Quick answer
The interest rate is the cost you pay each year to borrow the money, expressed as a percentage of the loan balance. It sets your principal-and-interest payment; unlike the APR, it doesn’t include points or lender fees.
Key facts
How the monthly charge is figured
Mortgage interest is charged on the balance you owe: the annual rate divided by 12, times the balance. On a $300,000 loan at 7.24%, the first month’s interest is $1,810 of a $2,044 payment. As the balance falls, so does the interest, which is why later payments go mostly to principal.
Small rate differences add up. Half a percentage point higher on the same loan raises the payment to $2,147, or $103 a month — about $36,961 over 30 years.
What moves your rate
- The market. Freddie Mac’s weekly averages are 7.24% for a 30-year fixed loan and 6.6% for a 15-year — see the PMMS.
- Your file. Credit score, down payment and loan type all change the price a lender quotes.
- Your choices. Paying discount points lowers the rate; a rate lock holds it until closing.
- Fixed or adjustable. A fixed-rate mortgage keeps one rate; an ARM’s rate can change later.
The mortgage rates guide explains how to compare quotes.
Sources
- Freddie Mac Primary Mortgage Market Survey — 30-year fixed rate, national weekly average; 15-year fixed rate, national weekly average (Week of Oct 29, 2026)
- CFPB: What is the difference between a mortgage interest rate and an APR?
Last reviewed Figures are checked against the sources above. Read our editorial policy. This page is general information, not financial advice — see the disclaimer.