National mortgage rates moved higher for all loan terms compared to a week ago, according to data compiled by Bankrate. Rates for 30-year fixed, 15-year fixed, 5/1 ARMs and jumbo loans increased.
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 as of January 8, 2024.
The rates listed above are averages based on the assumptions here. Actual rates available across the site may vary. This story has been reviewed by Suzanne De Vita. All rate data accurate as of Monday, January 8th, 2024 at 7:30 a.m.
Today’s 30-year mortgage rate moves higher, +0.08%
The average rate for a 30-year fixed mortgage for today is 7.07 percent, an increase of 8 basis points over the last seven days. A month ago, the average rate on a 30-year fixed mortgage was higher, at 7.32 percent.
At the current average rate, you’ll pay principal and interest of $670.01 for every $100,000 you borrow. That’s $5.38 higher compared with last week.
Most mortgage lenders defer to the 30-year, fixed-rate mortgage as the go-to for most borrowers because it allows the borrower to disperse payments out over 30 years, keeping their monthly payment lower.
15-year mortgage rate moves higher, +0.15%
The average rate for a 15-year fixed mortgage is 6.46 percent, up 15 basis points over the last week.
Monthly payments on a 15-year fixed mortgage at that rate will cost around $869 per $100,000 borrowed. Yes, that payment is much bigger than it would be on a 30-year mortgage, but it comes with some big advantages: You’ll save thousands of dollars over the life of the loan in total interest paid and build equity much more rapidly.
5/1 ARM rate moves up, +0.01%
The average rate on a 5/1 adjustable rate mortgage is 6.41 percent, ticking up 1 basis point over the last 7 days.
Adjustable-rate mortgages, or ARMs, are mortgage terms that come with a floating interest rate. To put it another way, the interest rate will change at regular intervals, unlike fixed-rate mortgages. These loan types are best for people 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 6.41 percent would cost about $626 for each $100,000 borrowed over the initial five years, but could climb hundreds of dollars higher afterward, depending on the loan’s terms.
Jumbo mortgage rate increases, +0.08%
The average rate you’ll pay for a jumbo mortgage is 7.13 percent, up 8 basis points over the last seven days. This time a month ago, the average rate on a jumbo mortgage was above that, at 7.39 percent.
At the current average rate, you’ll pay $674.06 per month in principal and interest for every $100,000 you borrow. That’s an additional $5.40 per $100,000 compared to last week.
Refinance rates
30-year fixed-rate refinance moves upward, +0.08%
The average 30-year fixed-refinance rate is 7.21 percent, up 8 basis points over the last week. A month ago, the average rate on a 30-year fixed refinance was higher, at 7.46 percent.
At the current average rate, you’ll pay $679.47 per month in principal and interest for every $100,000 you borrow. That’s $5.41 higher compared with last week.
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. Mortgage rates plummeted as a result and remain under 7 percent 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. As a borrower, you could be quoted a higher or lower rate compared to the trend.
What today’s rates mean for 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.
To help you uncover the best deal, get 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