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Mortgage rates are starting the month off nice and low, but borrowers shouldn’t be surprised if we see rates tick back up in the coming days or weeks. While mortgage rates are expected to go down in 2024, we’ll likely experience some volatility getting there.
Today, average 30-year mortgage rates are around 30 basis points lower from where they started the week, according to Zillow data.
Experts believe mortgage rates will fall as inflation continues to slow and the Federal Reserve is able to start cutting the federal funds rate, removing upward pressure off of mortgage rates.
But the latest jobs report, released on Friday, came in way hotter than expected. This is overall good news, since it means that the labor market has (so far) not been hurt by the Fed aggressively raising rates to combat inflation. However, it means that the Fed might not see a reason to start lowering rates soon, so we might not witness a rate cut until mid-2024 or later.
“We believe that if job growth continues at such a strong pace, this could potentially result in a slower pace of policy rate cuts than what is currently expected by the market,” Fannie Mae deputy chief economist Mark Palim said in emailed comments on the January jobs report. “It could also present some upside risk to mortgage rates over the coming months, which would dampen increased housing demand coming from stronger job growth.”
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 6.63%, according to Freddie Mac. This is a six-basis-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 5.94% 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 this 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 this year.
In December 2023, the Consumer Price Index rose 3.4% 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.
