Mortgage interest rates have fallen across the board today. According to Zillow, 30-year mortgage rates have fallen by three basis points 6.31%and the 15-year fixed rate has fallen by five basis points 5.65%.
Mortgage rates generally follow the interest rate on ten-year government bonds, which has been on a downward trend since mid-November. Rates could also gradually decline, as many expect the Federal Reserve to cut the federal funds rate by 25 basis points at its December 18 meeting. (Home loan rates typically fall in anticipation of a Fed rate cut rather than afterward.) These factors that lower interest rates can make it a good time to look for a home and mortgage lender.
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Dig deeper: How is the mortgage interest determined?
Here are the current mortgage rates, according to the latest Zillow data:
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30 years fixed: 6.31%
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20 years fixed: 6.05%
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15 years fixed: 5.65%
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5/1ARM: 6.55%
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7/1ARM: 6.56%
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30 years VA: 5.68%
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15 years VA: 5.32%
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5/1 VA: 5.95%
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: 6.35%
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20 years fixed: 6.10%
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15 years fixed: 5.70%
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5/1ARM: 6.05%
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7/1ARM: 6.58%
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30 years VA: 5.70%
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15 years VA: 5.51%
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5/1 VA: 5.63%
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.
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Use Yahoo Finance's free mortgage calculator to see how different interest rates and terms affect your monthly mortgage payment. It also shows how home price and down payment amount play a role.
Our calculator includes homeowners insurance and property taxes in your monthly payment estimate. You even have the option to enter costs for private mortgage insurance (PMI) and HOA dues if they apply to you. This data results in a more accurate estimate of monthly payments than if you simply calculated the principal and interest of your mortgage.
There are two main advantages to a 30-year fixed mortgage: your payments are lower and your monthly payments are predictable.
A mortgage with a fixed interest rate of 30 years has relatively low monthly costs, because you spread your repayment over a longer period than with, for example, a mortgage with a term of 15 years. Your payments are predictable because, unlike an adjustable-rate mortgage (ARM), your interest rate won't change from year to year. Most years, the only things that can affect your monthly payment are any changes in your homeowner's insurance or property taxes.
The biggest disadvantage of a 30-year fixed mortgage rate is the mortgage interest rate, both in the short and long term.
A 30-year fixed term has a higher rate than a shorter fixed term, and is higher than the introductory rate for a 30-year ARM. The higher your rate, the higher your monthly payment. You also pay much more interest over the term of your loan due to both the higher rate and the longer term.
The advantages and disadvantages of a mortgage interest rate with a fixed term of 15 years are in principle replaced by the interest rate with a term of 30 years. Yes, your monthly payments are still predictable, but another benefit is that shorter terms come with lower interest rates. In addition, you pay off your mortgage 15 years earlier. So you'll potentially save hundreds of thousands of dollars in interest over the course of your loan.
However, because you pay off the same amount in half the time, your monthly costs are higher than if you opt for a 30-year term.
Dig deeper: Mortgages with a term of 15 years versus 30 years
Variable rate mortgages fix your interest rate for a predetermined period of time and then change it periodically. For example, with a 5/1 ARM, your rate stays the same for the first five years and then goes up or down once a year for the remaining 25 years.
The main benefit is that the introductory rate is usually lower than what you get with a 30-year fixed rate, so your monthly payments will be lower. (However, current average rates do not reflect this: fixed rates are actually lower. Talk to your lender before deciding between a fixed or adjustable rate.)
With an ARM, you have no idea what the mortgage interest rate will be once the interest rate period ends, so you run the risk of your interest rate rising later. This can end up costing you more, and your monthly payments will be unpredictable from year to year.
But if you plan to move before the interest rate lock-in period is over, you can enjoy the benefits of a low interest rate without the risk of a rate hike later.
More information: Variable rate mortgage versus fixed rate mortgage
According to Freddie Mac, the national average 30-year mortgage rate is currently 6.31%. But keep in mind that averages can vary depending on where you live. For example, if you buy in a city with a high cost of living, the rates could be even higher.
Mortgage rates may decline slightly before the end of 2024, but are not expected to plummet. They will likely fall in 2025, but as the country waits to see how Trump's presidency will affect the economy, it is unclear how significantly rates could fall next year.
Mortgage rates have fallen in the past week.
In many ways, securing a low mortgage refinance rate is similar to when you bought your home. Try to improve your credit score and lower your debt-to-income ratio (DTI). Refinancing on a shorter term will also get you a lower rate, although your monthly mortgage payments will be higher.
