Economic factors cause prices to rise

Mortgage rates have increased today. According to Zillow, the 30-year fixed mortgage rate rose by seven basis points 6.42%and the 15-year fixed rate is up 11 basis points to 5.79%.

This is likely due to the 10-year Treasury yield inching back after falling for a few weeks and anticipation of the Federal Reserve’s rate decision at next Wednesday’s meeting. Although people expect the Fed to cut its rate by 25 percent, this is a small decrease. Mortgage rates may not go down after the meeting unless something unexpected happens, such as a big meltdown or the Fed announcing plans for a big rate cut in 2025.

Dig deep: The Federal Reserve’s rate decisions affect mortgage rates

Here are the current market rates, according to the latest Zillow data:

• 30-year term: 6.42%

• 20-year fixed: 6.20%

• 15-year fixed: 5.79%

• 5/1 ARM: 7.07%

• 7/1 ARM: 7.22%

• 30-year VA: 5.89%

• VA for 15 years: 5.57%

• 5/1 VA: 6.05%

Remember, these are national averages and are rounded to the nearest hundred.

Learn more: 5 tips for getting low mortgage rates

Here are the current mortgage refinance rates, according to the latest Zillow data:

• 30-year term: 6.51%

• 20-year fixed: 6.23%

• 15-year fixed: 5.84%

• 5/1 ARM: 7.76%

• 7/1 ARM: 7.18%

• 30-year VA: 5.80%

• VA for 15 years: 5.58%

• 5/1 VA: 5.24%

Again, the numbers given are national averages rounded to the nearest hundred. Mortgage refinance rates are often higher than home purchase prices, although this is not always the case.

Use Yahoo Finance’s free mortgage calculator to see how different interest rates and term lengths affect your monthly payments. It also shows how house prices and down payments work in real estate.

Our calculator includes homeowners insurance and property taxes in your monthly payment estimate. You even have the option to include private mortgage insurance (PMI) and homeowner association fees if that applies to you. This information yields a more accurate monthly payment estimate than if you simply calculated your mortgage principal and interest.

There are two major benefits to a 30-year fixed-payment plan: Your income is lower, and your monthly payments are more predictable.

A 30-year fixed-rate mortgage has a lower monthly payment because you’re spreading your payments over a longer period than, say, a 15-year loan. Your payments are predictable because, unlike an adjustable-rate mortgage (ARM), your rate won’t change from year to year. Most years, the only things that can affect your monthly payment are changes to your home insurance or property taxes.

The biggest downside to 30-year mortgage rates is mortgage interest – both in the short and long term.

A 30-year fixed term comes with a higher rate than a shorter fixed term, and is higher than the intro rate of a 30-year ARM. The higher your rate, the higher your monthly payments. You will pay more interest over the life of your loan because of the higher rate and longer term.

The advantages and disadvantages of 15-year fixed mortgage rates vary from 30 years. Yes, your monthly payments will still be estimated, but another advantage is that shorter terms come with lower interest rates. Not to mention, you will pay off your loan 15 years sooner. So you will save potentially hundreds of thousands of dollars in interest over the course of your loan.

However, because you are paying the same amount in half the time, your monthly payments will be higher than if you chose 30 years.

Dig deep: 15-year vs. 30-year mortgages

Adjustable-rate mortgages lock in your rate for a predetermined period of time, then change it periodically. For example, with a 5/1 ARM, your rate stays the same for the first five years and goes up or down once a year for the remaining 25 years.

The main advantage is that the introductory rate is usually lower than what you will get with a 30-year fixed rate, so your monthly payment will be lower. (Today’s average rates don’t reflect this, though—in some cases, fixed rates are lower. Talk to your lender before deciding between a fixed or adjustable rate.)

With an ARM, you don’t know what the interest rates will be after the first term is over, so you put your risk up later. This can end up being very expensive, and your monthly payment is unpredictable year after year.

But if you plan to move before the introductory period ends, you can reap the benefits of a lower price without risking an increase down the road.

Learn more: Adjustable-rate vs. fixed-rate mortgage

First of all, now is a good time to buy a home compared to several years ago. Mortgage rates are lower than last December, and home prices are not rising as much as they were during the height of the COVID-19 pandemic. So, if you want or want to buy a house soon, you should feel good about the current climate.

Also, mortgage rates are not expected to drop as much in 2025 as people expected a few months ago. Since prices are swinging right now – and competition tends to be less in the winter months – it may be a good time to buy.

Read more: What is more important, the price of your home or the mortgage rate?

According to Zillow, the national average 30-year mortgage rate is 6.42% right now. But remember that averages may vary depending on where you live. For example, if you are buying in a city with a high cost of living, prices may be higher.

Mortgage rates are not expected to decline significantly before the end of 2024, although they are likely to decline before the Fed’s Dec. 18 meeting.

Overall, mortgage rates have declined over the past year. However, they have increased in the last two days.

In many ways, securing a low mortgage refinance rate is similar to buying your home. Try to improve your credit and reduce your debt-to-income ratio (DTI). Short-term financing will also give you a lower rate, even if your monthly mortgage payment is higher.