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The Federal Reserve slashed the fed funds rate on Wednesday, and mortgage rates are decreasing too. According to Freddie Mac, the 30-year mortgage rate is down 11 basis points to 6.09%, and the 15-year mortgage rate fell by 12 basis points to 5.15%.
“While mortgage rates do not directly follow moves by the Federal Reserve, this first cut in over four years will have an impact on the housing market,” Sam Khater, chief economist for Freddie Mac, said in a press release. “Declining mortgage rates over the last several weeks indicate this cut was mostly baked in, but we expect rates to fall further, sparking more housing activity.”
Mortgage rates should continue to fall throughout 2024 and 2025. This means monthly payments could become more affordable, and homeowners who have been staying in their homes to keep their low rates might finally be ready to sell. Buyers could benefit from both lower rates and more home inventory.
Read more: Mortgage rates inch closer to 6% following Fed rate cut
Current mortgage rates
Here are the current mortgage rates, according to the latest Zillow data:
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30-year fixed: 5.68
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20-year fixed: 5.42%
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15-year fixed: 5.03%
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5/1 ARM: 6.13%
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7/1 ARM: 6.03%
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30-year VA: 5.14%
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15-year VA: 4.80%
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5/1 VA: 5.48%
Remember, these are the national averages and rounded to the nearest hundredth.
Learn more: 5 strategies to get the lowest mortgage rates
Current mortgage refinance rates
These are today’s mortgage refinance rates, according to the latest Zillow data:
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30-year fixed: 5.96%
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20-year fixed: 5.76%
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15-year fixed: 5.17%
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5/1 ARM: 6.19%
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7/1 ARM: 6.46%
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5/1 FHA: 4.51%
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30-year VA: 5.22%
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15-year VA: 5.01%
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5/1 VA: 5.59%
Again, the numbers provided are national averages rounded to the nearest hundredth. Mortgage refinance rates are often higher than rates when you buy a house, although that’s not always the case.
Learn more: Want to refinance your mortgage? Here are 7 home refinance options.
Free mortgage calculator
Yahoo Finance has a free mortgage payment calculator. Use the calculator to see how various mortgage rates and loan terms could affect your monthly payments.
Our calculator also considers homeowners insurance, property taxes, and other expenses that affect your monthly payment. This will give you a better idea of what you’d realistically pay in a month than if you just look at the mortgage principal and interest.
How mortgage interest rates work
A mortgage interest rate is a fee for borrowing money from your lender, expressed as a percentage. You can choose from two types of rates: fixed or adjustable.
A fixed-rate mortgage locks in your rate for the entire life of your loan. For example, if you get a 30-year mortgage with a 6% interest rate, your rate will stay at 6% for the entire 30 years unless you refinance or sell.
An adjustable-rate mortgage locks in your rate for a predetermined amount of time and then changes it periodically. Let’s say you get a 7/1 ARM with an introductory rate of 6%. Your rate would be 6% for the first seven years, then the rate would increase or decrease once per year for the last 23 years of your term. Whether your rate goes up or down depends on several factors, such as the economy and housing market.
At the beginning of your mortgage term, most of your monthly payment goes toward interest. Your monthly payment toward mortgage principal and interest stays the same throughout the years — however, less and less of your payment goes toward interest, and more goes toward the mortgage principal or the amount you originally borrowed.
Learn more: Adjustable-rate vs. fixed-rate mortgages
Which mortgage term length should you get?
A 30-year fixed-rate mortgage is a good choice if you want a lower mortgage payment and the predictability that comes with having a fixed rate. Just know that your rate will be higher than if you choose a shorter term and will result in paying significantly more in interest over the years.
You might like a 15-year fixed-rate mortgage if you want to pay off your home loan quickly and save money on interest. These shorter terms come with lower interest rates, and since you’re cutting your repayment time in half, you’ll save a lot in interest in the long run. But you’ll need to be sure you can comfortably afford the higher monthly payments that come with 15-year terms.
Read more: How to decide between a 15-year and 30-year fixed-rate mortgage
Typically, an adjustable-rate mortgage could be good if you plan to sell before the introductory rate period ends. Adjustable rates usually start lower than fixed rates, then your rate will change after a predetermined amount of time. However, 5/1 and 7/1 ARM rates are very similar to 30-year fixed rates right now. Before getting an ARM just for a lower rate, compare your rate options from term to term and lender to lender.
Are mortgage rates decreasing?
Yes, mortgage and refinance rates have been steadily going down since the beginning of August. This has mostly been in anticipation of the Federal Reserve meeting on Sept. 18, when the central bank was expected to cut the federal funds rate for the first time since 2020.
The Fed ended up slashing the rate by 50 basis points and indicating it plans to lower the rate two more times this year. The central bank also expects to cut the rate four more times in 2024.
So, yes, mortgage rates are decreasing and will probably continue dropping in the coming months.
Dig deeper: How the Federal Reserve impacts mortgage rates
Mortgage interest rates today: FAQs
What are mortgage interest rates doing today?
According to Freddie Mac, today’s national average 30-year mortgage rate has decreased by 11 basis points to 6.09%, and the average 15-year mortgage rate is down 12 basis points at 5.15%. Both rates have dropped drastically since September 2023.
How low will mortgage rates go in 2024?
No one has a crystal ball about what mortgage rates will do in 2024. However, because the Fed plans to cut the federal funds rate twice before the end of the year, mortgage rates will probably gradually decline too.
How high could mortgage rates go by 2025?
It’s actually likely that mortgage rates will get lower in 2025, not higher. The Federal Reserve will probably slash the federal funds rate several times next year, which will help push mortgage rates down.