Mortgage Rates on the Rise: What You Need to Know
Current Mortgage Rates: A Mixed Bag
As of today, mortgage rates have taken a slight uptick. According to Zillow, the average 30-year fixed interest rate has increased by six basis points to 6.78%, while the 15-year fixed rate has risen by three basis points to 6.07%. This may come as a surprise, given the initial expectation that rates would decrease in 2025. However, various factors are currently keeping rates high.
The Jobs Report: A Key Influencer
Yesterday’s December jobs report from the U.S. Bureau of Labor Statistics revealed a significant increase in job creation, exceeding expectations. This data has led many economists to suspect that the Federal Reserve may not cut the federal funds rate at its January or March meetings. As a result, mortgage rates are likely to remain high for the time being.
To Buy or Not to Buy: Weighing Your Options
If you’re not in a rush to purchase a home, it might be wise to wait until late 2025 or early 2026 to start house hunting. However, if you’re eager to buy sooner rather than later, it’s essential to understand that mortgage rates won’t be plummeting anytime soon.
Understanding Mortgage Rates: It’s Complicated
Mortgage rates are influenced by a complex array of factors. To make informed decisions, it’s crucial to grasp the underlying dynamics. Here are the current mortgage rates, according to Zillow:
- 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: What You Need to Know
Mortgage refinance rates are often higher than rates for buying a house, although this isn’t always the case. Here are today’s mortgage refinance rates, according to Zillow:
- 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%
The Pros and Cons of 30-Year Fixed Mortgages
A 30-year fixed mortgage offers lower monthly payments and predictable payments. However, the main disadvantage is the higher mortgage interest, both in the short and long term.
The Pros and Cons of 15-Year Fixed Mortgages
In contrast, 15-year fixed mortgage rates come with lower interest rates and the potential to save hundreds of thousands of dollars in interest over the course of the loan. However, monthly payments will be higher due to the shorter repayment period.
Adjustable-Rate Mortgages: Weighing the Risks and Benefits
Adjustable-rate mortgages offer a lower introductory rate, but the risk of rate increases later on can be unpredictable. If you plan to move before the intro-rate period ends, you might reap the benefits of a low rate without risking a rate increase.
Is Now a Good Time to Buy a House?
Despite the current high mortgage rates, now might be a relatively good time to buy a house compared to the last couple of years. Home prices are no longer spiking, and competition tends to be less fierce during winter months. However, it’s essential to keep in mind that mortgage rates are expected to drop later this year, so it’s crucial to weigh your options carefully.
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