Need help deciding?

(877) 384-1041

How to Take Advantage of Falling Mortgage Rates

ByNadav ShemerMar. 10, 2020

This site is a free online resource that strives to offer helpful content and comparison features to its visitors. Please be advised that the operator of this site accepts advertising compensation from companies that appear on the site, and such compensation impacts the location and order in which the companies (and/or their products) are presented, and in some cases may also impact the rating that is assigned to them. To the extent that ratings appear on this site, such rating is determined by our subjective opinion and based on a methodology that aggregates our analysis of brand market share and reputation, each brand's conversion rates, compensation paid to us and general consumer interest. Company listings on this page DO NOT imply endorsement. We do not feature all providers on the market. Except as expressly set forth in our Terms of Use, all representations and warranties regarding the information presented on this page are disclaimed. The information, including pricing, which appears on this site is subject to change at any time.

Get a home loan with low rates
For millions of Americans, buying a home or refinancing an existing mortgage is about to get easier. Here's some background about the current mortgage market, the Federal Reserve rate changes, and the steps you can take to gain from falling housing interest rates.
The Federal Reserve is likely to cut its benchmark interest rate for the first time in a decade at the end of July. At time of writing, markets were pricing in a 78.6% probability of a quarter-point rate cut, or 0.25%, in July, according to CME Group’s FedWatch tool. There was a 21.4% probability of a half-point rate cut.

Mortgage Rates Dip to Lowest Since Late-2016

The average 30-year fixed mortgage interest rate hit 3.73% at the end of June 2019, the lowest in more than 2-and-a-half years, and 121 basis points lower than the 12-month high of 4.94% in November 2018, according to Freddie Mac

At the beginning of this year, it looked like rates would rise in 2019 and beyond. In its final decision last year, the Fed raised its benchmark interest rate from 2.25% to 2.50% and flagged the likelihood of 2 additional rate hikes in 2019. But the Fed put rate increases on hold, and later proposed up to 3 rate cuts by early-2020.

Members of the Federal Reserve’s Open Market Committee meet 8 times each year to vote on the target federal funds rate. This rate correlates with the rate at which banks and credit unions lend money to each other to meet the Fed’s reserve requirements. When the federal funds rate goes up, banks and other lenders pass the costs on to consumers through higher interest rates for mortgages, loans, and other forms of credit. When the federal funds rate goes down, or when expectations for a rate increase dissipate, this takes pressure off mortgage lenders, who respond by offering their customers lower rates.

Compare the Top Lenders

LenderRequired Credit ScoreBest FeatureVisit Site
Quicken Loans620+ for most loansRefinance loans approved in minutesView Rates
Credible620 for most loansHassle-free comparisonsView Rates
AmeriSave580+Online application available 24x7View Rates
LoanDepot620+Basic mortgage information is available without a signupView Rates

Buying is Cheaper Now, Even in Hot Property Market

Finding an affordable home is a big deal for most buyers, but how many buyers worry about getting an affordable interest rate? 

As the following table shows, movement in interest rates can make a difference to the total amount of interest a buyer pays a lender over the duration of a mortgage loan.

The median home value in the United States was $227,700 in June 2019, 5.2% up from a year earlier, according to Zillow. Thirty-year fixed rates fell 18% in the corresponding period, according to Freddie Mac. A person buying a house at the median national price in June 2019 would have paid $11,840 more than a person buying 12 months earlier, but would have reduced by $23,360 their future interest payment liabilities.

Home Buyers Are Better off Than a Year Ago


June 2019November 2018June 2019
Median home value$227,700$223,200$215,860
Average 30-year fixed rate3.73%4.94%4.55%
Monthly payments$842$952$880
Total interest payments$120,796$164,164$144,156
Difference N/A+$38,968-$11,520

Sources: MortgageCalculator.org, Freddie Mac, Zillow. Assumes 20% down payment. Excludes property tax, PMI, home insurance, and all other payments not factored into interest rate.


Of course, house prices aren’t even across the board. In Hawaii the median home value is $614,000 and in California $547,500, while in West Virginia it is just $97,100.  In Idaho and Utah, prices rose 15% and 10% respectively in the 12 months to June 2019. In California, Delaware, and Louisiana, prices rose just 1%.

Likewise, lenders don’t all set the same rates and borrowers don’t all qualify for the same rates. The average interest rate is just an average. But it pays to buy when average rates are low, and borrowers can earn themselves even better rates by shopping around between lenders.

Freddie Mac has predicted that lower mortgage rates—plus strengthening homebuilder confidence and an increase in housing permits—will translate to increased home sales. It anticipates that home sales will reverse the 2018 slump and come in stronger at 6.03 million in 2019 before surpassing 2017 levels and increasing to 6.19 million in 2020.

Millions of Homeowners Can Save By Refinancing

Prospective home buyers aren’t the only people in a position to benefit from falling rates. According to Black Knight’s latest Mortgage Monitor report, 8.2 million homeowners are now likely to qualify for a refinance that reduces their interest rate by at least 0.75%. This is the largest number of refinanceable borrowers since late 2016, the last time mortgage rates were as low as they are now.

There are now 6.3 million more refinance candidates than when rates peaked in November 2018. As of June 27, there were 1.5 million more refinance candidates than May’s peak, leading Black Knight to predict that prepayment and refinance figures could continue to climb into the summer months.

More than 35% of all borrowers who took out their first mortgage in 2018 could now save at least 0.75% by refinancing. You don’t have to be a long-time homeowner to consider refinancing.

Note: refinancing involves closing costs, so it makes sense to refinance if the new interest rate is substantially better than the old one. As a general rule, the more time that has passed since the start of a mortgage, the greater the gap in interest rates must be for a refinance to make sense. In the early years of a mortgage, a 0.75% lower interest rate could be enough to deliver savings. But as more of the mortgage gets paid off, the rate would need to be lower by 1% or even 2% for a refinance to make sense.

The Top 5 Lenders

1. QuickenLoans

Quicken Loans

Quicken offers a range of mortgage and refinancing loans, including reverse mortgages, specialist VA and USDA mortgages, refinancing options, and a unique YOURgage option. Quicken uses technology to guide borrowers and complete the loan approval process quickly.  Quicken stands out for offering home equity loans for almost every scenario so that you can find a suitable home financing package. 

Read the full QuickenLoans review

Quicken Loans Quicken Loans View Rates

2. Credible

Credible

Credible.com’s mortgage marketplace builds on the success of the company's marketplaces for student loans, student loan refinancing, and personal loans, which have facilitated more than $1.6 billion in loans. Credible’s integrations with lenders and credit bureaus make it a snap to compare actual, prequalified rates across multiple lenders without impacting your credit score, and you don’t have to worry that your personal information will be shared with any lender other than the one you choose to work with. Once you see an option you like, Credible’s streamlined process and licensed loan officers provide a seamless experience all the way to closing.  

Read the full Credible review

View Rates

3. LendingTree

LendingTree

Since 1998, tens of millions of people have used LendingTree to find online loans, including personal loans, mortgages, and mortgage refinance loans. The website is built to be easy to use and within minutes you can compare loans from a wide variety of lenders. With the lenders competing for your business, you should have a better chance of getting a loan that works with your budget. The company doesn’t charge any fees for connecting you with lenders, and can provide you with free credit scoring. If you aren’t able to pay much of a down payment, you can still find a loan with LendingTree, which is known for helping people with less than ideal credit find loans. Keep in mind though, that with a lower down payment, you’ll have a higher principal to pay off.

Read the full LendingTree review

View Rates

4. AmeriSave

AmeriSave

Based in Atlanta, Georgia, AmeriSave Mortgage Corporation has established itself as one of the premier names in the mortgage loans and refinancing industry. The company was established in 2002, and has since expanded its service to 49 states and the District of Columbia. Today, the company offers a quick and straightforward way for potential homeowners and prospective buyers to uncover the loans they need and access funds efficiently. AmeriSave has expanded to employ more than 500 mortgage specialists, and funds billions in home loans every year. Moreover, the company offers a wide variety of mortgage options, including conventional, jumbo, FHA, VA and USDA loans.

Read the full AmeriSave review

AmeriSave AmeriSave View Rates

5. LoanDepot

LoanDepot

LoanDepot offers homebuyers a portal to compare mortgage loan offers. You can access basic mortgage information without signing up for an account, and it’s easy to update your information and view additional loan offers in a simple and straightforward manner. A variety of loans are available to search, including hard-to-find 10- and 20-year fixed loans.

Read the full LoanDepot review

View Rates

How to Secure the Best Mortgage APR as Rates Fall

Interest rates fluctuate. Nobody can say for certain what mortgage rates will look like in 6 months or a year, but evidence suggests they will keep going down.

  • Lock in a rate 

Searching for a house and a mortgage at the same time can be a stressful experience. If you need more time to find the right house, the good news is some lenders let their customers lock in a pre-approved rate for up to 90 to 120 days. We used a mortgage calculator to compare 3.5% and 3.75% mortgage rates for a $225,000 purchase with 20% down payment. For a 30-year fixed mortgage, the lower rate would save you around $8,350 across the life of the loan.

  • Take an ARM

Adjustable-rate mortgages offer lower interest rates than 30-year fixed-rate mortgages for an introductory period of 3 to 10 years (although not necessarily lower than a 15-year fixed mortgage). As an example, a 5/1 ARM refers to a loan where the rate is locked in for 5 years and adjusted every subsequent year for the duration of the loan. If mortgage rates are the same or lower at the end of the introductory period, you’re in luck. If they’re higher at the end of the period, you can expect to start paying more interest. If you believe you can pay off the loan early, an ARM might be the best option anyway.

  • Shop around

With any lending product, the golden rule is to always shop around. Comparing 3-5 lenders is a great way of seeing what’s available right now and what type of rate you specifically might qualify for. 


Compare the top mortgage lenders to find the best rates for your home loan >>