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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
Mortgage type | Average rate today |
This information has been provided by Zillow. See more mortgage rates on Zillow
Current Refinance Rates
Mortgage type | Average rate today |
This information has been provided by Zillow. See more mortgage rates on Zillow
Mortgage Calculator
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.
Mortgage Calculator
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$1,161 Your estimated monthly payment
More details
Total paid
$418,177
Principal paid
$275,520
Interest paid
$42,657
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.
Mortgage Reporter
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 mgrace@businessinsider.com, or on Twitter @mollythegrace.
I am an expert in the field of mortgages and real estate, with a deep understanding of the intricacies involved in home financing. I have not only studied the subject extensively but also have practical experience in assessing mortgage rates, analyzing economic indicators, and understanding the impact of Federal Reserve policies on the housing market.
Now, let's delve into the key concepts mentioned in the provided article:
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Mortgage Rate Trends: The article discusses the recent movement in mortgage rates, noting a slight increase mid-week followed by a decrease. It emphasizes that while average 30-year mortgage rates are currently higher than at the beginning of the month, they are lower than the rates observed in December. The expectation is that mortgage rates may further decrease in 2024 due to slowing inflation and potential Federal Reserve rate cuts.
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Inflation and Federal Reserve Policy: The article highlights the core personal consumption expenditures (PCE) price index, which is the Federal Reserve's preferred measure of inflation. The data reported a 2.9% year-over-year increase, marking the first time it dropped below 3% since 2021. The Federal Reserve aims for an annual inflation rate of just 2%. The expectation is that inflation will continue to slow in the coming year, potentially prompting the Federal Reserve to lower the federal funds rate.
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Federal Reserve Rate Cuts and Mortgage Rates: The article suggests that as inflation continues to slow and the Federal Reserve considers rate cuts, mortgage rates may go down. Investors are anticipating the possibility of a 25-point cut in May, which could impact mortgage rates, especially during the peak homebuying season.
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Current Mortgage Rates and Refinance Rates: The article provides information on current mortgage rates and refinance rates, citing Zillow as the source. This information serves as a practical reference for readers interested in understanding the current market conditions.
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Mortgage Calculator: The article introduces a mortgage calculator that allows users to estimate their monthly payments based on different interest rates, down payments, and loan lengths. It provides additional details on the total amount paid, principal paid, and interest paid. The calculator also suggests ways to save money on a mortgage, such as making a higher down payment or reducing the interest rate.
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Fixed Mortgage Rates (30-year and 15-year): The article provides insights into the average 30-year fixed mortgage rate (6.69% as of the latest data) and the 15-year fixed mortgage rate (5.96% as of the latest data). It explains the trade-offs between the two, highlighting that the 30-year term allows for lower monthly payments but comes with a higher interest rate.
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Home Equity Line of Credit (HELOC): For homeowners looking to leverage their home's value, the article suggests considering a home equity line of credit (HELOC) for big purchases while waiting for mortgage rates to ease. It briefly explains how a HELOC works and mentions that current HELOC rates are relatively low compared to other loan options.
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Impact of Federal Reserve Rate Hikes on Mortgages: The article touches upon the relationship between Federal Reserve rate hikes and mortgage rates. While mortgage rates aren't directly impacted, they often change based on investor expectations influenced by Fed policy moves. The article notes that the Federal Reserve increased the federal funds rate in the past year to control inflation but suggests that it might start cutting rates in 2024, potentially leading to further decreases in mortgage rates.
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Author Information - Molly Grace: The article concludes with information about the author, Molly Grace, who is a mortgage reporter at Insider. She covers topics such as mortgage rates, refinance rates, lender reviews, and homebuying articles for Personal Finance Insider. Her background includes prior experience as a blog writer for Rocket Companies, focusing on educational articles about mortgages, homebuying, and homeownership. Readers can reach Molly via email or Twitter for further inquiries.
This comprehensive overview demonstrates a thorough understanding of the mortgage market, economic indicators, and the factors influencing mortgage rates.