Key Highlights on Current Mortgage Rates:
- Recent mortgage rates have increased, rebounding from the previous day’s drop. The average rate for a 30-year fixed mortgage is now at 7.085%, reflecting an increase of 0.251 percentage points.
- Potential homebuyers are navigating a challenging market, with both home prices and mortgage rates remaining high.
- Based on a recent benchmark survey, the average rate for a 30-year fixed mortgage has decreased to 6.96% for the week ending January 23, marking a decline of 0.08 percentage points from the previous survey.
- The average rate for a 15-year fixed mortgage has dropped by 0.11 percentage points, now averaging 6.16%.
Trends in Mortgage Rates
Data from weekly surveys indicate that mortgage rates have experienced their first decline in over a month, largely influenced by the latest inflation report showing less-than-expected core price increases. This has led to a decrease in yields on the 10-year Treasury note, which mortgage rates typically follow.
However, arising concerns regarding potential tariffs on goods from major trading partners have caused those yields to rise again, leading to an uptick in daily mortgage rates.
Market analysts are closely monitoring the upcoming Federal Reserve meeting and other economic factors that might influence inflation for further indications of future rate trajectories.
Average Mortgage and Refinance Rates as of January 23, 2025
|
Loan Terms |
Latest Rates 
|
|
30-Year Fixed Mortgage |
7.085% ⇑ 0.251% |
|
15-Year Fixed Mortgage |
6.481% ⇑ 0.281% |
|
7/1 ARM |
6.506% ⇑ 0.265% |
|
10/1 ARM |
6.851% ⇑ 0.313% |
|
30-Year Fixed Refinance Loan |
7.162% ⇑ 0.238% |
|
15-Year Fixed Refinance Loan |
6.502% ⇑ 0.263% |
|
7/1 Adjustable-Rate Refinance Loan |
6.628% ⇑ 0.228% |
|
10/1 Adjustable-Rate Refinance Loan |
6.852% ⇑ 0.312% |
The daily mortgage rates are based on national averages for borrowers putting 20% down, without points paid, and who possess a credit score of 780. Individual rates may vary based on location, lender choice, and specific financial details.
These rates differ from those provided by surveys which reflect a weekly average based on various offers made to borrowers with favorable credit, a 20% down payment, and any applicable discounts.
Should you receive a higher-than-expected rate, inquire further and consider comparing quotes from multiple lenders.
Utilizing a mortgage calculator can help estimate monthly payments under various rate scenarios.
Mortgage Rates from Recent Freddie Mac Survey
Trends Overview
Freddie Mac’s assessment includes rates gathered from across the week, concluding each Thursday. The average rate serves as a ballpark figure for borrowers with strong credit seeking a mortgage with a 20% down payment.
Understanding Current Mortgage Rates
Mortgage rates, alongside home prices, heavily influence homeownership opportunities. They significantly impact how much home buyers can afford. This section answers common questions related to mortgage rates and their impact on the housing market.
Types of Mortgage Rates
When seeking a mortgage, two primary types may be presented: fixed-rate and adjustable-rate loans. Knowing the distinctions helps in forming the best choice for individual needs.
Fixed-Rate Mortgages
Fixed-rate loans maintain a consistent interest rate throughout the loan’s duration, typically available in 30-year or 15-year terms. A 30-year loan usually carries a higher interest rate than a 15-year loan, but it offers lower monthly payments due to the extended repayment period.
Fixed-rate mortgages are preferred by many buyers since they offer predictability in mortgage payments, although other costs like insurance and taxes may vary over time.
Adjustable-Rate Mortgages (ARMs)
ARMs start with a fixed interest rate for a set period before adjusting at predetermined intervals. These loans often present initial lower rates compared to fixed-rate loans and may be suitable for those expecting to relocate before the adjustment occurs.
Understanding Mortgage Costs
When assessing mortgage rates, two important figures to consider are the interest rate and the annual percentage rate (APR). The interest rate represents the cost of borrowing the principal, while the APR encompasses the total borrowing cost, including fees. Typically, the APR will be higher than the interest rate.
For instance, a $300,000 loan at a 3.1% interest rate with $2,100 in fees would result in an APR of 3.169%.
It’s crucial to compare both the interest rate and APR when evaluating rates from different lenders to better understand the overall financial implications.
Refinancing Considerations
Homeowners might seek refinancing for various reasons such as obtaining a better rate, changing loan terms, or accessing home equity. Generally, refinancing rates are slightly higher than purchasing rates.
Factors Influencing Mortgage Rates
While rates themselves are key, several additional factors also shape the overall cost of loans:
Loan Term
A longer loan term leads to smaller monthly payments but can increase overall borrowing costs. Switching from a 30-year to a 15-year mortgage raises monthly payments but reduces total interest paid.
Loan Type
Fixed-rate mortgages maintain consistent payments, while ARMs experience adjustments based on market conditions after an initial fixed-term.
Loans exceeding federal limits are termed “jumbo” loans and typically involve stricter credit assessments.
Taxes, HOA Fees, Insurance
Monthly payments often combine home insurance premiums, property taxes, and homeowners association fees. Check with a real estate agent for accurate estimates.
Private Mortgage Insurance
Private mortgage insurance can add significantly to costs, potentially up to 1.5% of the annual loan amount. Borrowers can usually avoid this by putting down at least 20% of the home’s price or through accrued equity.
Closing Costs
Closing costs, comprising origination fees and other expenses, typically account for 2% to 5% of the mortgage value and are usually paid upfront. Some opt to finance these costs into the loan.
Loan-to-Value Ratio (LTV)
The LTV compares the loan amount with the home’s value, with higher ratios signifying greater risk to lenders and higher rates for borrowers.
Economic Factors
Lenders assess various factors to determine daily mortgage rates, including the federal funds rate, competing rates, and borrower-specific qualifications. Generally, rates track yields on the 10-year Treasury note, with an average spread of 1.8 percentage points between the two. During economic instability, such as periods of high inflation, yields tend to rise, influencing mortgage rates accordingly.
Impact of Mortgage Rates on Affordability
Mortgage rates greatly affect home affordability and the nature of monthly loan payments across various properties.
For example, a $250,000 home with a 20% down payment of $50,000 results in a starting loan balance of $200,000. Monthly payments for a fixed-rate mortgage at different interest rates are as follows:
- At 3% interest: $843 (excluding taxes, insurance, or HOA fees)
- At 4% interest: $955
- At 6% interest: $1,199
- At 8% interest: $1,468
Using a mortgage calculator can illustrate how different rates and scenarios affect monthly payments. A home affordability calculator helps estimate the maximum loan you might qualify for based on various financial metrics.
Strategies for Securing the Best Mortgage Rate
To achieve the best mortgage rate, consider comparing multiple offers. Data indicates that obtaining another quote can save borrowers approximately $600 over the life of the loan, which can rise up to $1,200 with three quotes. A larger down payment can also yield a lower rate.
Local banks, credit unions, and online lenders are potential sources for favorable rates. To further reduce rates, borrowers can purchase discount points that lower interest rates over time.
After identifying the best rate, securing a rate lock can ensure it remains unchanged prior to closing. Obtaining preapproval may also enhance chances of acquiring a lower rate.
FAQs About Current Mortgage Rates
When can we expect mortgage rates to decline?
After peaking at 7.08% last November, mortgage rates are trending downwards. Experts predict stability will likely keep rates between 6% and 7% in the near term.
Is it advisable to lock in my mortgage rate now?
Yes, securing a rate lock after receiving an accepted offer ensures that you lock in favorable rates, typically for 45 to 60 days, regardless of market changes.
What are discount points in relation to mortgages?
Discount points are upfront payments made to lower the mortgage’s interest rate. Paying for points reduces monthly payments and totals cost over the loan’s duration.
Why is my mortgage rate above average?
Factors including credit scores, loan terms, rate types, down payment amounts, and loan location affect the rate. Improving credit scores is a key approach to lowering rates.
Competing lenders offer varying rates, and it’s critical to shop around for the best rate options.
Should I refinance if interest rates fall?
Refinancing can be beneficial if it leads to reduced monthly payments or shorter loan terms, especially if your current rate exceeds prevailing rates by at least 0.50 percentage points.
Summary of Current Mortgage Rates
- Mortgage rates have risen, with a 30-year fixed rate averaging 7.085%, an increase of 0.251 percentage points from the prior day.
- Homebuyers encounter significant challenges due to elevated home prices and mortgage rates.
- Freddie Mac reports a decrease in the average rate for a 30-year fixed loan to 6.96%, down by 0.08 percentage points from the prior week.
- The average rate for a 15-year fixed mortgage has decreased to 6.16%.
photo credit: money.com
