Mortgage Rates on the Rise: What You Need to Know
After a brief decline, mortgage rates are once again on the upswing. According to recent data from Zillow, the 30-year fixed mortgage rate has increased by 5 basis points to 6.73%, while the 15-year fixed rate has risen by 9 basis points to 6.14%. This trend is likely to continue in the near future.
The Federal Reserve’s Impact on Mortgage Rates
At its latest meeting, the Federal Reserve announced plans to cut the federal funds rate only twice in 2025, down from the previously predicted four cuts. This decision will likely keep mortgage rates elevated for the foreseeable future.
Current Mortgage Rates
Here are the current mortgage rates, based on the latest Zillow data:
- 30-year fixed: 6.73%
- 20-year fixed: 6.78%
- 15-year fixed: 6.14%
- 5/1 ARM: 6.81%
- 7/1 ARM: 6.75%
- 30-year VA: 6.19%
- 15-year VA: 5.57%
- 5/1 VA: 6.38%
Refinance Mortgage Rates
Here are today’s mortgage refinance interest rates, according to the latest Zillow data:
- 30-year fixed: 6.86%
- 20-year fixed: 6.58%
- 15-year fixed: 6.07%
- 5/1 ARM: 6.14%
- 7/1 ARM: 6.64%
- 30-year VA: 6.19%
- 15-year VA: 5.96%
- 5/1 VA: 5.79%
Understanding Mortgage Rates
A mortgage interest rate is a fee for borrowing money from your lender, expressed as a percentage. There are two basic types of mortgage rates: fixed and adjustable rates. Fixed-rate mortgages lock in your rate for the entire life of your loan, while adjustable-rate mortgages keep your rate the same for the first few years before changing it periodically.
Factors Affecting Mortgage Rates
Mortgage rates are influenced by two categories of factors: those you can control and those you cannot control. You can control factors such as your credit score, debt-to-income ratio, and down payment, which can affect the rate you’re offered by lenders. On the other hand, economic factors such as employment rates and inflation are beyond your control and can impact mortgage rates.
Choosing the Right Mortgage Term
Two of the most common mortgage terms are 30-year and 15-year fixed-rate mortgages. A 30-year mortgage offers relatively low monthly payments but comes with a higher interest rate and more interest paid over the life of the loan. A 15-year mortgage, on the other hand, has a lower rate and less interest paid over time, but higher monthly payments.
Shopping for the Best Rate
It’s essential to shop around for the best mortgage rate, considering not only banks but also credit unions and companies specializing in mortgage lending. According to 2023 Home Mortgage Disclosure Act (HMDA) data, some of the banks with the lowest median mortgage rates are Citibank, Wells Fargo, and USAA.
Refinancing Your Mortgage
Refinancing your mortgage can be a great way to lock in a lower rate and save money on interest. However, it’s crucial to consider your financial goals and break-even point before refinancing. With current refinance mortgage rates at 6.28% for a 30-year term, it may be worth exploring your options.
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