Mortgage Rates Take a Dip: What It Means for Homebuyers
Rates Drop Across the Board
Mortgage rates have decreased across the board, with the 30-year fixed mortgage rate dropping by eight basis points to 6.64%, and the 15-year fixed rate falling by nine basis points to 6.03%. While rates are expected to continue their downward trend in 2025, the decreases will likely be gradual.
Don’t Wait for Lower Rates
If you’re financially ready to buy a home, it may not be worth holding out for lower rates. You can always refinance your mortgage later when rates are lower. Remember, national averages are just that – averages. Your rate will vary depending on your personal finances and location.
Current Mortgage Rates
Here are the current mortgage rates, according to the latest data:
- 30-year fixed: 6.64%
- 20-year fixed: 6.48%
- 15-year fixed: 6.03%
- 5/1 ARM: 6.71%
- 7/1 ARM: 6.57%
- 30-year VA: 6.08%
- 15-year VA: 5.63%
- 5/1 VA: 6.27%
Refinance Rates Also Drop
Refinance rates have also decreased, with the 30-year fixed refinance rate falling to 6.67%. Refinance rates are usually higher than purchase rates, but refinancing could still land you a lower rate.
Understanding Mortgage Terms
A mortgage calculator can help you see how various mortgage term lengths and interest rates will affect your monthly payments. Remember, 15-year mortgage rates are typically lower than 30-year rates, but your monthly payments will be higher because you’re paying off the same loan amount in half the time.
Fixed-Rate vs. Adjustable-Rate Mortgages
With a fixed-rate mortgage, your rate is locked in from day one. An adjustable-rate mortgage, on the other hand, keeps your rate the same for a set period of time before changing based on economic factors.
The Federal Reserve’s Impact
The Federal Reserve’s decision on whether or not to cut the federal funds rate will largely determine the trajectory of future mortgage rates. Currently, it’s expected the Fed will cut its target rate twice next year, which could lead to gradual decreases in mortgage rates.
What’s Ahead for Mortgage Rates
Mortgage rates will likely continue their downward trend in 2025, but the decreases will probably be small. By watching inflation and the Federal Reserve’s decisions, you’ll be better prepared for where interest rates are headed.
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