How Often Do Mortgage Rates Change?

Learn How Changing Rates Affect Home Affordability

Mortgage rates can change every day. Often, they can go up or down a little bit. Sometimes, they can fluctuate up or down more because of economic circumstances or other events. Rates can change over time. They can stay the same for periods of time, too.

It's difficult to predict what interest rates will do in the future. One way to deal with the unpredictability of rates is to decide on your homebuying goals and improve your finances so that when mortgage rates become right for you, you are ready to take advantage of them.

How Do Rate Changes Affect Mortgage Payments?

An interest rate is the price you'll pay to borrow money. The higher the rate, the more you'll pay. As a result, interest rates can have a big impact on your monthly mortgage payment, as well as the prices of homes you can afford. Use our mortgage payment calculator to see how different interest rates can change your mortgage payments.

What Causes Mortgage Rates to Change?

Many factors influence changes in rates and the amount of money you'll pay in interest on a mortgage, as a result. These factors include:

• 10-year Treasury Bonds. Mortgage interest rates closely follow the yield on 10-year treasury bonds. Changes in the market for these bonds often impact mortgage rates.
• The economy. Current economic conditions and future expectations for the economy influence mortgage rates.
• Inflation. The current inflation rate and future expectations for inflation also influence mortgage rates.
• The Federal Funds Rate. This rate can affect mortgage rates, but changes in the Federal Funds Rate does not always lead to changes in mortgage rates.

What Factors Affect Your Mortgage Rate?

Your mortgage rate is personal to you. We might be able to offer you a rate that is lower—or higher—than the interest rates you might see advertised or hear about in the news. Factors that can affect your rate include:

• Your credit score. Having a higher credit score can help you get a lower rate. A lower credit score might result in a higher rate.
• Your income, debts, and assets. A good income, low monthly debt payments, and good savings and assets can help you earn a lower interest rate. When your finances are less solid, you might get a higher rate.
• Your down payment and loan amount. Making a larger down payment and choosing a smaller loan amount might help lower your rate.
• 15-year versus 30-year mortgages. 15-year mortgages often have lower interest rates than 30-year mortgages, which can save you money over the life of the loan. Keep in mind that 15-year mortgages usually have higher minimum monthly payments, compared to 30-year mortgages.
• Fixed-rate versus adjustable-rate mortgages. Adjustable-rate mortgages can have lower interest rates at the beginning of the loan, compared to fixed-rate mortgages. However, the rate on adjustable-rate loans can change over time, which may increase or decrease your interest payment.

How Can Buying Points Change Your Interest Rate?

Mortgage discount points are a way to buy a lower interest rate when you are applying for a home loan. One discount point costs 1% of the loan amount and can reduce your interest rate by 0.25%.

For example, let's say that you are borrowing $300,000 with an interest rate of 7%. If you paid $3,000 for one discount point, you might be able to lower your interest rate to 6.75%.

Buying points can make sense when you are planning to pay the mortgage over many years. You can calculate a break-even mark to help you decide if buying points is right for you.

Can You Change the Interest Rate on Your Current Mortgage?

Yes. You can change your mortgage rate by refinancing your home. When you refinance to take advantage of lower interest rates, you'll generally want your new rate to be significantly lower than your current rate to make refinancing worthwhile. When you are thinking about buying a new home, remember that you are often able to refinance if rates decline in the future. You might want to keep your new home forever—but you don't need to keep your interest rate forever, too!

Last reviewed and updated February 2025 by Freedom Mortgage.