So long, 5.99%.

Mortgage rates jumped on Monday as the US-Israeli strikes on Iran sent oil prices surging, and Treasury yields rose amid fresh concerns about inflation.

MORE: 6% or less — See which lenders have the best mortgage rates this week.

The average 30-year mortgage rate jumped 13 basis points to 6.12%, according to Mortgage News Daily, pushing rates off 3.5-year lows.

In the long-term, mortgage rates are influenced largely by expectations about the health of the US economy, inflation trends, and investor demand for mortgage-backed securities. But geopolitical shocks can temporarily rock mortgage rates in both directions.

10-year Treasury bonds, which mortgage rates closely track, are often considered a safe-haven asset. During times of turmoil, investors typically flock to the bonds, which can push yields, and thus mortgage rates, lower.

But the war in Iran has so far had the opposite effect: Oil prices surged, rising nearly 6% to $71 a barrel as of midday on Monday, and investors worried about the possibility of higher inflation shunned Treasuries in favor of assets like gold. The yield on the 10-year Treasury rose more than 11 basis points to 4.05%.

Mortgage rates gradually drifted lower through much of last year and early 2026. Monday’s jump brings rates back to where they were for much of January and February.

“It’s never fun to see that,” said Jimmy Vercellino, a mortgage loan originator in Phoenix.

Still, if history is a guide, the rise in rates could be short-lived. During past conflicts in the Middle East, including during 2003, the 2020 assassination of Iranian Major General Qasem Soleimani, and the onset of the Gaza War in 2023, mortgage rates ultimately moved lower. But a period of volatility typically comes first.

“When you look back at conflict, typically when wars start, we do see a reduction in rates,” he said. “However, in the interim, what we see is an initial spike in rates and oil.”

Here are the current mortgage rates, according to the latest Zillow data:

30-year fixed: 5.81%

20-year fixed: 5.76%

15-year fixed: 5.32%

5/1 ARM: 5.82%

7/1 ARM: 5.88%

30-year VA: 5.41%

15-year VA: 5.04%

5/1 VA: 5.01%

Remember, these are the national averages and rounded to the nearest hundredth.

These are today's mortgage refinance rates, according to the latest Zillow data:

30-year fixed: 5.85%

20-year fixed: 5.68%

15-year fixed: 5.42%

5/1 ARM: 5.89%

7/1 ARM: 5.80%

30-year VA: 5.40%

15-year VA: 5.08%

5/1 VA: 4.75%

Again, the numbers provided are national averages rounded to the nearest hundredth. Mortgage refinance rates are often higher than rates when you buy a house, although that's not always the case.

MORE: Read about the best mortgage refinance lenders right now.

You can use the free Yahoo Finance mortgage calculator below to play around with how different terms and rates will affect your monthly payment. Our calculator considers factors like property taxes and homeowners insurance when estimating your monthly mortgage payment. This gives you a better idea of your total monthly payment than if you just looked at mortgage principal and interest.

You can bookmark the Yahoo Finance mortgage payment calculator and keep it handy for future use, as you shop for homes and lenders.

30-year mortgage rates today

Today’s average 30-year mortgage rate is 5.81%. A 30-year term is the most popular type of mortgage because by spreading out your payments over 360 months, your monthly payment is relatively low.

If you had a $300,000 mortgage with a 30-year term and a 5.81% rate, your monthly payment toward the principal and interest would be about $1,762, and you’d pay $334,381 in interest over the life of the loan.

The average 15-year mortgage rate is 5.32% today. Several factors must be considered when deciding between a 15-year and 30-year mortgage.

A 15-year mortgage comes with a lower interest rate than a 30-year term. This is great in the long run because you’ll pay off your loan 15 years sooner, and that’s 15 fewer years for interest to compound.

However, your monthly payments will be higher because you’re squeezing the same debt payoff into half the time.

If you get that same $300,000 mortgage with a 15-year term and a 5.32% rate, your monthly payment would jump to $2,423. But you’d only pay $136,084 in interest over the life of the loan. That's a sizable savings.

How much house can I afford? Use our home affordability calculator.

With an adjustable-rate mortgage, your rate is locked in for a set period of time and then increases or decreases periodically. For example, with a 5/1 ARM, your rate stays the same for the first five years, then changes every year.

Adjustable rates usually start lower than fixed rates, but you run the risk that your rate will go up once the introductory rate-lock period is over. But an ARM could be a good fit if you plan to sell the home before your rate-lock period ends — that way, you pay a lower rate without worrying about it rising later.

Lately, ARM rates have occasionally been similar to or higher than fixed rates. Before dedicating yourself to a fixed or adjustable mortgage rate, be sure to shop around for the best lenders and rates. Some will offer more competitive adjustable rates than others.

Mortgage lenders typically give the lowest mortgage rates to people with higher down payments, excellent credit scores, and low debt-to-income ratios. So if you want a lower rate, try saving more, improving your credit score, or paying down some debt before you start shopping for homes.

You can also buy down your interest rate permanently by paying for discount points at closing. A temporary interest rate buydown is also an option — for example, maybe you get a 6.25% rate with a 2-1 buydown. Your rate would start at 4.25% for year one, increase to 5.25% for year two, then settle in at 6.25% for the remainder of your term.

Just consider whether these buydowns are worth the extra money at closing. Ask yourself if you’ll stay in the home long enough that the amount you save with a lower rate offsets the cost of buying down your rate before making your decision.

Here are interest rates for some of the most popular mortgage terms: According to Zillow data, the national average 30-year fixed rate is 5.81%, the 15-year fixed rate is 5.32%, and the 5/1 ARM rate is 5.82%.

A normal mortgage rate on a 30-year fixed loan is 5.81%. However, keep in mind that's the national average based on Zillow data. Zillow's rates are usually lower than those reported by Freddie Mac and elsewhere. Each source compiles rates using different methods. Zillow obtains rates from its lender marketplace, and Freddie Mac pulls information from loan applications submitted to its underwriting system. The average might be higher or lower depending on where you live in the U.S. And of course, your credit score.

Mortgage rates are already better than predicted. According to February forecasts, the MBA expects the 30-year mortgage rate to be near 6.10% through the end of 2026. Fannie Mae also predicts a 30-year rate near 6% through the end of the year.

A housing market crash happens when home values plummet due to a lack of demand for or an oversupply of homes. The factors leading to a housing market crash are varied, ranging from economic recessions to high mortgage rates that make it less affordable to buy a home. A housing crash can have upsides (low home prices) and downsides (losing built-up equity and tighter finances). So, what’s ahead for the housing market in 2026?

Want to buy a house in early 2026? Here's what you need to know.

Generally, experts don’t foresee a housing market crash in 2025. If anything, they see a greater sense of normalcy following multiple years of twists and turns.

"We’re not heading toward a housing crash; we’re in a market correction defined by stability, not volatility,” Hoby Hanna, CEO of Howard Hanna Real Estate Services, said via email. “Today’s housing environment is fundamentally different from 2008. Homeowners have record levels of equity, lending standards are sound, and inventory remains constrained. What we’re seeing now is a normalization, not a collapse, as the market adjusts to new economic realities. For buyers and sellers, this is a market filled with opportunity and resilience, not instability or uncertainty.”

It could be difficult to consider late 2025 as a “market filled with opportunity” if you remember the past few months showing weak growth in the job market. How are Americans supposed to keep up with mortgage payments if unemployment is on the rise? Many experts even cite weak job data as the reason for the Fed's recent interest rate cuts.

Things are looking up in the jobs sector, though.

According to the October Job Openings and Labor Turnover Survey (JOLTS), layoffs increased in October — but job openings increased more than economists had predicted. So, while the jobs market isn’t necessarily thriving, it isn’t struggling to the point that it would lead to a housing market crash anytime soon.

The monthly ADP National Employment Report shows that the private sector added 42,000 jobs in October 2025, bringing the total employment to 134,571,000 — the highest it's been in years.

While the 42,000 added jobs fall short of what economists have historically expected, they lean toward a new normal for the job market, according to Josh Hirt, senior U.S. economist at Vanguard.

“People are always entering and leaving the job market,” said Hirt via email. Those pluses and minuses create what’s called a break-even rate, or the number of jobs the economy has to add to make up for those who leave jobs.

“Previously, that break-even point was roughly 150,000 jobs per month,” Hirt added. Yet today, he said the real break-even point is around 60,000 jobs per month. He credits much of that shift to new immigration policies and the increasing number of workers reaching retirement age, which will only continue to rise in the coming years.

“Due to those factors, we know we’re going to experience low labor market growth for the foreseeable future,” Hirt said. Putting his comments into context, the addition of 42,000 jobs in October compared to a 60,000 break-even falls short, but still trends upward toward the level Hirt’s team at Vanguard expects.

For buyers and current homeowners, this could translate to a few things.

First, job losses can happen to anyone, and current market conditions could mean it takes longer to find a new job. This makes emergency savings even more important and might mean revisiting your current savings to see if it's worth bumping it up a bit.

Next, it could also mean that current homeowners approach home equity lending products more conservatively. While home prices still trend upward (more on that in a minute), a softer labor market could mean that borrowing small proves the wiser move. For instance, if you need to remodel your kitchen, a home equity line of credit (HELOC) that you can draw from to pay for your project in each stage (cabinets, flooring, plumbing, etc.), versus a home equity loan that’s dispersed in a lump sum. The HELOC could leave you less exposed if your income changes suddenly.

Are home prices slumping? Not really. Recent data from Redfin shows home prices up 1.3% year-over-year. Some hot markets, such as Baton Rouge, La., and Dallas, have posted price increases between 11.1% and 33.9% compared to last year.

However, Zillow data shows monthly declining prices in markets like Austin, Texas, Pittsburgh, Dallas, and San Antonio.

Learn more about why home prices are so high.

For the housing market to crash, supply and demand must be drastically out of balance, favoring supply. Looking back at the first half of 2025, we can see that while supply is increasing, the discrepancy isn’t as drastic as it was in 2008. As of October 2025, the National Association of REALTORS® showed a housing supply of 4.4 months.

“In a normal market balanced between buyers and sellers, we would have a six-month supply of homes,” said Rick Sharga, founder and CEO of CJ Patrick Co., a market intelligence firm for real estate and mortgage companies. For comparison, the buildup to the 2008 financial crisis led to a drastic oversupply — 13 months. That was more than double the average figure of six months and more than a way to go from the current 4.4-month supply.

There’s also demand chipping away at the current market supply, likely driven in part by consumers taking advantage of declining mortgage rates. For instance, in early December 2025, the average rate for a 30-year fixed-rate mortgage was 6.19%. While these aren’t the rock-bottom rates seen in early 2021, sub-3% mortgage rates are unlikely to return.

Hence, eager buyers are getting a foothold in the market where they can start building equity in their homes. If interest rates decline, owners can always refinance for additional savings.

See how historical mortgage rates compare to rates today.

The housing crash that started in 2007 and contributed to the global financial crisis continues to weigh heavily on the minds of many economists and consumers. But the factors that led to that crash are not in place today. Not only are housing supply levels and home equity levels vastly different, but mortgages are a different animal as well.

“Lending practices have tightened significantly since 2007, making for a wildly different scenario today than we faced back then,” David Gottlieb, a wealth advisor at Savvy Advisors, said via email.

Gone are the days of the low- to no-documentation mortgage and zero-down for anyone and everyone. Today, lenders are looking for buyers willing to put skin in the game. The lowest down payments are typically with VA loans — which offer zero down — and FHA loans — offering down payments as low as 3.5%. Both loans still require stringent income, asset, and employment verification.

With those subprime lending products gone and most mortgage lenders requiring money down, today’s homeowners also have significantly more home equity than those from the early 2000s. Today, the average American has more than $300,000 in home equity, and sellers can afford to cut prices to close a deal.

“When comparing the financial health of the consumer and banking industry between 2008 and today, we truly are looking at apples and oranges,” Gottlieb said.

Whether you’re monitoring your home’s value or hoping to buy a new home, you may want to watch for indications of a future housing market crash. An economic shock such as a significant stock market crash or big, prolonged job cuts could signal the start of a housing market crash, Yun said, along with a large increase in the supply of homes.

If unemployment rose rapidly and homeowners couldn’t afford their mortgage payments, they could lose their homes to foreclosure if they couldn’t sell them. A large increase in foreclosures would bring home values down, potentially triggering a housing crash.

“Currently, what may be a concern for some markets is the significant increase in non-mortgage related costs, such as property insurance and taxes,” Hepp said. “That may be a bigger concern for households with fixed incomes who may choose to sell their home if they can no longer afford to make their payments. If a significant number of properties were being listed as a result, that could dampen home prices and weaken a housing market. Nevertheless, with housing shortages still outweighing the impact of these additional expenses, a housing crash is not likely, especially a widespread one.”

Sharga suggested that consumers watch their local market conditions, such as whether the population and the job market is growing or declining, along with wages, home sales, and home prices.

“While a national housing crash remains very unlikely, every market is unique, and some are likely to see prices go down even as the national numbers are going up — probably not enough to designate it as a ‘crash,’ but enough to make a difference for some homeowners,” Sharga said.

Determine which is more important, your home price or mortgage rate.

A housing crash is a mixed bag for home buyers. Crashes typically come with other economic undesirables, like job losses. Even if housing prices drop, increasing unemployment numbers could mean many Americans find it more difficult to qualify for a mortgage.

On the other hand, some home buyers could welcome a crash. Lower prices could mean those who have saved and are steadily employed have first dibs on more affordable housing.

Learn whether you should buy a house during a recession.

In a housing crash, homeowners who don’t need to sell may prefer to wait until home values regain their strength. Being “underwater” on your mortgage — owing more on your mortgage balance than the value of your home — as many people were during the previous housing market crash, doesn’t immediately impact your finances.

However, if you need to sell your house, you may need to consider more competitive pricing. Buyers in market crashes are looking for bargains, and you may end up with less profit on your home than you anticipated.

If you’re worried about when the housing market will crash again, you can take steps to protect your financial well-being.

Build an emergency fund. Experts recommend having three to six months of expenses in the bank.

Pay down your debt. Try to prioritize high-interest debt, like credit cards.

Buy within your budget. Whether the market crashes or not, it’s always wise to have a mortgage you can comfortably afford.

Make extra mortgage payments. Even a little bit extra each month can help you build equity in your home faster.

Choose a fixed-rate mortgage. Enjoy a steady mortgage payment, and don’t worry if rates increase — a fixed mortgage rate is locked in, regardless of what happens in the real estate market.

While some markets have shown a slight decline, home prices are broadly up for the year. The most recent data from Redfin shows that home prices are up 1.3% year over year compared to 2024.

A good time to buy a house is when buying makes sense for your unique financial circumstances. For some, that might mean buying a home in 2026 if their income, other debts, and employment support the mortgage payment required for the home they want. For others, 2026 could be the year to pay down debt and build a down payment, so they qualify for a better mortgage rate in the future.

Economists expect mortgage rates to decline gradually throughout 2026, although most predict that the average 30-year fixed rate will remain above 6%.

Laura Grace Tarpley edited this article.

The national average 30-year rate is the lowest it's been since 2022 — now sitting at 5.98%, according to Freddie Mac. What does a sub-6% home loan rate mean for 2026 housing market? Will mortgage rates continue to drop?

Want to buy a house in early 2026? Here’s how to get started.

In short, yes. As of February 26, Freddie Mac reported that the average 30-year fixed-rate mortgage rate is 5.89%. This is three basis points lower than last week, and 78 basis points lower than this time last year. In late February 2025, mortgage rates averaged 6.76%.

The average 15-year fixed mortgage rate this week is 5.44%. This is up nine basis points since last week, but 50 basis points lower than this time last year.

In situations like these, it’s helpful to look at the numbers. Here’s the Freddie Mac data on mortgage rates for the past 52 weeks as of Feb. 26, 2026:

30-year fixed-rate mortgage: 5.98% to 6.89%

15-year fixed-rate mortgage: 5.35% to 6.03%

Mortgage rates have been falling in unison with the bond market. The 10-year Treasury sank below the 4% mark on Feb. 27; a nearly 6% drop in one month. The stock market has experienced sharp volatility in recent weeks, pressing some investors to move into bonds. As prices rise with demand, yields fall.

In January, President Trump encouraged Fannie Mae and Freddie Mac, the government-sponsored enterprises that provide capital to the mortgage market, to buy billions of dollars in mortgage bonds. The move tightened the spread between mortgage rates and 10-year Treasurys (as explained below).

While lower mortgage rates can stoke demand, a shortage of home inventory remains a concern.

“Lower rates can give buyers more confidence to enter the market, as they improve affordability,” Matt Vernon, head of consumer lending at Bank of America, said in a statement. “Inventory has been a consistent challenge for buyers, and while more borrowers now have mortgages above 6% than below 3%, lower rates could encourage some to consider a move, though we’d expect this to happen gradually.”

Nevertheless, Vernon noted that Bank of America has seen a 22% year-over-year increase in mortgage applications, with funding volumes up 26.5%.

Discover the lenders with the best mortgage rates this week.

The Federal Reserve lowered the fed funds rate three times in 2025, but the central bank kept the rate stagnant at its first meeting of 2026. So, what does this mean for mortgage rates in the upcoming year?

When the Fed — the common nickname for the Federal Open Market Committee (FOMC) — held its Sept. 2025 meeting, it voted to lower the federal funds rate by 25 basis points. Then, it announced its second 25-bps cut of the year at its October meeting and third at the December meeting.

That federal funds rate tends to directly influence rates on shorter-term lending. While mortgage rates aren’t directly based on the fed funds rate, they typically mirror fed fund rate trends. So, if the fed funds rate goes down, mortgage rates will likely follow. The inverse is also true.

When people anticipate a fed funds rate cut, mortgage rates usually fall in the weeks leading up to the meeting. However, home loan rates don’t necessarily continue to decrease after a fed funds rate cut.

In 2024, mortgage rates plummeted throughout August and early September as people expected the Fed to lower its rate at the bank’s September meeting. But mortgage rates stopped decreasing significantly after this meeting — and after the two additional rate cuts later that year.

The same thing happened in 2025. Mortgage rates gradually declined in the weeks leading up to the September meeting when people expected the Fed to lower its rate, and even though the fed funds rate did go down, mortgage rates bounced back up.

The Fed did not lower the fed funds rate at its January meeting, and is considering its options for the balance of the year. The next Fed meeting is in mid-March, but it’s unlikely that the central bank will lower its rate at this meeting.

Dig deeper into how the Federal Reserve affects mortgage rates.

While short-term lending rates closely follow the fed funds rate, mortgage rates more closely follow the 10-year Treasury yield. As of February 26, the 10-year Treasury yield closed at 4.02% — down from 4.29% a year prior.

Now, you’re probably wondering why today’s mortgage rates aren’t in the 4% range, right?

To determine current mortgage rates, lenders add a “spread” to the 10-year Treasury yield. The spread is simply the difference between the rates consumers pay and the rate on the 10-year Treasury. Without getting too much into the weeds, charging a spread helps mortgage lenders cover costs associated with making loans to the public and the risk of providing such loans.

For example, the average 30-year fixed mortgage rate is 5.98%, and the 10-year Treasury yield is 4.02% — a spread of 1.96%. A year ago, the 30-year rate was 6.76%, and the 10-year yield was 4.29%, resulting in a spread of 2.47 percentage points. Today’s spread is smaller, which is one reason mortgage rates are lower now.

Follow these 8 tips to get a mortgage rate under 6%.

In short, no. You shouldn’t necessarily wait to buy a home until mortgage rates drop below 6% or lower. Mortgage rates are just one part of the affordability equation. You also have to consider home prices, a factor of housing supply and demand.

The current housing market is in a crunch. To put it simply, buyers outnumber homes for sale, especially homes in price ranges accessible to the first-time home buyer. When supply and demand are out of balance like this, home prices tend to remain high since sellers know they’ll have multiple buyers interested.

According to data from the Federal Reserve Bank of St. Louis, the median sale price of single-family homes has generally trended upward since Q1 of 2009. At that time, the median sale price was $208,400. The median price had risen to $410,800 by Q2 2025.

Even in the event of a recession, prospective buyers likely won’t see much relief. If interest rates drop like they tend to do in recessions, that will increase the number of people looking to buy and lock in a lower interest rate. That drives up demand for the already limited supply of homes.

To truly save, buyers need both interest rates and home prices to drop. Mortgage rates are inching down, and housing prices are stagnant or even lowering in certain parts of the country. Situations may be improving for buyers.

Learn how mortgage rates respond during a recession.

If you crave the comforts of homeownership, the best strategy in today’s market may be to buy what you can afford. Whether that means a smaller house or a condo instead of a single-family home, owning something puts you in a position to start building equity.

Yes, shopping for the best mortgage lenders with low rates and fees is crucial when getting a mortgage. But to help you find your ideal home that balances affordability and desirability, it pays to adopt a curious mindset and consider lesser-discussed financial tools.

There’s no better time to learn more about your local real estate market than today. By adopting a sense of curiosity, you could discover that your city has more to offer housing-wise than you previously thought.

You may want to take weekend excursions to lesser-known neighborhoods and suburban developments beyond the city limits. You never know what you’ll find that could expand your idea of what “home” looks like — including new developments, school districts, and types of homes.

If you’re looking to spend less on a home in today’s mortgage market, a house needing a bit of TLC could help you do just that. Loans like the FHA 203(k) mortgage can roll your purchase and renovation costs into one convenient loan. When you qualify and have an accepted offer, your lender immediately funds the home’s purchase price and puts the cost of renovations into an escrow account. As you make repairs, funds get dispersed.

How would it feel to have a longer commute yet come home to a house you love? Master-planned communities tend to crop up outside major cities, offering various amenities like parks, shopping, and top-notch schools — all in exchange for a longer commute. These areas could look a lot more palatable if they offer commuting options like park-and-ride or commuter rail. Dare to consider parking the car and taking public transit if it could get you into the home of your dreams.

While shared walls, floors, and ceilings might not immediately scream “dream home,” they could help you find an affordable home in a terrific area. Condominiums come in various shapes and sizes, from apartment-style flats to townhomes. Depending on the area, you might even score a small backyard. However, be sure to consider HOA fees when calculating your monthly payment.

While the monthly payment on a 15-year mortgage will be higher than the typical 30-year, these loans have plenty of upsides. Not only will you pay off your home on a speedier timeline, but you’ll also likely score a lower interest rate and save a ton on interest over the life of your loan.

To make today’s mortgage rates more palatable, look into rate buydown options. An interest rate buydown lets you pay cash up front in exchange for a reduced interest rate on your mortgage. Buydowns can be permanent or temporary, like for your loan's first one to three years. Even a few years of lower rate relief can make today’s home prices more affordable.

Read about the 5-year mortgage rate predictions.

Expert opinions differ on what mortgage rates will do over the next year or so. Fannie Mae’s February Housing Forecast put the 30-year fixed rate near 6% through the end 2026 and for all of 2027.

Compared to historical mortgage rates, 7% isn’t considered a high rate. While it might be high compared to pandemic-era rates that were sub-3%, it’s on par with mortgage rates in the 1990s and considerably lower than the double-digit rates seen in the late 1970s and early 1980s.

It’s not impossible to get a 3% interest rate, but doing so requires the perfect set of circumstances. You’d need to find a homeowner with an assumable mortgage — one that can be passed to a new owner at the same interest rate as the original loan. Assumable mortgages are generally government-backed loans from agencies like the VA, FHA, or USDA.

As the central bank of the U.S., the Federal Reserve, also known as the Fed, holds major sway over the cost of borrowing money. Although it doesn't directly set the interest rates on consumer loans, its adjustment of the federal funds rate — the rate banks charge each other for overnight lending — influences interest rates on loans across the economy. When the Fed increases or decreases the federal funds rate, you'll typically see the interest rates on personal, auto, and private student loans follow suit.

By tracking the Fed's moves, you can get a better sense of whether taking out a loan will be more expensive or more affordable. It may even help you time your borrowing decisions so you can secure the best possible rate.

The Federal Reserve sets a target range for the federal funds rate, a benchmark rate that determines how much lenders charge one another for overnight lending. When the Fed increases this rate, lenders generally pass along the higher costs to consumers by raising interest rates on consumer loans and credit cards. When the Fed decreases this rate, lenders may lower the interest rates on their loans as well.

Between February 2022 and August 2023, for example, the Fed increased the federal funds rate from 0.08% to 5.33% in an effort to combat inflation. Rates on loans increased along with it and remain high today, despite a few Fed rate cuts in 2024. The Fed held rates steady at its most recent meeting in July 2025, but economists predict that rates could come down once or twice by the end of the year.

Learn more: Mortgage rate predictions for the next 5 years

The federal funds rate can also influence the prime rate, which is what banks use as a starting point when setting consumer loan rates. Banks typically set the prime rate about three percentage points above the federal funds rate. They may offer this prime rate to the most creditworthy customers and charge higher rates to borrowers with a weaker credit profile.

Personal loan rates are on the high side after the Fed increased its rate multiple times over the past few years. Although it cut the federal funds rate a few times in 2024, average personal loan rates only came down slightly, from a high of 12.49% in February 2024 to 11.14% today (on two-year loans).

Most personal loan rates are fixed, so if you already borrowed one, your rate won't change. A fixed rate stays the same over the life of the loan. But if you're looking to take out a new personal loan, your rate may be higher than it would have been a few years ago.

The good news is that some lenders offer rates starting around 6% or 7%, and most don't go above 36%. These rates are much more affordable than a payday loan, which can come with an APR of 390% or higher.

The Fed doesn't have much of an impact on federal student loan rates, but it can influence private student loan rates. The rates on federal student loans are set by Congress each year and are partly based on the 10-year Treasury note auction, which the U.S. Treasury holds every spring.

Federal student loan interest rates are always fixed, so they stay the same over the life of the loan. They were particularly low in the 2020-21 school year, when Direct Subsidized and Unsubsidized Loans for undergraduates carried an interest rate of just 2.75%. They're much higher today, with a rate of 6.39% for the 2025-26 academic year.

The interest rates on private student loans are influenced by the federal funds rate, and lenders may increase or decrease their rates to keep up with the changes. If you already have a private loan with a variable rate, you could see your rate fluctuate with market changes.

A variable interest rate could also cause your monthly payments to go up and down. If you're a new borrower and want predictable monthly payments, consider a fixed-rate private student loan. If you've already borrowed, you might consider refinancing your student loan to a fixed rate, especially if you can qualify for a better rate than you currently have.

Learn more: How the Fed affects student loan interest rates

The rates on car loans can also be influenced by the Federal Reserve. When the federal funds rate is high, auto loan rates will likely be high as well.

According to Edmunds, the average rate on a new car loan was 6.6% in November 2025. For used cars, it was 10.6%. These rates haven't changed much from a year ago, when they were at near-record highs.

The federal funds rate isn't the only factor influencing car loan rates, though. Your rate depends on a variety of factors, including your credit score, the type of vehicle you're purchasing, and whether you're getting a new or used car.

Learn more: How to buy a car without a co-signer

While the Federal Reserve's decisions around interest rates are outside your control, there are ways you can boost your chances of securing a decent rate on a loan. Here are a few ways you can qualify for a competitive rate.

Your credit score plays a major role in the rate you get when you take out a personal loan, auto loan, or private student loan. A high credit score can help you access the best rates, while a low credit score means you could get stuck with higher rates and fees.

Consider ways you can improve your score before you apply for a loan, such as making on-time payments on your debts, avoiding too many hard credit inquiries, and paying down credit card balances to decrease your credit utilization.

These steps could be well worth the effort if they score you a better interest rate on a consumer loan.

Your credit score isn't the only part of your finances that lenders consider when you apply for a loan. They're also concerned with your income, employment, and debt-to-income ratio (DTI). Having a reliable income and a history of stable employment can help you access a better interest rate.

You could also reduce your debt-to-income ratio — that’s your monthly debt payments compared to your income — by paying down existing loans or increasing your income. Lenders generally prefer a DTI at or below 35%, though it can vary depending on the loan type.

Private lenders set their own rates, so shop around with multiple loan providers to find your best offer. You can often prequalify for loans online, which is a quick process that lets you check your potential rates without harming your credit. Checking your rates with several lenders could help you save money in the long run.

Lenders may offer lower interest rates on short-term loans and higher rates on long-term loans. This helps them offset the risk of a long repayment term. If you can swing a shorter repayment term, you might benefit from a lower rate. But make sure you can afford the monthly payments, as this strategy wouldn't be worth the risk of defaulting on your loan.

Although you can't control the federal funds rate, you could be strategic about when you apply for a loan. If the Federal Reserve cuts rates, that could be a good time to borrow.

If it seems like rate increases are on the horizon, you may want to lock in a fixed rate before that happens. And if you have a variable rate that keeps going up, you could consider refinancing your debt for a fixed-rate loan.

If you don't have to pay a fee to refinance, as is usually the case with student loans and personal loans, you could refinance multiple times to take advantage of decreasing interest rates and maximize your savings.

This article was edited by Alicia Hahn.