Glossary · Bonds and rates
Mortgage rate
A mortgage rate is the interest rate on a home loan. It sets the monthly payment, and over 30 years the interest can add up to more than the loan itself.
Also called: home loan rate, mortgage interest rate, 30-year mortgage rate, housing loan rate
Conventional home-purchase loans closed in Dec 2025 (FHFA). The 10-year Treasury yield now: 4.98%.
A 30-year loan at 6.2%: $361,466 of interest over 30 years.
In plain words
Few people can pay for a house in cash, so they borrow most of the price with a mortgage and repay it monthly over 15 or 30 years. The mortgage rate is the interest on that loan, and because the loan is so big and so long, a small change in the rate changes the payment a lot.
In the US most home loans have a rate fixed for all 30 years. It follows long-term bond yields, such as the 10-year Treasury, rather than the Fed’s overnight rate. Lenders add a margin for their costs and risks, and your own rate also depends on your credit score, your down payment and the size of the loan.
Home buyers who closed loans in Dec 2025 paid 6.2% on average. On $300,000 over 30 years, that is about $1,837 a month.
Example
One point on a $300,000 mortgage
- At 6% for 30 years the payment is $1,799 a month; the interest over 30 years comes to $347,515.
- At 7% it is $1,996: $197 a month more, and $418,527 of interest in all.
- A 15-year loan at 5.5% costs $2,451 a month, but only $141,225 of interest in all.
Over 30 years the interest can exceed the loan: at 6%, you repay about $647,515 for $300,000 borrowed.
One level deeper
Lenders price new 30-year fixed mortgages off the 10-year Treasury yield, because most such loans are repaid or refinanced well before 30 years. On top they add a spread for the risk that borrowers repay early when rates fall, for servicing costs and for profit. Since 1973, the average mortgage rate in these data has been 1.4 points above the 10-year Treasury yield.
The long fixed-rate mortgage is mostly an American product, supported by Fannie Mae and Freddie Mac, government-sponsored companies that buy loans from lenders. In many countries home loans are variable or fixed for only a few years, so a rise in rates reaches borrowers much faster (see fixed vs variable rate).
US mortgage rates peaked at 15.75% in Nov 1981, as the Fed fought double-digit inflation, and bottomed at 3.0% in Dec 2020. A low rate locked in for 30 years can make owners reluctant to move, since a new home would mean a new loan at a higher rate.
US mortgage rates and the 10-year Treasury since 1973
The average rate on new home-purchase loans, against the 10-year Treasury yield. The two move together; the gap is the lenders’ margin and the price of the borrower’s right to repay early.
The numbers behind the chart
| Date | Average mortgage rate | 10-year Treasury |
|---|---|---|
| Jan 1973 | 7.5% | 6.5% |
| Dec 1980 | 13.1% | 12.8% |
| Dec 1990 | 9.6% | 8.1% |
| Dec 2000 | 7.5% | 5.2% |
| Dec 2010 | 4.5% | 3.3% |
| Dec 2020 | 3.0% | 0.9% |
| Dec 2021 | 3.3% | 1.5% |
| Dec 2022 | 6.3% | 3.6% |
| Dec 2023 | 7.1% | 4.0% |
| Dec 2024 | 6.6% | 4.4% |
| Dec 2025 | 6.2% | 4.1% |
Why it matters
It decides how much house a family can afford: the same monthly budget carries a much smaller loan at 7% than at 3%.
Mortgage rates move the housing market. When they rise, sales and building slow; when they fall, waves of refinancing cut borrowers’ payments.
A mortgage is the largest debt of most households, so its rate shapes their finances for decades.
A common mistake
Myth: When the Fed cuts rates, mortgage rates fall right away.
In fact: Fixed mortgage rates follow long-term bond yields, not the Fed’s overnight rate. They often move before the Fed acts, on expectations, and can even rise after a cut if investors expect higher inflation.
Questions people ask
What is the difference between the interest rate and the APR on a mortgage?
The interest rate sets the monthly payment. The APR also spreads the loan’s fees and points over its life, so it is a little higher and better for comparing offers.
Why are mortgage rates higher than Treasury yields?
Lenders take risks the government doesn’t: borrowers can default, and they can repay early when rates fall, leaving the lender to reinvest at lower rates. Since 1973, the average gap in these data was 1.4 percentage points.
What was the highest mortgage rate in history?
In these FHFA data, 15.75% on average in Nov 1981; the lowest was 3.0%, in Dec 2020. Our mortgage rates history article goes through every year.
Read more on BigCapital
About the numbers
- The numbers on this page are recalculated from the data every night; the sources are listed at the end of the page.
- US recessions (NBER business cycle dates): National Bureau of Economic Research (NBER), Business Cycle Dating Committee: US Business Cycle Expansions and Contractions.
- Average mortgage rate in the US (conventional home-purchase loans), monthly: Federal Housing Finance Agency: Monthly Interest Rate Survey (MIRS), Table 17 "Terms on Conventional Single-Family Mortgages, Monthly National Averages, All Homes", contract interest rate, 1973-01 to 2018-12; National Mortgage Database (NMDB®) Aggregate Statistics, new residential mortgages, national monthly, "Average Interest Rate" of Conventional Market (Home Purchase), weighted by the number of mortgages, 2019-01 to 2025-12.
- US Treasury par yield curve rates: U.S. Department of the Treasury, Daily Treasury Par Yield Curve Rates (Interest Rate Statistics).
- S&P Composite (price, dividends, earnings, CAPE), US consumer prices and the 10-year Treasury rate: Robert J. Shiller, Online Data (shillerdata.com).
- FHFA’s average covers all conventional home-purchase loans closed in the month, fixed and adjustable, 30-year and shorter; fees and points are not included. It is published with a lag of several months.
- This page explains a term. It is not investment advice.