Prices will drop after the job report

Mortgage interest rates are the lowest in the world today. According to Zillow, the 30-year fixed mortgage rate has dropped by five basis points 6.24%and the 15-year fixed rate has decreased by two basis points to 5.63%. The 5/1 ARM rate has fallen by seven basis points to 6.44%.

The eyes of economists have been on the November jobs report released by the US Bureau of Labor Statistics yesterday. Mortgage rates tend to increase with a strong economy and decrease with a weak economy. On the one hand, the US economy added more jobs than expected last month – but on the other hand, the unemployment rate rose. All of this means that the Federal Reserve will probably maintain its plan to reduce government funds at its meeting on December 18. Mortgage rates may go down in anticipation of the Fed rate set in a few weeks.

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

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

• 30-year term: 6.24%

• 20-year fixed: 6.02%

• 15-year fixed: 5.63%

• 5/1 ARM: 6.44%

• 7/1 ARM: 6.24%

• 30-year VA: 5.63%

• VA for 15 years: 5.25%

• 5/1 VA: 5.97%

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: 6.37%

• 20-year fixed: 6.06%

• 15-year fixed: 5.76%

• 5/1 ARM: 6.14%

• 7/1 ARM: 6.37%

• 30-year VA: 5.81%

• VA for 15 years: 5.63%

• 5/1 VA: 5.50%

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 payment is predictable because, unlike an adjustable-rate mortgage (ARM), your rate will not 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 mortgage rates are variable from 30-year rates. Yes, your monthly payments will remain the same, 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 choose a 30-year term.

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 when the first-term period ends, so you risk increasing your interest 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 November, 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. As prices are slowly falling 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 6.24% 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 in 2024, although they will continue to decline ahead of the December 18 Fed meeting.

Overall, mortgage rates have declined over the past year. They have also been dropping or holding steady for over a week.

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.