Mortgage rates rose this week. According to Freddie Mac, 30-year mortgage rates rose 12 basis points 6.72% – five basis points higher than this time last year. The good news is that the 30-year yield is still lower than the November high of 6.84%.
Currently, the Federal Reserve plans to cut the fed funds rate only twice in 2025. This is a signal that mortgage rates could remain relatively high next year. If you’re ready to buy a home but want lower rates, it might not be worth the wait. Focus on improving your finances and searching for mortgage lenders to get the lowest interest rate possible.
Dig deeper: How the Federal Reserve’s interest rate decision affects mortgage rates
Here are the current mortgage rates, according to the latest Zillow data:
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30 years fixed: 6.63%
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20 years fixed: 6.63%
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15 years fixed: 5.97%
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5/1ARM: 6.68%
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7/1ARM: 6.68%
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30 years VA: 6.01%
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15 years VA: 5.58%
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5/1 VA: 6.30%
Please note that these are national averages, rounded to the nearest hundredth.
More information: 5 strategies to get the lowest mortgage interest rate
Here are the current mortgage interest rates, according to the latest data from Zillow:
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30 years fixed: 6.65%
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20 years fixed: 6.60%
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15 years fixed: 5.86%
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5/1ARM: 6.38%
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7/1ARM: 6.75%
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30 years VA: 5.97%
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15 years VA: 5.76%
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5/1 VA: 5.45%
Again, the figures provided are national averages, rounded to the nearest hundredth. Mortgage refinancing rates are often higher than the rates when you buy a home, although that is not always the case.
More information: Do you want to transfer your mortgage? Here are 7 home refinancing options.
Yahoo Finance has a free mortgage payment calculator. Use the calculator to see how different mortgage rates and loan terms can affect your monthly payments.
Our calculator also takes into account homeowners insurance, property taxes, and other expenses that will affect your monthly payment. This will give you a better idea of what you would realistically pay in a month than if you just looked at the principal and interest of the mortgage.
A mortgage interest rate is a fee for borrowing money from your lender, expressed as a percentage. You can choose from two types of rates: fixed or variable.
With a fixed-rate mortgage, your interest rate is fixed for the entire term of your loan. For example, if you get a 30-year mortgage with an interest rate of 6%, your interest rate will remain at 6% for the entire 30 years unless you refinance or sell.
With an adjustable-rate mortgage, your rate is fixed for a predetermined period of time and then changes periodically. Let’s say you get a 7/1 ARM with an introductory rate of 6%. Your rate would be 6% for the first seven years, then the rate would increase or decrease once a year for the last 23 years of your term. Whether your rate goes up or down depends on several factors, such as the economy and the housing market.
At the beginning of your mortgage term, most of your monthly payment goes toward interest. Your monthly payment for the principal and interest of the mortgage remains the same over the years, but less and less of your payment goes toward interest, and more goes toward the principal of the mortgage or the amount you originally borrowed.
More information: Variable rate mortgages versus fixed rate mortgages
A 30-year fixed rate mortgage is a good choice if you want a lower mortgage payment and the predictability that comes with a fixed rate. Please note that your rate will be higher than if you choose a shorter term and that you will have to pay significantly more interest over the years.
If you want to pay off your home loan quickly and save money on interest, you can opt for a 15-year fixed-rate mortgage. These shorter terms come with lower interest rates, and since you cut your repayment time in half, you save a lot on interest in the long run. But you need to be sure you can comfortably afford the higher monthly payments that come with a 15-year term.
Read more: How to choose between a 15 and 30 year fixed rate mortgage
Typically, an adjustable rate mortgage can be good if you plan to sell before the introductory rate period ends. Adjustable rates usually start lower than fixed rates, then your rate changes after a predetermined amount of time. However, the 5/1 and 7/1 ARM rates currently look very similar to the 30-year fixed rate. Before getting an ARM just for a lower rate, compare your rate options from term to term and from lender to lender.
Mortgage rates had largely remained stable or increased since mid-September. However, three weeks ago the 30-year yield finally started to fall, and the 15-year yield has fallen for two weeks in a row.
This week the rates went up again.
Mortgage rates are unlikely to fall (at least not significantly) before the end of 2024. It is possible that they will fall in 2025, but because the Fed predicts only two cuts to the federal funds rate next year, the cuts will likely be gradual.
Read more: When will the housing market collapse again?
According to Freddie Mac, the national average 30-year mortgage rate rose 12 basis points to 6.72% this week, and the average 15-year mortgage rate rose eight basis points to 5.92%.
According to the December housing forecast, Fannie Mae expects the 30-year mortgage rate to end at 6.60% in 2024. The Mortgage Bankers Association (MBA) has not yet released its forecasts for December, but its forecast for November also puts the 30-year fixed mortgage rate at 6.60% at the end of the year.
There is a good chance that mortgage rates will actually fall in 2025 and not rise. However, we will have to see how the coming months will play out as markets react to Trump’s upcoming presidential term and when the Fed decides to cut rates.
