5-1.5% more. Before applying for a mortgage, check your credit reports from all three bureaus, dispute any errors, pay down revolving balances (aim for under 30% utilization), and avoid opening new credit accounts. Even a 20-point improvement can meaningfully lower your rate. See our credit score guides for detailed improvement strategies.
2. Make a larger down payment. Putting down 20% or more eliminates the need for private mortgage insurance (PMI), which typically costs 0.5-1.0% of the loan amount annually. Beyond avoiding PMI, a larger down payment reduces the lender's risk and often qualifies you for a lower interest rate. If you can stretch to 25% or more, some lenders offer additional rate discounts. Every percentage point of down payment signals financial strength to the lender.
3. Shop multiple lenders — at least three to five. Mortgage rates vary significantly between lenders, even on the same day for the same borrower profile. Research consistently shows that borrowers who obtain quotes from at least three lenders save an average of $1,500 over the life of their loan compared to those who accept the first offer. Get quotes from a mix of banks, credit unions, online lenders, and mortgage brokers. All rate inquiries within a 45-day window count as a single credit inquiry, so shopping aggressively will not hurt your credit score.
4. Consider buying discount points. Mortgage points allow you to pay upfront to reduce your rate, with each point (1% of the loan amount) typically lowering your rate by about 0.25%. This strategy makes sense if you plan to keep the loan long enough to reach the break-even point, usually 5-7 years. Calculate the break-even period by dividing the cost of the points by your monthly savings.
5. Lock your rate at the right time. Once you find a rate you are comfortable with, lock it in. Rate locks typically last 30-60 days, and longer locks may cost slightly more. In a volatile rate environment, locking protects you from unexpected increases between application and closing. Ask about "float-down" provisions that let you benefit if rates drop after you lock.
6. Reduce your debt-to-income ratio. Lenders evaluate your DTI — the percentage of your gross monthly income that goes toward debt payments. Most conventional lenders prefer a DTI below 43%, and borrowers with DTIs under 36% receive the most favorable terms. Pay off car loans, student loans, or credit card balances before applying to improve your DTI and strengthen your application.
7. Choose the right loan term and type. A 15-year mortgage carries a lower rate than a 30-year, and conventional loans often offer better rates than jumbo loans. Match the loan product to your financial situation and goals rather than defaulting to the most common option.

Fixed-Rate vs Adjustable-Rate Mortgages

Choosing between a fixed-rate mortgage and an adjustable-rate mortgage (ARM) is one of the most important decisions you will make during the home-buying process. Each product has clear advantages and risks, and the right choice depends on your time horizon, risk tolerance, and financial flexibility.

A fixed-rate mortgage locks in your interest rate for the entire life of the loan — typically 15 or 30 years. Your principal and interest payment never changes, regardless of what happens in the broader economy. This predictability makes budgeting straightforward and eliminates the risk that rising rates will increase your housing costs. The trade-off is that fixed rates are typically higher than the initial rate on an ARM, and if rates fall significantly, you would need to refinance to benefit.

An adjustable-rate mortgage offers a lower initial interest rate for a fixed period (5, 7, or 10 years for the most common ARM products), after which the rate adjusts periodically based on a benchmark index plus a margin. A 5/1 ARM, for example, has a fixed rate for 5 years and then adjusts annually. ARMs typically include caps that limit how much the rate can increase at each adjustment and over the life of the loan, but your payment can still rise substantially after the initial period.

In the current rate environment, ARMs have become more appealing to some buyers because the initial rate savings can be meaningful and many economists expect rates to decline over the next few years. However, this is a bet on future rate direction that carries real risk. If you value certainty and plan to stay in your home for the long term, a fixed-rate mortgage remains the safer choice for most borrowers. If you are confident you will move or refinance within 5-7 years, the lower initial cost of an ARM could save you thousands.

How Tariffs and Global Events Affect Mortgage Rates

Trade policy and geopolitical developments might seem far removed from your mortgage payment, but they can have a meaningful impact on borrowing costs. Tariffs — taxes on imported goods — affect mortgage rates through two competing channels.

On one hand, tariffs increase the cost of imported materials and consumer goods, which feeds into inflation. Higher inflation expectations push bond yields higher and put upward pressure on mortgage rates. Tariffs on lumber, steel, and other construction materials also increase the cost of new-home construction, limiting housing supply and keeping home prices elevated. This inflationary channel has been a concern during recent rounds of U.S. trade policy changes, particularly tariffs affecting goods from China, Canada, and Mexico.

On the other hand, the economic uncertainty created by trade disputes can trigger a "flight to safety" in financial markets, where investors move capital into U.S. Treasury bonds. Increased demand for Treasuries pushes yields down, which can pull mortgage rates lower. This dynamic was visible during the 2019 U.S.-China trade war, when mortgage rates dropped even as tariffs were being imposed, because investor anxiety drove a bond-market rally.

The net effect on mortgage rates depends on which force dominates. If tariffs cause broad-based inflation without significantly slowing the economy, rates will likely rise. If tariffs trigger enough economic fear to drive a bond-market rally, rates could fall despite rising consumer prices. International events — including wars, energy supply disruptions, and foreign central bank policy decisions — operate through similar mechanisms, making global awareness a useful tool for understanding rate trends. Borrowers watching for rate opportunities should monitor not just the Fed, but also trade policy headlines and international bond markets.

Our Mortgage Rate Guides

Refinancing: When Does It Make Sense?

Refinancing replaces your existing mortgage with a new one, ideally at a lower interest rate or with better terms. It can be a powerful financial tool, but it comes with closing costs (typically 2-5% of the loan amount), so the math needs to work in your favor before you proceed.

The 1% rule. A common rule of thumb is that refinancing makes sense when you can reduce your rate by at least 1 percentage point. However, this is a simplification. The real test is the break-even calculation: divide your total refinancing costs by your monthly savings to determine how many months it takes to recoup the expense. If you plan to stay in the home longer than the break-even period, refinancing is financially advantageous. For example, if refinancing costs $6,000 and saves you $200 per month, the break-even point is 30 months. If you plan to stay for five or more years, that is a clear win.

Rate-and-term refinance. This is the most straightforward type of refinancing: you replace your existing loan with a new one at a lower rate, a shorter term, or both. The goal is to reduce your monthly payment, pay less total interest, or accelerate your payoff timeline. Rate-and-term refinancing makes the most sense when rates have dropped significantly since you originally took out your mortgage.

Cash-out refinance. A cash-out refinance lets you borrow more than you owe on your current mortgage and receive the difference as cash. This can be useful for home improvements, debt consolidation, or other major expenses, but it increases your loan balance and resets your amortization schedule. Cash-out refinancing makes sense when you have substantial home equity (at least 20% remaining after the cash-out), the rate on the new mortgage is competitive, and the funds will be used for a purpose that builds value or eliminates higher-interest debt.

Before refinancing, consider whether you have been paying your current mortgage long enough to have shifted toward principal-heavy payments. Refinancing restarts the amortization clock, which means early payments on the new loan will once again be mostly interest. If you are 15 years into a 30-year mortgage, refinancing to a new 30-year loan may actually increase your total interest costs even at a lower rate.

Related Finance Topics

• Credit Scores — Your credit score is the #1 factor in your mortgage rate. Learn how to check, improve, and leverage your score.
• Home Insurance — Your mortgage lender requires homeowners insurance. Compare policies and find the right coverage.
• Savings Accounts — Where to park your down payment fund while earning competitive interest.