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The 30-year mortgage rate has increased a little this week, while the 15-year rate has gone down slightly. Neither change from last week is very drastic, though.
“While incoming economic signals indicate lower rates of inflation, we do not expect rates will decrease meaningfully in the near-term,” Sam Khater, chief economist at Freddie Mac, said in a press release. “On the plus side, inventory is improving somewhat, which should help temper home price growth.”
No, mortgage rates might not plummet during the spring and summer home-buying season. But the good news is that while house prices may seem high, prices are not rising as quickly as they were from 2020 through 2022. This could make your home-buying experience less stressful than it would have been a couple of years ago.
Dig deeper: Is it a good time to buy a house?
Today’s mortgage rates
The average 30-year mortgage fixed rate this week is 6.82%, according to Freddie Mac. This is a three-basis-point increase from last week.
On the other hand, the national average 15-year fixed mortgage rate has gone down a bit. The 15-year rate is 6.06%, which is down five basis points since last week.
30-year vs. 15-year fixed mortgage rates
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 the shorter term will save you money on interest in the long run. However, your monthly payments will be higher because you’re paying off the same loan amount in half the time.
For example, with a $400,000 30-year mortgage and a 6.82% rate, you’ll make a monthly payment of $2,613.03 toward your principal and interest. As interest accumulates and compounds over decades, you’ll end up paying $540,691 in interest.
If you get a $400,000 15-year mortgage with a 6.06% rate, you’ll pay $3,388.41 monthly toward your principal and interest. However, you’ll only pay $209,913 in interest over the years.
Learn more: How much money do I need to buy a house?
Fixed-rate vs. adjustable-rate mortgages
With a fixed-rate mortgage, your rate is locked in from day one. You will get a new rate if you refinance your mortgage, though.
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 maximum amount your rate 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.
Adjustable rates typically start lower than fixed rates, but once the initial rate-lock period ends, you risk your interest rate going up.
Will mortgage rates go down in 2024?
In Fannie Mae’s latest rate forecast, the government-sponsored enterprise said it expects 30-year fixed rates to end 2024 at 6.4%. So while rates will likely go down in 2024, the drop might not be as drastic as people were expecting at the end of last year.
The trajectory of future mortgage rates will largely depend on the Federal Reserve’s decision on whether or not to cut the federal funds rate at its meetings throughout the year. The federal funds rate doesn’t directly impact mortgage rates, but it is a good indicator of how the economy is doing overall. So when the Fed rate drops, mortgage rates typically go down, too.
Learn more: What the Fed rate decision means for bank accounts, CDs, loans, and credit cards