Mortgage Rates on the Rise: What You Need to Know
As of late, mortgage rates have been trending upward, with the average 30-year fixed mortgage rate increasing by four basis points to 6.68%. This rise is despite the Federal Reserve’s recent decision to cut the federal funds rate by 25 basis points. So, what’s driving this trend?
The Factors Influencing Mortgage Rates
Mortgage rates are not directly controlled by the central bank and are instead influenced by a variety of factors, including concerns over inflation and the potential impact of President-elect Donald Trump’s proposed policies on the economy. These uncertainties have kept mortgage rates inflated.
Current Mortgage Rates
According to the latest Zillow data, here are the current mortgage rates:
- 30-year fixed: 6.68%
- 20-year fixed: 6.68%
- 15-year fixed: 6.05%
- 5/1 ARM: 6.80%
- 7/1 ARM: 6.80%
- 30-year VA: 6.12%
- 15-year VA: 5.63%
- 5/1 VA: 6.34%
Refinance Mortgage Rates
If you’re considering refinancing, here are the current rates:
- 30-year fixed: 6.72%
- 20-year fixed: 6.51%
- 15-year fixed: 6.06%
- 5/1 ARM: 5.99%
- 7/1 ARM: 6.64%
- 30-year VA: 6.05%
- 15-year VA: 5.85%
- 5/1 VA: 5.79%
Understanding the Pros and Cons of Different Mortgage Options
When choosing a mortgage, it’s essential to weigh the pros and cons of each option. For example, a 30-year fixed mortgage offers lower monthly payments and predictable payments, but you’ll pay more in interest over the life of the loan. On the other hand, a 15-year fixed mortgage comes with lower interest rates, but higher monthly payments.
Adjustable-Rate Mortgages: Weighing the Risks and Benefits
Adjustable-rate mortgages (ARMs) offer a lower introductory rate, but the rate can increase or decrease periodically. While this can be beneficial if you plan to move before the intro-rate period ends, it also means your monthly payments are unpredictable from year to year.
What’s Ahead for Mortgage Rates?
As the country awaits the impact of President-elect Donald Trump’s presidency on the economy, it’s unclear how significantly mortgage rates will drop next year. However, with a few exceptions, mortgage rates have been increasing over the past week despite the Fed’s move to cut the federal funds rate.
Tips for Securing a Low Mortgage Rate
To secure a low mortgage rate, focus on improving your credit score and lowering your debt-to-income ratio (DTI). Refinancing into a shorter term can also land you a lower rate, although your monthly mortgage payments will be higher.
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