Mortgage Rates Dip Today, but Gradual Decline Expected in 2025

Mortgage rates saw a slight decrease across almost all terms today. Zillow reports that the 30-year fixed mortgage rate fell eight basis points to 6.64%, while the 15-year fixed rate dipped nine basis points to 6.03%.

While a gradual decline in mortgage interest rates is anticipated in 2025, waiting for a significant drop might not be the best strategy. If you’re financially prepared to purchase a home, don’t let minor rate fluctuations deter you. Remember, refinancing is always an option if rates fall substantially in the future.

Further Insights: 2025 Housing Market Outlook: Is it a Good Time to Buy?

Current Mortgage Rates

According to the latest Zillow data, today’s national average mortgage rates are:

• 30-Year Fixed: 6.64%
• 20-Year Fixed: 6.48%
• 15-Year Fixed: 6.03%
• 5/1 ARM: 6.71%
• 7/1 ARM: 6.57%
• 30-Year VA: 6.08%
• 15-Year VA: 5.63%
• 5/1 VA: 6.27%

These rates are national averages rounded to the nearest hundredth and may vary based on location and individual financial circumstances.

Learn More: Strategies to Secure the Lowest Mortgage Rates

Current Mortgage Refinance Rates

Zillow’s latest data shows the following national average mortgage refinance rates:

• 30-Year Fixed: 6.67%
• 20-Year Fixed: 6.54%
• 15-Year Fixed: 6.05%
• 5/1 ARM: 5.89%
• 7/1 ARM: 6.47%
• 30-Year VA: 6.11%
• 15-Year VA: 5.99%
• 5/1 VA: 6.50%

These are national averages rounded to the nearest hundredth. Refinance rates typically exceed purchase rates.

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Utilizing the Yahoo Finance Mortgage Calculator

The Yahoo Finance mortgage calculator is a valuable tool for estimating monthly payments based on various mortgage terms and interest rates. It incorporates property taxes and homeowners insurance, providing a comprehensive overview of potential housing costs.

Comparing 30-Year and 15-Year Fixed Mortgage Rates

15-year mortgage rates are generally lower than 30-year rates. While a shorter term (15-year) leads to long-term interest savings, monthly payments are higher due to the accelerated repayment schedule.

For instance, a $400,000 mortgage with a 30-year term and a 6.64% interest rate results in a monthly payment of approximately $2,565 (principal and interest). Over the loan’s life, you’d pay roughly $523,476 in interest.

Conversely, a $400,000 15-year mortgage at 6.03% necessitates a higher monthly payment of around $3,382 (principal and interest). However, total interest paid would be significantly lower, at approximately $208,744.

If the higher 15-year payment is unaffordable, consider making extra payments on a 30-year mortgage to accelerate repayment and reduce overall interest costs.

Fixed-Rate vs. Adjustable-Rate Mortgages (ARMs)

A fixed-rate mortgage locks in your interest rate for the loan’s duration, providing payment stability. An adjustable-rate mortgage (ARM) offers an initial fixed rate for a set period (e.g., 7 years for a 7/1 ARM), after which the rate fluctuates based on market conditions.

While ARMs may initially offer lower rates, they carry the risk of rising rates after the fixed-rate period expires. Recently, ARM rates have often started higher than fixed rates, diminishing their appeal.

Further Analysis: Choosing Between Adjustable-Rate and Fixed-Rate Mortgages

Forecasting Future Mortgage Rate Trends

Mortgage rates generally declined from early August until the Federal Reserve’s September 18th meeting, where a 50-basis-point reduction in the federal funds rate was announced. Subsequently, rates have largely plateaued or increased, with occasional dips like today’s.

The Federal Reserve implemented further rate cuts in November and December (25 basis points each). Future mortgage rate movements hinge on the Fed’s decisions regarding the federal funds rate in 2025. Current expectations point towards two potential rate cuts next year.

Anticipating a Fed rate cut often leads to mortgage rate decreases before the actual meeting. With the next Fed meeting weeks away, the CME FedWatch tool suggests a likely hold on rates in January, implying minimal rate movement before January 29th.

In-Depth Look: The Federal Reserve’s Impact on Mortgage Rates

Frequently Asked Questions About Today’s Mortgage Rates

What is the Current 30-Year Fixed Mortgage Rate?

Zillow data indicates a 6.64% 30-year fixed rate and a 6.67% 30-year refinance rate. These are national averages; regional and individual rates may differ.

Are Mortgage Rates Expected to Decline?

A gradual decline in mortgage rates is projected for 2025, but a dramatic drop is unlikely.

Will Mortgage Rates Decrease in 2025?

While a decrease is anticipated, it may not be as substantial as previously predicted. The Federal Reserve’s indication of two potential rate cuts suggests relatively modest changes.