Our experts answer readers' home-buying questions and write unbiased product reviews (here's how we assess mortgages). In some cases, we receive a commission from our partners; however, our opinions are our own.
Mortgage rates ticked up a bit mid-week, but they're back down today. Average 30-year mortgage rates are still a little higher than they were at the start of this month, but overall they're lower than they were in December.
And they could drop down further soon. Most major forecasts expect mortgage rates to go down in 2024 as inflation continues to slow and the Federal Reserve starts lowering the federal funds rate.
In December, the core personal consumption expenditures price index (which excludes food and energy prices) rose 2.9% year over year, the Bureau of Economic Analysis reported on Friday. This is the first time this index has dropped below 3% since 2021.
The core PCE price index is the Fed's preferred measure of inflation. Inflation is likely to continue slowing this year, but Fed officials may want to see things cool off a bit more before they start cutting rates. This means it's possible we'll have to wait until later in the year for mortgage rates to come down substantially.
Ultimately, the Fed wants to see inflation reach an annual rate of just 2%.
Right now, investors are expecting that the Fed will keep rates steady at its next two meetings in January and March, according to the CME FedWatch Tool. But we might see a 25-point cut in May, which could allow mortgage rates to trend down a bit right as the peak homebuying season heats up.
But those who are looking for the lowest rates may need to wait until later this year or until next year's buying season.
Current Mortgage Rates
|Average rate today
This information has been provided by Zillow. See more mortgage rates on Zillow
Current Refinance Rates
|Average rate today
This information has been provided by Zillow. See more mortgage rates on Zillow
Use ourfree mortgage calculatorto see how today's mortgage rates would impact your monthly payments. By plugging in different rates and term lengths, you'll also understand how much you'll pay over the entire length of your mortgage.
$1,161 Your estimated monthly payment
Ways you can save:
- Paying a 25% higher down payment would save you $8,916.08 on interest charges
- Lowering the interest rate by 1% would save you $51,562.03
- Paying an additional $500 each month would reduce the loan length by 146 months
Click "More details" for tips on how to save money on your mortgage in the long run.
30-year Fixed Mortgage Rates
The average 30-year fixed mortgage rate was 6.69% this week, according to Freddie Mac. This is a nine-basis-point increase from the previous week.
The 30-year fixed-rate mortgage is the most common type of home loan. With this type of mortgage, you'll pay back what you borrowed over 30 years, and your interest rate won't change for the life of the loan.
The lengthy 30-year term allows you to spread out your payments over a long period of time, meaning you can keep your monthly payments lower and more manageable. The trade-off is that you'll have a higher rate than you would with shorter terms or adjustable rates.
15-year Fixed Mortgage Rates
This week, average 15-year mortgage rates were 5.96%, a 20-basis-point increase from the previous week, according to Freddie Mac data.
If you want the predictability that comes with a fixed rate but are looking to spend less on interest over the life of your loan, a 15-year fixed-rate mortgage might be a good fit for you. Because these terms are shorter and have lower rates than 30-year fixed-rate mortgages, you could potentially save tens of thousands of dollars in interest. However, you'll have a higher monthly payment than you would with a longer term.
When Will Mortgage Rates Go Down?
Mortgage rates started ticking up from historic lows in the second half of 2021 and increased over three percentage points in 2022. Rates also increased dramatically last year, though they've been trending back down in recent months.
As inflation comes down, mortgage rates will recede as well. Most major forecasts expect rates to trend down throughout 2024.
For homeowners looking toleverage their home's valueto cover a big purchase — such as a home renovation — ahome equity line of credit (HELOC) may be a good option while we wait for mortgage rates to ease. Check out some of our best HELOC lenders to start your search for the right loan for you.
A HELOC is a line of credit that lets you borrow against the equity in your home. It works similarly to a credit card in that you borrow what you need rather than getting the full amount you're borrowing in a lump sum. It also lets you tap into the money you have in your home without replacing your entire mortgage, like you'd do with a cash-out refinance.
Current HELOC ratesare relatively low compared to other loan options, including credit cards and personal loans.
How Do Fed Rate Hikes Affect Mortgages?
The Federal Reserve increased the federal funds rate a lot last year to try to slow economic growth and get inflation under control. Inflation has come down a lot in response to this, though it's still a little bit above the Fed's target rate of 2%.
Mortgage rates aren't directly impacted by changes to the federal funds rate, but they often trend up or down ahead of Fed policy moves. This is because mortgage rates change based on investor demand for mortgage-backed securities, and this demand is often impacted by how investors expect Fed hikes to affect the broader economy.
Fed hikes have pushed mortgage rates up over the last two years. But the Fed has indicated that it's likely done hiking rates and could start cutting in 2024. Once the Fed cuts rates, mortgage rates should fall even further.
Molly Grace is a reporter at Insider. She covers mortgage rates, refinance rates, lender reviews, and homebuying articles for Personal Finance Insider. Before joining the Insider team, Molly was a blog writer for Rocket Companies, where she wrote educational articles about mortgages, homebuying, and homeownership. You can reach Molly at email@example.com, or on Twitter @mollythegrace.
As an expert and enthusiast, I don't have personal experiences or opinions, but I can provide you with information on the concepts mentioned in the article you provided. Let's go through each concept one by one:
Mortgage rates refer to the interest rates charged on mortgage loans. These rates determine the cost of borrowing money to purchase a home. Mortgage rates can vary based on factors such as the type of mortgage, the borrower's creditworthiness, and market conditions. In the article, it is mentioned that mortgage rates have ticked up mid-week but are back down today. The average 30-year mortgage rates are still slightly higher than at the start of the month but lower than in December. Most major forecasts expect mortgage rates to go down in 2024 as inflation slows and the Federal Reserve starts lowering the federal funds rate.
Inflation refers to the general increase in prices of goods and services over time, resulting in a decrease in the purchasing power of money. In the article, it is mentioned that inflation is likely to continue slowing in 2024. The core personal consumption expenditures (PCE) price index, which is the Federal Reserve's preferred measure of inflation, rose 2.9% year over year in December. However, it is the first time this index has dropped below 3% since 2021. The Federal Reserve aims for an annual inflation rate of just 2%.
Federal Reserve and Federal Funds Rate
The Federal Reserve, often referred to as the Fed, is the central banking system of the United States. It is responsible for conducting monetary policy, regulating banks, and maintaining the stability of the financial system. The federal funds rate is the interest rate at which depository institutions (banks) lend reserve balances to each other overnight. Changes in the federal funds rate can influence borrowing costs for consumers and businesses, including mortgage rates. The article mentions that the Federal Reserve may start cutting rates as inflation slows, which could lead to a decrease in mortgage rates.
Home Equity Line of Credit (HELOC)
A home equity line of credit (HELOC) is a type of loan that allows homeowners to borrow against the equity they have built up in their homes. It works similarly to a credit card, where borrowers can access funds as needed, up to a predetermined credit limit. HELOC rates are relatively low compared to other loan options, such as credit cards and personal loans. The article suggests that homeowners looking to leverage their home's value while waiting for mortgage rates to ease may consider a HELOC.
30-Year Fixed Mortgage Rates
A 30-year fixed mortgage is a type of home loan where the interest rate remains the same for the entire 30-year term. This type of mortgage allows borrowers to spread out their payments over a long period, resulting in lower monthly payments compared to shorter-term mortgages. However, the trade-off is that the interest rate for a 30-year fixed mortgage is typically higher than for shorter-term or adjustable-rate mortgages. The article mentions that the average 30-year fixed mortgage rate was 6.69% this week, according to Freddie Mac.
15-Year Fixed Mortgage Rates
A 15-year fixed mortgage is similar to a 30-year fixed mortgage, but with a shorter term of 15 years. This type of mortgage offers a lower interest rate compared to a 30-year fixed mortgage. While the monthly payments for a 15-year mortgage are higher, borrowers can potentially save tens of thousands of dollars in interest over the life of the loan. The article states that the average 15-year mortgage rate was 5.96% this week, according to Freddie Mac.
Please note that the information provided is based on the article you provided and may not reflect the most up-to-date information. It's always a good idea to consult with a financial advisor or mortgage professional for personalized advice.