Mortgage Rates Take a Dip: Is Now the Time to Buy or Refinance?
After weeks of steady increases, mortgage interest rates have finally dropped, offering a glimmer of hope for prospective homebuyers and those looking to refinance. According to the latest data from Freddie Mac, the national average 30-year fixed rate has decreased by eight basis points to 6.96%, while the 15-year fixed rate has dropped by 11 basis points to 6.16%.
Rates Still Below 50-Year Average
While these rates may seem high compared to recent years, it’s essential to remember that they’re still below the 50-year average. If you’ve found your dream home, it might be wise to take advantage of these rates before they potentially increase in the coming weeks.
Current Mortgage Rates
Here are the latest mortgage rates, based on Zillow data:
- 30-year fixed: 6.72%
- 20-year fixed: 6.44%
- 15-year fixed: 5.98%
- 5/1 ARM: 6.65%
- 7/1 ARM: 6.61%
- 30-year VA: 6.18%
- 15-year VA: 5.57%
- 5/1 VA: 6.08%
- 30-year FHA: 6.29%
Refinance Rates Also Drop
If you’re considering refinancing your mortgage, now might be a good time to explore your options. According to Zillow data, refinance rates have also decreased:
- 30-year fixed: 6.73%
- 20-year fixed: 6.21%
- 15-year fixed: 6.03%
- 5/1 ARM: 6.63%
- 7/1 ARM: 6.40%
- 30-year VA: 6.13%
- 15-year VA: 5.85%
- 5/1 VA: 6.05%
Understanding Mortgage Rates
A mortgage interest rate is a fee for borrowing money from your lender, expressed as a percentage. You can choose from two types of rates: fixed or adjustable. A fixed-rate mortgage locks in your rate for the entire life of your loan, while an adjustable-rate mortgage locks in your rate for a predetermined amount of time and then changes it periodically.
Fixed-Rate vs. Adjustable-Rate Mortgages
A 30-year fixed-rate mortgage is a good choice if you want a lower mortgage payment and the predictability that comes with having a fixed rate. However, you’ll pay more in interest over the years. A 15-year fixed-rate mortgage can help you save money on interest, but you’ll need to be prepared for higher monthly payments.
Adjustable-Rate Mortgages: Worth Considering?
An adjustable-rate mortgage could be a good option if you plan to sell before the introductory rate period ends. However, with 5/1 and 7/1 ARM rates similar to 30-year fixed rates, it’s essential to compare your rate options carefully.
What’s Ahead for Mortgage Rates?
While mortgage rates have decreased this week, they’re still expected to rise overall. According to Freddie Mac data, the 30-year fixed rate is 27 basis points higher than this time last year, and the 15-year rate is up 20 basis points. However, some experts predict that rates will decrease throughout 2025, although the extent of the drop is uncertain.
Stay Informed About Mortgage Rates
To make informed decisions about buying or refinancing a home, it’s crucial to stay up-to-date on mortgage rates and their impact on the economy. By understanding how inflation, the Federal Reserve, and the 10-year Treasury note affect mortgage rates, you’ll be better prepared to navigate the complex world of home financing.
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