Unlock Today’s Best Mortgage Rates: December 28, 2024 Insights!

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• Today’s mortgage rates sit at approximately 6.70% as of December 28, 2024.
• Recent rate hikes followed last week’s Federal Reserve meeting.
• With fewer expected rate cuts next year, mortgage rates may not decline significantly.

After the Fed’s latest meeting, mortgage rates took a turn upward, with projections indicating they may not dip as low as anticipated in 2025.

This year, the Fed has already reduced the federal funds rate by a full percentage point. However, their recent Summary of Economic Projections suggests that only two quarter-point cuts may occur next year. Given the recent inflation numbers, it will likely be a while before we see more rate adjustments.

Originally, officials had planned for four rate cuts in 2025, but persistent inflation, a robust labor market, and uncertainty surrounding the economic landscape have led to a reassessment.

While fewer Fed cuts usually signal a potential decline in mortgage rates, they may only see modest easing in the coming year.

Current Mortgage Rates

Current Refinance Rates

Mortgage Calculator

Utilize our free mortgage calculator to discover how today’s rates could affect your monthly payments and total cost over the life of your mortgage.

Click “More details” for insights on saving money on your mortgage over time.

30-Year Mortgage Rates Today

Current average 30-year mortgage rates are landing in the high 6% range, based on data from Zillow.

The 30-year fixed-rate mortgage remains the most preferred choice among homebuyers. This loan structure allows you to repay your borrowed amount over three decades, with a fixed interest rate that won’t change.

While the extended repayment term ensures lower monthly payments, it does come with a higher interest rate compared to shorter options like the 15-year mortgage.

15-Year Mortgage Rates Today

On average, 15-year mortgage rates hover around 6.15%. Just last month, they averaged 5.92%.

If you want the stability of a fixed rate but want to minimize interest payments over the loan’s lifetime, a 15-year fixed-rate mortgage may suit you. Although monthly payments are higher compared to a 30-year loan, you could save significantly on interest.

Average Mortgage Refinance Rates Today

Current refinance rates are closely matching purchase rates this month. In November, 30-year refinance rates averaged 6.62%, with 15-year refinance rates at around 5.96%.

5-Year Mortgage Rate Trends

Check out how 30-year and 15-year mortgage rates have evolved over the last five years with our detailed chart.

What Influences Mortgage Rates?

Mortgage rates are shaped by several key factors, including overall economic trends, Federal Reserve policies, and individual financial profiles. While you can’t control everything, improving your credit score, reducing debt, and saving for a larger down payment can help you secure a better rate.

How Does the Fed Rate Affect Mortgage Rates?

The Federal Reserve raised the federal funds rate significantly in 2022 and 2023 to curb inflation and manage economic growth. While inflation has decreased, it remains above the Fed’s 2% target.

Mortgage rates don’t directly change with the federal funds rate but often respond ahead of Fed policy shifts due to investor demand for mortgage-backed securities.

How Low Will Mortgage Rates Go?

While mortgage rates are expected to ease over the coming year, they likely won’t return to the historic lows of 2020 and 2021, when they dipped below 3%. However, settling closer to 6% is a possibility.

Should I Refinance Now or Wait for Lower Rates?

Thinking about refinancing? If your current mortgage rate is high, refinancing could lead to savings. Yet, with rates projected to decline slightly over the next few years, waiting might also be beneficial.

Your decision should weigh the costs of refinancing against potential savings. If you can save enough to offset the costs relatively quickly, it may be worth it. You could also consider refinancing now and again later if rates fall further.

Understanding How Mortgage Rates Work

Your mortgage interest rate determines how much you’ll pay to borrow money for a home. Each month, you’ll make a payment that includes both principal and interest.

As you pay down your mortgage, the interest portion of your payment decreases over time through a process known as amortization. This means that over the life of the loan, a larger share of your monthly payment will go toward reducing your loan balance.

For instance, if you take out a $300,000 mortgage at a 6.5% interest rate, your first payment would involve paying about $1,896, of which only $271 goes to the principal, while $1,625 is interest. Fast forward 20 years, and $992 would go toward the principal, with about $905 going to interest.

Ask your lender for an amortization schedule to break down your payments, or use an online calculator to visualize your payment structure.

How Often Do Mortgage Rates Change?

Mortgage rates can fluctuate daily, influenced by various economic factors. If conditions remain stable, rates may not change much. However, uncertainty in the economy can lead to sharp movements in rates.

How to Shop for Mortgage Rates

Not all mortgage lenders offer the same rates, so it’s wise to shop around. Experts recommend obtaining quotes from multiple lenders—aim for at least three for a well-rounded view of available rates.

Early in the process, applying for preapproval can provide you with an estimate of your rate. If you’re under contract for a home, proceed with regular approval for a more precise rate.

Always evaluate the full offer. If a lower rate comes with excessive fees, it may not be advantageous. Also, consider other factors like customer service and down payment assistance.