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.
It’s been a frightening month for mortgage rates. Average 30-year mortgage rates reached 23-year highs in October, and they remain elevated today. But rates could finally start trending down in the coming months.
On Wednesday, the Federal Reserve will wrap up its latest meeting and announce whether or not it will raise the federal funds rate again. Markets overwhelmingly expect the Fed to keep rates steady, according to the CME FedWatch Tool.
As inflation comes down and the Fed is able to stop hiking rates, mortgage rates should start to recede. In their latest forecast, Fannie Mae researchers predicted that rates will drop to 6.7% by the end of 2024 — around a full percentage point lower compared to where they’re currently at.
Mortgage Rates Today
Mortgage Refinance Rates Today
Mortgage Calculator
Use our free mortgage calculator to see how today’s interest rates will affect your monthly payments.
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
Last week’s average 30-year fixed mortgage rate was 7.79%, according to Freddie Mac. This is a 16-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 were 7.03% last week, according to Freddie Mac data. This rate is up 11 points from the prior week.
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, but it’s still 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.
As inflation starts to come down, mortgage rates should, too. But the Fed has indicated that it’s waiting for inflation to come down further, which means that more rate hikes could be coming this year.
When Will Mortgage Rates Go Down?
Mortgage rates increased dramatically in 2022 and have been volatile so far in 2023, but they’re expected to trend down later this year.
In September 2023, the Consumer Price Index rose 3.7% year-over-year. Inflation has slowed significantly since it peaked last year, which is good news for mortgage rates. But we’ll likely need to see a bit more slowing before rates fall substantially.
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.
