See Mortgage Rate Quotes for Your Home
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In California, the average rate for a 30-year fixed-rate mortgage is currently 3.93%. The 15-year fixed-rate average is 3.43%, while the 5/1 adjustable-rate mortgage (ARM) average is at 3.52%.
|Loan type||Average rate||Weekly change||3-month change|
|Loan type||Average rate||Weekly change|
Mortgage rates go up and down every week, which can make it confusing to know when it's right to lock in a quoted rate. We've provided more analysis and information below on how California's home loan rates shift across different lenders and markets.
How Much Do California Mortgage Rates Vary?
Mortgage rates in the Golden State can vary by as much as 125 basis points, or 1.25%. Among the lenders we researched, the lowest rate for a 30-year loan was 3.25%, while the highest was 4.88%. To understand what this means for borrowers, we calculated the difference in monthly mortgage costs between two loans at these rates.
Using the median value of $603,000 in the Los Angeles metro area, we found that the gap between the state's lowest and highest 30-year mortgage rates resulted in a difference of almost $129,000 in interest paid over the life of the loan. Each month, the loan payment at the highest rate would be $359 more than the cost at the lowest rate. Your own numbers will vary, but this example suggests how much you could save by looking for a lower mortgage rate. You can start your own search for rates with the tool above.
Comparing Home Loan Rates by Bank
Our survey of mortgage rates in the Golden State also covered rates offered by each major bank. The following graph visualizes the variations among some of California's largest mortgage lenders.
While these rates may change from day to day, it's clear from the data that there's a fair amount of variation from bank to bank. Based on the theoretical assumptions used to obtain these estimates, a mortgage at the lowest rate would cost $753 per month in principal and interest, which is significantly less than the monthly cost of $859 at the highest rate. Over the full course of a 30-year home loan, this amounts to a savings of about $38,000 in interest.
Are Home Loan Rates Rising in California?
For 2019, mortgage rates in California and the rest of the country may not rise as much as previously forecasted. The Federal Reserve's Open Market Committee (FOMC) recently announced that it would and adopt a data-dependent "wait-and-see" approach to future rate hikes, which may indicate a slowdown from the hikes we saw in 2018.
Currently set at 2.25%-2.50%, the target federal funds rate represents the cost that banks pay to borrow money for their operations. Due to the effect that the federal funds rate has on the interest rates offered by banks on both loans and consumer deposits, the FOMC's periodic announcements are regarded as indicators of future rate trends. Loosely tied to this trend are long-term mortgage rates, which tend to follow the trend of Fed Fund rates, although there are slight deviations due to overall consumer demand, credit considerations and expenses incurred through the origination process.
For homebuyers in California, the news of potentially stabilizing rates creates some breathing room for a more deliberate shopping process. In times of rising rates, shoppers often rush to secure financing before interest rates get too high. With the FOMC announcing its intent to monitor the market prior to considering future hikes, buyers can take comfort in the knowledge that mortgage rates won't spike while they're shopping for the right home or lender.
Comparing Home Loan Rates in California's Cities
We also studied differences in home loan rates among California's many metro areas. For example, we discovered that typical interest rates differ significantly based on whether you apply for a home loan in Los Angeles as opposed to Fresno. If you're thinking about moving to another city, the table below shows the typical mortgage rates and home values in California's largest metro areas.
|MSA||Average mortgage rate||Median home value||Estimated monthly cost|
|Los Angeles–Long Beach–Anaheim||4.62%||$603,484||$2,481|
As the table shows, mortgage rates in California's biggest cities usually fall within a few basis points of one another. The purchase price of your home is a far bigger factor in determining future interest costs. However, there are still a few things you can change in your mortgage in order to adjust how much interest you pay. To demonstrate this, let's take a look at a hypothetical home purchase in the Bay Area.
Evaluating Mortgage Options: An Example in San Francisco
With a median home value of over $785,000 in 2018, the San Francisco metro area has become a byword for extreme housing costs. For homebuyers who plan on financing with a mortgage, the Bay Area's high price tags make it more important than usual to choose a loan that's both feasible and affordable.
Assuming you buy a property at the median value in San Francisco, taking out a 30-year mortgage after a down payment of 20% would leave you with monthly loan costs of $3,227. That works out to paying $533,691 in interest over the full loan. The six-figure down payment required in this traditional scenario is impractically high for many first-time buyers, who may need to consider an alternative that lowers their upfront costs.
Government-sponsored home financing is one popular way to get affordable down payments. The Federal Housing Administration's (FHA) loan program is specifically designed for this purpose, allowing down payments as low as 3.5%. Applied to our sample home scenario, that translates to $27,475. These loans are backed by the government, which keeps interest rates similar to standard rates despite the increased risk represented by a smaller upfront payment.
That said, FHA loans do require an extra monthly payment in the form of mortgage insurance premiums (MIP). These premiums work like private mortgage insurance found on regular mortgages, and it can only be eliminated by refinancing once you've built up enough home equity. Still, it may be worth paying mortgage insurance at first if you need the FHA program's lower down payment.
The high cost of housing in California makes it more important to track mortgage rates than it is in cheaper states. Borrowing more dollars means paying back more interest over time, so don't consider it a waste of time to shop for multiple rate quotes before you sign. And with down payment requirements larger than ever, it's crucial to keep an open mind about alternative programs like the FHA loan.