Unlock December 22, 2024: Today’s Hottest Mortgage Rate Insights!

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• As of December 22, 2024, mortgage rates are sitting in the high 6% range.
• Mortgage rates are rising, reflecting expectations of fewer cuts from the Fed in the coming year.
• The potential drop in rates next year hinges on inflation levels and the Federal Reserve’s actions.

Recently, the Federal Reserve made a move to lower the federal funds rate, yet mortgage rates have mysteriously climbed.

Many borrowers anticipate falling mortgage rates following a Fed rate cut, but these changes are often priced in well before they take effect, leaving minimal impact when the decision is made. So, what’s behind the recent uptick in mortgage rates?

During the recent meeting, the Fed revealed new economic forecasts, indicating that fewer rate cuts are expected next year. This announcement triggered the rise in mortgage rates.

Looking ahead, mortgage rates are projected to decrease next year, but the extent of that drop remains uncertain. If inflation persists and the Fed only implements one or two cuts, we might only see slight easing in rates.

Current Mortgage Rates

Current Refinance Rates

Mortgage Calculator

Take advantage of our free mortgage calculator to see how today’s mortgage rates affect your monthly payments. Input various rates and terms to fully understand your total cost over the life of your mortgage.

Hit “More details” for insightful tips on how to save big on your mortgage in the long run.

30-Year Mortgage Rates Today

The average 30-year mortgage rates are currently in the high 6% range, with rates hovering around 6.56% as of November.

The 30-year fixed-rate mortgage is the most favored option among homebuyers. With this mortgage type, you’ll pay back your loan over a span of 30 years with a consistent interest rate throughout.

This extended term allows for lower monthly payments, making your budget more manageable. However, note that you’ll typically pay a higher rate compared to shorter-term options like a 15-year mortgage.

15-Year Mortgage Rates Today

Average 15-year mortgage rates are currently about 6%, while November rates averaged around 5.92%.

If you seek the stability of a fixed rate but want to minimize interest costs over the loan’s life, a 15-year fixed-rate mortgage could be just what you need. With shorter terms and generally lower rates than 30-year options, you could save tens of thousands in interest. Just remember, your monthly payments will be higher than those associated with a longer term.

Average Mortgage Refinance Rates Today

This month, refinance rates have been on par with purchase rates. In November, the average 30-year refinance rate was around 6.62%, while for 15-year refinance rates, it was about 5.96%.

5-Year Mortgage Rate Trends

Check out how 30-year and 15-year mortgage rates have shifted over the last five years based on Freddie Mac data.

What Factors Influence Mortgage Rates?

Mortgage rates are influenced by several factors, from macroeconomic trends and Federal Reserve policies to your state’s current rates, the type of loan, and your personal financial profile.

While many of these factors may be beyond your control, you can positively influence your mortgage rate by improving your credit score, paying down debt, and saving for a heftier down payment.

How Does the Fed Rate Affect Mortgage Rates?

The Federal Reserve raised the federal funds rate significantly in 2022 and 2023 to curb economic growth and control inflation. Although inflation has eased, it’s still higher than the Fed’s ideal target of 2%.

While mortgage rates don’t directly correlate with changes to the federal funds rate, they frequently trend upward or downward based on anticipation of Fed policies. These fluctuations are largely driven by investor demand for mortgage-backed securities, which can be swayed by predictions about Fed policies and their broader economic implications.

The Fed has decreased rates three times in 2024 but is predicted to implement fewer cuts in 2025. This suggests mortgage rates may not experience significant declines next year.

How Low Will Mortgage Rates Go?

Rates are expected to ease somewhat in the coming year, although the extent of any decline will depend on economic conditions.

Mortgage rates are unlikely to return to the historical lows seen in 2020 and 2021, when 30-year fixed rates dipped below 3%. Still, there’s potential for rates to settle closer to the 6% range over the next year or two.

Should I Refinance Now or Wait for Mortgage Rates To Drop?

With rates lower now, many homeowners are questioning whether it’s time to refinance. If your current mortgage has a high interest rate and refinancing to a lower rate would reduce your monthly payments, it might be worth considering.

Conversely, since mortgage rates are expected to drop further, waiting to refinance could also yield advantages.

Ultimately, whether to refinance now depends on your costs versus potential savings. If your monthly savings offset the refinancing costs in a reasonable time frame, refinancing may be a smart move. Alternatively, you could refinance now and again later if rates drop further, depending on your financial situation.

How Do Mortgage Rates Work?

Your mortgage interest rate reflects the cost of borrowing funds for purchasing or refinancing a home. Each month, your payments contribute not only toward the principal amount borrowed but also toward the interest accrued.

As you pay down your mortgage, the portion of your monthly payment allocated to interest decreases over time, a phenomenon known as amortization. For instance, on a $300,000 mortgage with a 6.5% interest rate, your monthly payment would be around $1,896. However, on your first payment, only about $271 would reduce the principal, while around $1,625 would go toward interest. Fast forward 20 years, and the principal reduction would rise to about $992, with approximately $905 applied to interest.

Request an amortization schedule from your lender to see your payment breakdown over time, or utilize an online amortization calculator.

How Often Do Mortgage Rates Change?

Mortgage rates fluctuate throughout the day and can vary weekly based on economic conditions. In stable economic situations, mortgage rates might not shift significantly. However, when uncertainty or impending changes arise, rates can swing up or down.

How to Shop for Mortgage Rates

Not all mortgage lenders offer the same rates, so shopping around can save you a significant amount of money.

Experts recommend obtaining quotes from multiple lenders—aim for at least three—to understand the range of available rates. If you’re still in the early stages, applying for preapproval can give you an estimate of your rate while you continue house hunting. If you’re ready to buy, applying for standard approval will provide a clearer picture of what you can expect to pay with a particular lender.

Be sure to evaluate the overall offer. If a lower rate comes with high fees, it might not be worth it. Also consider other vital aspects, such as the lender’s customer service reputation or down payment assistance options.