The mortgage lenders with the best interest rates this week are PenFed Credit Union, Chase Home Lending and US Bank, according to a survey conducted by Yahoo Finance. Lenders were ranked by annual percentage rate (APR), which includes lender fees.
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With the Federal Reserve last week announcing a second cut in the federal funds rate for 2025, potential home borrowers may be looking for an immediate cut in mortgage rates. It’s not a real thing.
The Fed influences, but does not control, mortgage rates. But mortgage lenders can rely on consumer demand to adjust their offerings as the Fed draws the world’s attention by cutting interest rates.
Here’s an example:
“The Fed cut rates by 0.25%, so we cut our rates,” Rocket Mortgage announced in a red banner at the top of its website. Rocket actually ranks in the top 10 for 30-year fixed mortgage rates among lenders we surveyed this week.
Here are the results of our survey of the lowest conventional mortgage rates this week. These numbers are each lender’s annual percentage rate (APR).
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Penfed Credit Union: 5.951%
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Chase Home Loans: 5.978%
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US Bank: 6.159%
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Rate it: 6.26%
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Citizens Bank: 6.337%
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Bank of America: 6.406%
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Wells Fargo: 6.414%
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Truist: 6.563%
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Flagstar Bank: 6.711%
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Rocket mortgage: 6.778%
These are all sample mortgage rates found on lender websites and are based on general assumptions. Lenders advertise 30-year mortgage rates based on different credit scores, down payments and other credit qualifications. Even where you live affects your mortgage interest rate.
Your rate will depend on your specific credit profile.
If the mortgage lender required additional borrower information to provide a sample rate, we provided an average home value and credit score with a 20% down payment based on a home located in the Midwest.
According to a new study by Realtor.com, the key to getting the lowest mortgage rate is shopping around. Here’s what we do for you: We scour national lender rates for the best deals we can find after the Federal Reserve cut interest rates last week.
We are also looking for information that you will want to consider. Often, borrowers focus on the interest rates offered, as this is what lenders usually emphasize. But the mortgage’s annual percentage rate, or APR, is the most important number.
APR includes both the interest rate and lender fees (such as the mortgage origination fee), making it the most accurate measure of the annual cost of borrowing.
Lenders often include mortgage discount points to reduce the interest rate offered. This is where things can get confusing.
First of all, discount points are prepaid interest, an upfront fee paid at closing that lowers your interest rate. Although lenders often include discount points in their online rates, purchasing points is optional. Each point represents 1% of your loan amount and typically lowers your interest rate by about 0.25%. For example, one point on a $400,000 mortgage would cost $4,000, bringing it down to 6% on a 6.25% home loan.
Truist, on the other hand, offered negative points, commonly known as lender credits. This means they don’t charge you more for your loan – instead, they’ll actually apply that credit toward your closing costs.
Just remember that no matter what the lender says in their advertisement or loan offer, once you get your loan estimate and see discount points in the lender’s fees section, you can say no and remove them. But your rate will be higher.
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We know there are a lot of moving parts.
Where possible, when shopping from three or more lenders, each will quote a mortgage rate with zero discount points. Then focus on the APR so you can accurately compare rates and fees.
Laura Grace Tarpley edited this article.