Our experts answer readers’ home-buying questions and write unbiased product reviews (here’s how we assess mortgages). In some cases, we receive a commission from our partners; however, our opinions are our own.
Mortgage rates jumped up last week following the release of some hotter-than-expected inflation data. Because the economy is still so strong, it’s possible that the Federal Reserve could keep the federal funds rate higher for longer, which would likely keep mortgage rates elevated as well.
Currently, average 30-year mortgage rates are around 30 basis points up from January’s average, according to Zillow data.
Mortgage rates are expected to go down this year, but they likely won’t start falling until we get more data showing that inflation is continuing to slow. Once it looks clearer that inflation is coming down to the Fed’s 2% target, mortgage rates should ease.
Mortgage rates don’t directly follow the federal funds rate, but they’re often pushed up or down based on how investors expect Fed moves to impact the broader economy.
In a speech given at the National Association for Business Economics last Friday, San Francisco Fed President Mary Daly said that while the Fed has made a lot of progress in bringing inflation down, it needs “more time and data” to be sure that price growth will continue to slow.
“We will need to resist the temptation to act quickly when patience is needed and be prepared to respond agilely as the economy evolves,” Daly said.
Last week, the Consumer Price Index and the Producer Price Index, two popular measures of inflation, both came in hotter than forecasts expected. Markets took this as a sign that we may need to wait longer for the Fed to start cutting rates, and mortgage rates trended up as a result.
At the moment, investors believe the Fed might start cutting rates at its June meeting, according to the CME FedWatch Tool. But whether this happens depends on the path inflation takes over the next few months.
Mortgage Rates Today
|Average rate today
Mortgage Refinance Rates Today
|Average rate today
Use our free mortgage calculator to see how today’s interest rates will affect your monthly payments.
$1,161 Your estimated monthly payment
- Paying a 25% higher down payment would save you $8,916.08 on interest charges
- Lowering the interest rate by 1% would save you $51,562.03
- Paying an additional $500 each month would reduce the loan length by 146 months
By clicking on “More details,” you’ll also see how much you’ll pay over the entire length of your mortgage, including how much goes toward the principal vs. interest.
30-Year Fixed Mortgage Rates
This week’s average 30-year fixed mortgage rate is 6.77%, according to Freddie Mac. This is a 13-basis-point increase from the previous week.
The 30-year fixed-rate mortgage is the most common type of home loan. With this type of mortgage, you’ll pay back what you borrowed over 30 years, and your interest rate won’t change for the life of the loan.
The lengthy 30-year term allows you to spread out your payments over a long period of time, meaning you can keep your monthly payments lower and more manageable. The trade-off is that you’ll have a higher rate than you would with shorter terms or adjustable rates.
15-Year Fixed Mortgage Rates
Average 15-year mortgage rates inched down to 6.12% last week, according to Freddie Mac data. This is a 22-point increase since the week before.
If you want the predictability that comes with a fixed rate but are looking to spend less on interest over the life of your loan, a 15-year fixed-rate mortgage might be a good fit for you. Because these terms are shorter and have lower rates than 30-year fixed-rate mortgages, you could potentially save tens of thousands of dollars in interest. However, you’ll have a higher monthly payment than you would with a longer term.
How Do Fed Rate Hikes Affect Mortgages?
The Federal Reserve has increased the federal funds rate dramatically to try to slow economic growth and get inflation under control. So far, inflation has slowed significantly, but it’s still a bit above the Fed’s 2% target rate.
Mortgage rates aren’t directly impacted by changes to the federal funds rate, but they often trend up or down ahead of Fed policy moves. This is because mortgage rates change based on investor demand for mortgage-backed securities, and this demand is often impacted by how investors expect Fed hikes to affect the broader economy.
The Fed has indicated that it’s likely done hiking rates and that it could start cutting soon. This will likely allow mortgage rates to trend down later this year.
When Will Mortgage Rates Go Down?
Mortgage rates increased dramatically over the last two years, but they’ve been falling in recent months, and are expected to drop further this year.
In January 2024, the Consumer Price Index rose 3.1% year-over-year. Inflation has slowed significantly since it peaked last year, which is good news for mortgage rates.
For homeowners looking to leverage their home’s value to cover a big purchase — such as a home renovation — a home equity line of credit (HELOC) may be a good option while we wait for mortgage rates to ease. Check out some of our best HELOC lenders to start your search for the right loan for you.
A HELOC is a line of credit that lets you borrow against the equity in your home. It works similarly to a credit card in that you borrow what you need rather than getting the full amount you’re borrowing in a lump sum. It also lets you tap into the money you have in your home without replacing your entire mortgage, like you’d do with a cash-out refinance.
Current HELOC rates are relatively low compared to other loan options, including credit cards and personal loans.