Although many adjustable rate mortgage rates are high today, fixed rates are going down. According to Zillow, the average 30-year fixed mortgage rate has decreased by three percentage points 6.21%and the 15-year fixed rate has fallen by 10 basis points to 5.53%.
Overall, fixed rates are better deals than flexible ones right now. ARM interest rates are starting to be higher than fixed rates, so you’ll be stuck with a higher monthly payment during the introductory period. However, every mortgage lender is different, so ask to see all the lender’s options before committing to a loan type.
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Here are the current market rates, according to the latest Zillow data:
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30-year term: 6.21%
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20-year fixed: 6.01%
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15-year fixed: 5.53%
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5/1 ARM: 6.45%
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7/1 ARM: 6.50%
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30-year VA: 5.64%
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VA for 15 years: 5.25%
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5/1 VA: 5.93%
Remember that these are national averages and are rounded to the nearest hundred.
Read more: How to get the lowest mortgage rates possible
Here are the current mortgage refinance rates, according to the latest Zillow data:
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30-year term: 6.30%
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20-year fixed: 6.07%
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15-year fixed: 5.67%
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5/1 ARM: 5.92%
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7/1 ARM: 6.42%
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30-year VA: 5.70%
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VA for 15 years: 5.58%
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5/1 VA: 5.70%
Again, the numbers given are national averages rounded to the nearest hundred. Refinance rates are often higher than purchase prices.
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A mortgage calculator can help you determine how different loan lengths and interest rates will affect your monthly payments. Use the free Yahoo Finance mortgage calculator to play around with different results.
Our calculator also takes into account factors such as property taxes and homeowners insurance when calculating your estimated monthly mortgage payment. This will give you a better idea of your overall monthly payment than if you just looked at the mortgage principal and interest.
As a rule of thumb, 15-year mortgage rates are lower than 30-year mortgage rates. When comparing 15- versus 30-year mortgage rates, know that a shorter term will save you money on interest in the long run. However, your monthly payment will go up because you are paying the same loan amount in half the time.
For example, with a $400,000 mortgage with 30 years and a 6.21% rate, you will make a monthly payment of approx. $2,452 to your mortgage principal and interest. As interest accrues over the decades, you will eventually pay $482,890 in interest.
If you get a $400,000 15-year loan with a 5.53% rate, you’ll pay more. $3,275 per month to your boss and interests. However, you only pay $189,447 in the interest of years.
If the 15-year monthly payment is too much, remember that you can always increase the mortgage rate on your 30-year loan to pay off your loan faster and then pay less.
With a fixed-rate mortgage, your balance is locked in from day one. However, you will get a new rate if you refinance your home loan.
An adjustable-rate mortgage keeps your rate the same for a set period of time. Then the rate will go up or down depending on several factors, such as the economy and the amount of money that can change according to your contract. For example, with a 7/1 ARM, your rate would be locked in for the first seven years, then change every year for the remainder of your term.
Flexible rates sometimes start out lower than fixed rates, but once the initial lock-in period is over, you risk your rate increase. ARM rates have also been starting above fixed rates recently, so it’s not as good of a deal as usual.
Dig deep: Adjustable-rate vs. fixed-rate mortgage – Which one should you choose?
Mortgage rates are lower from early August to September. 18 Federal Reserve meeting, when the central bank announced a 50-basis-point slash to the federal funds rate. Since that announcement, mortgage rates have increased significantly. (With occasional exceptions, like today.)
The Fed cut its rate again at its November meeting. Future mortgage rate movements will largely depend on the Federal Reserve’s decision on whether or not to cut federal funds at its next meeting. The federal funds rate does not directly affect interest rates, but it is a good indicator of how the economy is doing overall. So when the Fed rate falls, mortgage rates tend to fall again.
Learn more: How does the Federal Reserve control mortgage rates
According to Zillow data, today’s 30-year fixed rate is 6.21%, and the 30-year refinance rate is 6.30%. These are national averages, so keep in mind that the average in your area or city may be different. Your rate will also vary depending on your income.
Housing prices are falling ahead of the Federal Reserve meeting next Wednesday. Rates may fall gradually in 2025, but there are no guarantees.
Mortgage rates probably won’t drop much in 2024. They may drop in 2025, though.