Mortgage Rates on the Rise: What It Means for Homebuyers
Rates Continue to Climb
Mortgage interest rates have seen a significant increase, with the 30-year fixed mortgage rate rising by 11 basis points to 6.78% and the 15-year fixed rate increasing by seven basis points to 6.07%. This upward trend is expected to continue, driven in part by speculation that Trump’s tariff policies may push inflation upwards this year.
The Impact on Homebuyers
If you’re waiting for lower rates to buy a house, it may be worth reconsidering. With rates likely to remain high throughout 2025, now could be a good time to start house hunting. However, it’s essential to understand how mortgage rates are determined and how they can affect your monthly payments.
Current Mortgage Rates
According to the latest Zillow data, the current mortgage rates are:
- 30-year fixed: 6.78%
- 20-year fixed: 6.55%
- 15-year fixed: 6.07%
- 5/1 ARM: 7.16%
- 7/1 ARM: 7.08%
- 30-year VA: 6.20%
- 15-year VA: 5.68%
- 5/1 VA: 6.36%
Mortgage Refinance Rates
The current mortgage refinance rates are:
- 30-year fixed: 6.84%
- 20-year fixed: 6.66%
- 15-year fixed: 6.15%
- 5/1 ARM: 7.50%
- 7/1 ARM: 7.44%
- 30-year VA: 6.13%
- 15-year VA: 5.86%
- 5/1 VA: 6.05%
Understanding Your Options
When deciding on a mortgage, it’s crucial to consider the pros and cons of different term lengths and interest rates. A 30-year mortgage may offer lower monthly payments, but you’ll pay more in interest over the life of the loan. A 15-year mortgage, on the other hand, comes with a lower interest rate, but higher monthly payments.
Adjustable-Rate Mortgages
Adjustable-rate mortgages (ARMs) offer a lower initial rate, but the risk of increased rates later on. However, if you plan to sell the home before the rate-lock period ends, an ARM could be a good fit.
Shopping for the Best Rates
To get the lowest mortgage rates, shop around for the best lenders and rates. Consider factors like down payments, credit scores, and debt-to-income ratios, as these can affect the rates you’re offered. You can also buy down your interest rate permanently by paying for discount points at closing.
Staying Informed
Keep an eye on inflation and the latest inflation report to stay ahead of interest rate changes. The Federal Reserve’s decisions on federal funds rates can also impact mortgage rates. By understanding these factors, you’ll be better equipped to make informed decisions when buying or refinancing a home.
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