National mortgage rates were mostly higher versus last week, according to rate data compiled by Bankrate. Rates for 30-year fixed, 15-year fixed and jumbo mortgages moved higher, while 5/1 ARM rates stayed flat.
Mortgage rates could gradually come down this year, according to Greg McBride, CFA, Bankrate chief financial analyst. Rates began falling in the latter part of 2023 as inflation cooled and the Federal Reserve opted not to raise rates further. The central bank now expects to cut rates in 2024 — a reversal that would touch all corners of the economy, including on the 10-year Treasury, the main driver of fixed mortgage rates.
“The 10-year Treasury yield that serves as a baseline for fixed mortgage rates will have a bouncy journey lower, moving back above 4 percent early in 2024 but trending lower as inflation cools and the Fed gets closer to cutting rates,” says McBride. “For mortgage rates, that portends a general downtrend — albeit with fits and starts — in 2024.”
Rates last updated January 5, 2024.
These rates are marketplace averages based on the assumptions here. Actual rates listed on-site may vary. This story has been reviewed by Suzanne De Vita. All rate data accurate as of Friday, January 5th, 2024 at 7:30 a.m.
30-year mortgage increases, +0.14%
The average rate for a 30-year fixed mortgage for today is 7.09 percent, an increase of 14 basis points since the same time last week. A month ago, the average rate on a 30-year fixed mortgage was higher, at 7.45 percent.
At the current average rate, you’ll pay a combined $671.36 per month in principal and interest for every $100,000 you borrow. That’s up $9.41 from what it would have been last week.
The 30-year mortgage is the most popular home loan, and it has a number of advantages. Among them:
- Lower monthly payment: Compared to a shorter term, such as 15 years, the 30-year mortgage offers lower, more affordable payments spread over time.
- Stability: With a 30-year fixed mortgage, you lock in a set principal and interest payment, making it easier to plan your housing expenses for the long term. Keep in mind: Your monthly housing payment can still change if your homeowners insurance premiums and property taxes go up or, less likely, down.
- Buying power: With lower payments, you might qualify for a larger loan amountor a more expensive home.
- Flexibility: Lower monthly payments can free up some of your monthly budget for other goals, like building an emergency fund, contributing to retirement or college tuition, or saving for home repairs and maintenance.
Read more: What is a fixed-rate mortgage and how does it work?
15-year mortgage rate advances, +0.12%
The average 15-year fixed-mortgage rate is 6.47 percent, up 12 basis points over the last week.
Monthly payments on a 15-year fixed mortgage at that rate will cost approximately $869 per $100,000 borrowed. The bigger payment may be a little harder to find room for in your monthly budget than a 30-year mortgage payment, but it comes with some big advantages: You’ll come out several thousand dollars ahead over the life of the loan in total interest paid and build equity much faster.
5/1 ARM goes unchanged
The average rate on a 5/1 ARM is 6.40 percent, unchanged over the last 7 days.
Adjustable-rate mortgages, or ARMs, are home loans that come with a floating interest rate. In other words, the interest rate will change at regular intervals, unlike fixed-rate mortgages. These loan types are best for those who expect to sell or refinance before the first or second adjustment. Rates could be considerably higher when the loan first adjusts, and thereafter.
While borrowers shunned ARMs during the pandemic days of super-low rates, this type of loan has made a comeback as mortgage rates have risen.
Monthly payments on a 5/1 ARM at 6.40 percent would cost about $626 for each $100,000 borrowed over the initial five years, but could increase by hundreds of dollars afterward, depending on the loan’s terms.
Current jumbo mortgage rate moves higher, +0.14%
The average jumbo mortgage rate is 7.14 percent, an increase of 14 basis points since the same time last week. This time a month ago, jumbo mortgages’ average rate was above that, at 7.53 percent.
At the average rate today for a jumbo loan, you’ll pay a combined $674.73 per month in principal and interest for every $100,000 you borrow. That’s an increase of $9.43 over what you would have paid last week.
Mortgage refinance rates
30-year mortgage refinance rate increases, +0.14%
The average 30-year fixed-refinance rate is 7.23 percent, up 14 basis points compared with a week ago. A month ago, the average rate on a 30-year fixed refinance was higher, at 7.57 percent.
At the current average rate, you’ll pay $680.82 per month in principal and interest for every $100,000 you borrow. Compared with last week, that’s $9.46 higher.
Where are mortgage rates going?
At its December meeting, the Federal Reserve signaled it was done raising interest rates and would begin cuts in 2024. In response, mortgage rates dropped to under 7 percent, and remain there as of early January.
This dynamic could hold throughout the year, says McBride.
“Mortgage rates will spend the bulk of the year in the 6s, with movement below 6 percent confined to the back half of the year,” says McBride.
The rates on 30-year mortgages mostly follow the 10-year treasury, which shifts continuously as economic conditions dictate, while the cost of variable-rate home loans mirror the Fed’s moves. These broader factors influence overall rate movement. Your rate might be higher or lower than what trends show, depending on your credit score and other factors.
What today’s rates mean for you and your mortgage
While mortgage rates are notoriously volatile, there is some consensus that we won’t see rates back at 3 percent. If you’re shopping for a mortgage now, it might be wise to lock your rate when you find an affordable loan. If your house-hunt is taking longer than anticipated, revisit your budget so you’ll know exactly how much house you can afford at prevailing market rates.
Keep in mind: You could save thousands over the life of your mortgage by getting at least three loan offers, according to Freddie Mac research. You don’t have to stick with your bank or credit union, either. There are many types of mortgage lenders, including online-only and local, smaller shops.
“All too often, some [homebuyers] take the path of least resistance when seeking a mortgage, in part because the process of buying a home can be stressful, complicated and time-consuming,” says Mark Hamrick, senior economic analyst for Bankrate. “But when we’re talking about the potential of saving a lot of money, seeking the best deal on a mortgage has an excellent return on investment. Why leave that money on the table when all it takes is a bit more effort to shop around for the best rate, or lowest cost, on a mortgage?”
More on current mortgage rates
Methodology
Bankrate displays two sets of rate averages that are produced from two surveys we conduct: one daily (“overnight averages”) and the other weekly (“Bankrate Monitor averages”).
The rates on this page represent our overnight averages. For these averages, APRs and rates are based on no existing relationship or automatic payments.
Learn more about Bankrate’s rate averages, editorial guidelines and how we make money.
Source: bankrate.com