2021: The lowest 30-year mortgage rates ever
And it kept falling to a new record low of just 2.65% in January 2021.
Lawrence Yun, chief economist at the National Association of Realtors, even told CNBC in 2023 that he doesn't think mortgage rates will reach the 3% range again in his lifetime.
The lowest average mortgage rates on record came about when the Federal Reserve lowered the federal funds rate in 2020 and 2021 in response to the pandemic. As a result, the weekly average 30-year, fixed-rate mortgage fell to 2.65%, while the average 15-year, fixed-rate mortgage sunk to 2.10%.
According to The Mortgage Reports' lender network, the lowest mortgage rates as of January 2025 are 7.042% (7.088% APR) for a 30-year fixed-rate conventional loan and 7.078% (7.114% APR) for a 30-year fixed-rate VA loan.
30 Year Mortgage Rate in the United States averaged 7.72 percent from 1971 until 2025, reaching an all time high of 18.63 percent in October of 1981 and a record low of 2.65 percent in January of 2021.
At its February 2024 meeting, the Reserve Bank Board decided to leave the cash rate target unchanged at 4.35 per cent. This decision supports progress of inflation to the midpoint of the 2–3 per cent target range within a reasonable timeframe and continued moderate growth in employment.
30-Year Fixed Mortgage Rates Over Time
You'll notice the highest annual rate came in 1981, peaking at 16.64%. The lowest came in 2021 at 2.96%.. You'll also see that while current interest rates are higher than in recent years, they're still lower than they were for almost all of the 70s, 80s and 90s.
Mortgage rates are unlikely to drop back down to the historic lows of 2020 and 2021, when 30-year fixed rates fell below 3%. But rates are expected to continue to ease throughout the next year or two, and it's possible rates could ultimately settle in closer to 6% in the next couple of years.
In fact, in March, Fed Chair Jerome Powell remarked that interest rates "will not go back down to the very low levels that we saw" during the financial crisis, suggesting that the economy can adapt to a more "neutral" benchmark rate range of between 2.4% to 3.8% in the long run, i.e., less tightening, but not too much ...
Mortgage rates have tended to fall in response to recent recessions.
"While I'd love to say rates will drop below 6% in 2025, I think it's a moderate probability and not a certainty," says Steven Parangi, a licensed mortgage loan originator and owner of Alpine Mortgage Services.
Runaway Inflation Kills Housing
The Fed funds rate, which is the rate banks charge each other for overnight loans, hit 20 percent in 1980, and 21 percent in June 1981. The cause was an inflationary spiral brought on by rising oil prices, government overspending and rising wages.
Today's national mortgage interest rate trends
If you're looking to refinance your current mortgage, today's current average 30-year fixed refinance interest rate is 7.08%, up 1 basis point over the last seven days. Meanwhile, the national 15-year refinance interest rate is 6.38%, unchanged from a week ago.
The National Association of Home Builders expects the 30-year mortgage rate to decrease to around 6.5% by the end of 2024 and fall below 6% by the end of 2025, according to the group's latest outlook.
The current Bank of America, N.A. prime rate is 7.50% (rate effective as of December 19, 2024).
There is technically no limit to how many times you can refinance your home. If you meet the lender's qualifications and it makes financial sense for your situation, you can refinance as often as you wish. However, just because you have the option to refinance multiple times doesn't mean it's always a wise choice.
Today's rates seem high compared with the recent 2% rates of the pandemic era. But experts say getting below 3% on a 30-year fixed mortgage is unlikely without a severe economic downturn.
The average 30-year fixed rate reached an all-time record low of 2.65% in January 2021 before surging to 7.79% in October 2023, according to Freddie Mac. And in late 2024, rates finally moderated, coming down into the low-6% range as the Federal Reserve kicked off an expected series of rate cuts.
Mortgage rates, which had been lower than the previous year for much of 2024, were 21 basis points higher annually. "Mortgage rates moved higher through the last full week of 2024, reaching almost 7% for 30-year fixed-rate loans," said Mike Fratantoni, chief economist at the MBA.
The Mortgage Bankers Association (MBA) in its 2025 finance forecast indicates that mortgage rates will gradually slide from 6.6% at the beginning of 2025 to 6.3% through 2026. The National Association of Home Builders is forecasting 6.12% in 2025 and 5.71% in 2026.
Current mortgage interest rates in California. As of Sunday, January 12, 2025, current interest rates in California are 7.33% for a 30-year fixed mortgage and 6.61% for a 15-year fixed mortgage. This aligns with current national mortgage rate trends.
Which bank gives the highest interest rate on FD? As of 2024, Canara Bank offers the highest interest rate of 7.25% for 444 days.