Uncover the Secrets of Today's Mortgage Rates

Home Purchase Mortgage Rates

Currently, the 30-year fixed mortgage rate stands at 6.61% and the 20-year fixed rate is 6.35%. The 15-year fixed rate is 5.95%, while the 5/1 ARM is 7.24% and the 7/1 ARM is 7.07%. For those with VA loans, the 30-year VA rate is 6.02%, the 15-year VA is 5.55%, and the 5/1 VA is 6.14%. In the case of FHA loans, the 30-year FHA rate is 5.70%, the 15-year FHA is 5.69%, and the 5/1 FHA is 4.88%. These are national averages rounded to the nearest hundredth.

For example, with a $400,000 mortgage and a 30-year term at a 6.61% rate, the monthly payment towards the mortgage principal and interest is about $2,557. Over the decades, the accumulated interest amounts to $520,620. On the other hand, a $400,000 15-year mortgage with a 5.95% rate requires a monthly payment of about $3,365, but the total interest paid over the years is only $205,634. This shows the significant difference in interest payments between the two terms.

Mortgage Refinance Rates

The current mortgage refinance rates, according to the latest Zillow data, are as follows: the 30-year fixed rate is 6.71%, the 20-year fixed is 6.95%, and the 15-year fixed is 6.06%. The 5/1 ARM is 7.68% and the 7/1 ARM is 7.71%. For VA refinance, the 30-year VA rate is 6.03%, the 15-year VA is 5.70%, and the 5/1 VA is 5.89%. Again, these are national averages rounded to the nearest hundredth. It's important to note that refinance rates are usually higher than purchase rates.

A mortgage calculator can be a useful tool to understand how different mortgage term lengths and interest rates will impact your monthly payments. The free Yahoo Finance mortgage calculator allows you to experiment with various scenarios. It also considers factors like property taxes and homeowners insurance when calculating your estimated monthly mortgage payment, providing a more comprehensive view than just looking at mortgage principal and interest.

Fixed-Rate vs. Adjustable-Rate Mortgages

With a fixed-rate mortgage, the rate is locked in from the very beginning. But if you choose to refinance your mortgage, you will get a new rate. An adjustable-rate mortgage keeps the rate the same for a specific period. After that, the rate will fluctuate based on several factors such as the economy and the maximum amount it can change according to your contract. For instance, with a 7/1 ARM, the rate is locked in for the first seven years and then changes every year for the rest of the term. Adjustable rates may start lower than fixed rates, but once the initial rate-lock period ends, there is a risk of the interest rate going up. Currently, fixed rates are also starting lower than adjustable rates.

Mortgage rates trended downward from early August until the Sept. 18 Federal Reserve meeting when the central bank announced a 50-basis-point cut to the federal funds rate. Since then, mortgage rates have gradually increased. The Fed decreased its rate again at its November meeting. The future trajectory of mortgage rates will largely depend on the Federal Reserve's decisions on whether to cut the federal funds rate in future meetings. Although the federal funds rate doesn't directly impact mortgage rates, it is a good indicator of the overall economic situation. So, when the Fed rate drops, mortgage rates typically follow suit.

According to Zillow data, today's 30-year fixed rate is 6.61% and the 30-year refinance rate is 6.71%. These are national averages, and the average in your state or city could be different. Your rate will also vary depending on your personal finances. Mortgage rates may gradually drop in 2025, but there is no certainty. It is likely that mortgage rates will not go down significantly in 2024, but they may fall throughout 2025.