2025 Affordable Mortgage Rates & How to Earn Up to 5.75% on Your Savings Now

Essential Insights for Savvy Homebuyers in 2024

• While waiting for mortgage rates or housing prices to drop, put your down payment money to work by earning competitive interest rates without risk.
• Thanks to the Federal Reserve's historic rate hikes, banks and credit unions are offering some of the highest deposit rates seen in over two decades.
• High-yield savings and money market accounts offer flexible access to your funds if your home purchase timeline is uncertain.
• Money market accounts often allow check writing, providing additional convenience compared to savings accounts.
• For those with a longer wait before buying, locking in a top-rate certificate of deposit (CD) can secure impressive returns for months or years.

Why 2024 Is a Golden Opportunity to Grow Your Cash

Mortgage rates remain elevated and home prices are still high, prompting many buyers to delay purchasing. Meanwhile, deposit interest rates are soaring due to the Federal Reserve's aggressive rate hikes aimed at curbing inflation. This creates a unique chance to earn over 5% APY on your down payment funds with minimal risk.

Financial institutions have responded by boosting rates on savings accounts, money market accounts, and CDs to attract deposits, allowing you to maximize your earnings while awaiting the right moment to buy.

Flexible Access with High-Yield Savings Accounts

If your home buying timeline is uncertain, a high-yield savings account is ideal. These accounts let you deposit and withdraw funds anytime without penalties. However, not all "high-yield" accounts offer competitive rates, so it's crucial to compare options.

Currently, top savings accounts offer rates up to 5.50% APY, such as Poppy Bank, with many others paying 5.15% APY or higher. This far exceeds the national average savings rate of 0.46% APY, meaning your money can grow substantially faster.

For example, $25,000 in a 5.25% APY savings account earns roughly $106 monthly, compared to under $10 with the average rate.

Money Market Accounts: Added Convenience with Competitive Rates

Money market accounts combine the benefits of savings accounts with the ability to write checks, offering liquidity and flexibility. They typically require higher minimum balances but many now have low or no minimums to stay competitive.

Top money market accounts currently yield up to 5.35% APY, such as Brilliant Bank. Always ensure your account is insured by the FDIC or NCUA to protect your deposits.

Note on Variable Rates

Keep in mind that savings and money market rates can fluctuate with market conditions and may decrease if overall U.S. interest rates fall.

Lock in High Returns with Certificates of Deposit (CDs)

If you won’t be buying a home for at least a few months, consider locking your funds in a certificate of deposit. CDs offer fixed rates guaranteed for the term length, protecting your earnings from rate drops.

Currently, top CDs pay up to 5.75% APY for 6-month terms, such as those from Andrews Federal Credit Union. Many CDs offer over 5.50% APY for various terms, providing excellent options for longer waits.

Note that early withdrawal penalties apply if you access funds before maturity, so choose terms aligned with your anticipated purchase timeline.

How We Identify the Best Rates

Our daily research analyzes over 200 federally insured banks and credit unions nationwide, focusing on accounts with reasonable minimum deposits (under $25,000) and broad availability. We exclude credit unions requiring high donation fees for membership to ensure accessibility.

By staying informed and strategically placing your down payment funds, you can confidently grow your savings while waiting for affordable mortgage rates in 2024.

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