National mortgage rates trended lower across all terms compared to a week ago, according to data collected by Bankrate. Rates for 30-year fixed, 15-year fixed, 5/1 ARMs and jumbo loans all declined.
After topping 8 percent in late October, mortgage rates have somewhat moved lower. One big driver: Inflation has cooled, which means the Federal Reserve might end its rate increases. The Fed last hiked its key interest rate in July, which increased borrowing costs on a variety of financial products, including mortgages.
The central bank held firm at its November meeting, indicating it expects rates to stay on the higher side for the foreseeable future.
“Expectations of slower economic growth, moderating inflation and no more Fed interest rate hikes have been a downward influence on mortgage rates,” says Greg McBride, CFA, chief financial analyst for Bankrate.
The slight decline in mortgage rates comes alongside appreciating home prices. Home values have now climbed for eight months in a row, according to the S&P CoreLogic Case-Shiller index for September 2023.
Rates accurate as of December 13, 2023.
The rates listed above are averages based on the assumptions indicated here. Actual rates available across the site may vary. This story has been reviewed by Suzanne De Vita. All rate data accurate as of Wednesday, December 13th, 2023 at 7:30 a.m.
30-year mortgage rate retreats, -0.12%
The average rate for a 30-year fixed mortgage for today is 7.31 percent, a decrease of 12 basis points over the last seven days. A month ago, the average rate on a 30-year fixed mortgage was higher, at 7.75 percent.
At the current average rate, you’ll pay $686.25 per month in principal and interest for every $100,000 you borrow. That’s $8.18 lower, compared with last week.
Standard lending practices defer to the 30-year, fixed-rate mortgage as the go-to for most borrowers buying a home as it allows the borrower to scatter payments out over 30 years, keeping their monthly payment lower.
15-year fixed mortgage rate drops, -0.03%
The average rate for the benchmark 15-year fixed mortgage is 6.70 percent, down 3 basis points over the last seven days.
Monthly payments on a 15-year fixed mortgage at that rate will cost $882 per $100,000 borrowed. That’s clearly much higher than the monthly payment would be on a 30-year mortgage at that rate, 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 rate slides, -0.07%
The average rate on a 5/1 ARM is 6.66 percent, down 7 basis points over the last week.
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 types of loans are best for those who expect to refinance or sell before the first or second adjustment. Rates could be substantially 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 6.66 percent would cost about $643 for each $100,000 borrowed over the initial five years, but could ratchet higher by hundreds of dollars afterward, depending on the loan’s terms.
Jumbo mortgage declines, -0.11%
The average rate for the benchmark jumbo mortgage is 7.37 percent, down 11 basis points over the last seven days. A month ago, the average rate for jumbo mortgages was higher, at 7.77 percent.
At the current average rate, you’ll pay $690.33 per month in principal and interest for every $100,000 you borrow. That’s $7.52 lower, compared with last week.
Refinance rates
30-year mortgage refinance drops, –0.12%
The average 30-year fixed-refinance rate is 7.45 percent, down 12 basis points over the last seven days. A month ago, the average rate on a 30-year fixed refinance was higher, at 7.95 percent.
At the current average rate, you’ll pay $695.79 per month in principal and interest for every $100,000 you borrow. That’s $8.22 lower, compared with last week.
Where are mortgage rates going?
Mortgage rates have done a 180 as of late, dipping back under 8 percent. With inflation cooling and 10-year Treasury yields declining, the 30-year fixed mortgage could head into the 6 percent range by next year, said Lawrence Yun, chief economist of the National Association of Realtors, at the group’s conference in November.
“I believe we’ve already reached the peak in terms of interest rates,” said Yun.
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 you and your mortgage
While mortgage rates move up and down on a daily basis,, there is some consensus that we won’t see rates back at 3 percent for some time. 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.
You could save serious money on interest 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.
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Source: bankrate.com