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Mortgage rates are way down. Average 30-year mortgage rates have dropped by more than a full percentage point from where they peaked in October, and they’re officially the lowest they’ve been in seven months, according to Freddie Mac.
And the news just keeps getting better for hopeful homebuyers: Most experts believe that mortgage rates will go down in 2024. As rates fall next year, borrowers will be able to snag lower monthly payments or get approved for larger loan amounts, helping them afford more house than they previously could.
“The rapid descent of mortgage rates over the last two months stabilized a bit this week, but rates continue to trend down,” Sam Khater, Freddie Mac’s chief economist, said in a press release. “Heading into the new year, the economy remains on firm ground with solid growth, a tight labor market, decelerating inflation, and a nascent rebound in the housing market.”
The latest housing market predictions for 2024 forecast a much hotter market thanks to lower rates. This means increased competition and higher home prices, so buyers with more limited budgets should prepare to have to make a lot of offers on homes before they get one accepted.
Mortgage Rates Today
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Mortgage Refinance Rates Today
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Mortgage Calculator
Use our free mortgage calculator to see how today’s interest rates will affect your monthly payments.
Mortgage Calculator
$1,161
Your estimated monthly payment
- 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
By clicking on “More details,” you’ll also see how much you’ll pay over the entire length of your mortgage, including how much goes toward the principal vs. interest.
30-Year Fixed Mortgage Rates
This week’s average 30-year fixed mortgage rate is 6.61%, according to Freddie Mac. This is a six-point decrease 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
Average 15-year mortgage rates inched down to 5.93% last week, according to Freddie Mac data. This is a two-point decrease since the week before.
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.
How Do Fed Rate Hikes Affect Mortgages?
The Federal Reserve has increased the federal funds rate dramatically to try to slow economic growth and get inflation under control. So far, inflation has slowed significantly, but it’s still a bit above the Fed’s 2% target rate.
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.
The Fed has indicated that it’s likely done hiking rates and that it could start cutting next year. This has allowed mortgage rates to trend down somewhat.
When Will Mortgage Rates Go Down?
Mortgage rates increased dramatically over the last two years, but they’ve been falling in recent months, and are expected to drop further next year.
In November 2023, the Consumer Price Index rose 3.1% year-over-year. Inflation has slowed significantly since it peaked last year, which is good news for mortgage rates.
For homeowners looking to leverage their home’s value to cover a big purchase — such as a home renovation — a home 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 rates are relatively low compared to other loan options, including credit cards and personal loans.
