Will interest rates continue to rise until 2025?

After a few straight weeks of decline, mortgage rates are on the rise. According to Freddie Mac, 30-year fixed rate mortgage It rose by 13 basis points weekly to 6.85%The 15-year fixed interest rate rose by eight basis points to 6.00%.

Mortgage rates are likely to remain high for the foreseeable future. At last week’s Fed meeting, Fed Chairman Jerome Powell announced The central bank plans to cut the federal funds rate just twice in 2025 – down from the four expected cuts mentioned at the September meeting. This means that mortgage rates will have to remain relatively high for a period of time.

Dig deeper: How does the Fed’s interest rate decision affect mortgage rates?

Here are the current mortgage rates, according to the latest Zillow data:

• 30 years fixed: 6.73%

• 20 years fixed: 6.78%

• 15 years fixed: 6.14%

• 1/5 arm: 6.81%

• 7/1 arm: 6.75%

• 30 years fa: 6.19%

• 15 years fa: 5.57%

• 1/5 volt: 6.38%

Remember, these are national averages and are rounded to the nearest hundredth.

Learn more: 5 Strategies to Get the Lowest Mortgage Rates

Here are today’s mortgage refinancing interest rates, according to the latest Zillow data:

• 30 years fixed: 6.86%

• 20 years fixed: 6.58%

• 15 years fixed: 6.07%

• 1/5 arm: 6.14%

• 7/1 arm: 6.64%

• 30 years fa: 6.19%

• 15 years fa: 5.96%

• 1/5 volt: 5.79%

As with purchase mortgage rates, these are national averages that we have rounded to the nearest hundredth. Refinancing rates can be higher than purchase mortgage rates, but as you can see above, that’s not always the case.

Yahoo Finance has it for free Mortgage payment calculator To help you see how different mortgage rates will affect your monthly payments.

Our calculator goes deeper by including factors like homeowners insurance and property taxes in your calculation. You can also add the costs of private mortgage insurance and HOA dues if they apply to you. These monthly expenses, plus your mortgage principal and interest rate, will give you a realistic idea of ​​what your monthly payment could be.

A Mortgage interest rate This is the fee for borrowing money from your lender, expressed as a percentage. There are two basic types of mortgage rates: fixed and adjustable rates.

A Fixed interest rate mortgage Lock in your rate for the life of your loan. For example, if you get a 30-year mortgage with a 6% interest rate, your interest rate will remain at 6% for the entire 30 years. (Unless you refinance or sell the house.)

that Adjustable rate mortgage You keep your rate the same for the first few years, then change it periodically. Let’s say you get a 5/1 ARM with an introductory rate of 6%. Your rate will be 6% for the first five years and then the rate increases or decreases once a year for the last 25 years of your term. Whether your interest rate rises or falls depends on several factors, such as the economy and the U.S. housing market.

At the beginning of your mortgage term, most of your monthly payment goes toward interest. Over time, less of your payment goes toward interest, and more goes toward the mortgage principal, or the amount you originally borrowed.

Dig deeper: Adjustable Rate Mortgage vs. Fixed Rate Mortgage – Which Should You Choose?

Two categories Determine mortgage rates: Those you can control and those you can’t.

What factors can you control? First, you can compare Best Mortgage Lenders To find the one that gives you the lowest rates and fees.

Second, lenders typically offer lower interest rates to people with higher or lower credit scores Debt-to-income (DTI) ratios.And large down payments. If you can save more or pay off debt before getting a mortgage, the lender will likely give you a better interest rate.

What factors can you not control? In short, economics.

The list of ways the economy affects mortgage rates is long, but here are the basic details. If the economy — think employment rates, for example — is struggling, mortgage rates fall to encourage borrowing, which helps boost the economy. If the economy is strong, mortgage rates rise to ease spending.

All other things being equal, mortgage refinance rates are usually slightly higher than purchase rates. So don’t be surprised if your refinance rate is higher than you expected.

Two of the most common mortgage terms are 30-year and 15-year fixed rate mortgages. Both lock your rate for the entire term of the loan.

The 30-year mortgage is very popular because it has relatively low monthly payments. But it comes with a higher interest rate than shorter terms, and because you’re accumulating interest for three decades, you’ll pay a lot more in interest over the long term.

A 15-year mortgage can be great because it has a lower interest rate than you would with longer terms, so you’ll pay less in interest over the years. You will also pay off your mortgage faster. But your monthly payments will be higher because you’re paying off the same loan amount in half the time.

Basically, a 30-year mortgage is more affordable month to month, while a 15-year mortgage is cheaper over the long term.

According to data from the Home Mortgage Disclosure Act 2023 (HMDA), some of the banks with the lowest average mortgage rates are: Citibank, Wells Fargoand USA. However, it is a good idea to look for the best rate not only with banks, but also with credit unions and companies that specialize in mortgage lending.

Yes, 2.75% is a great mortgage interest rate. You are unlikely to get a 2.75% interest rate in today’s market unless you get a 2.75% interest rate Assumed mortgage From a seller who locked this price in 2020 or 2021, when prices were at all-time lows.

According to Freddie Mac, the lowest interest rate on a 30-year fixed mortgage was 2.65%. This was the national average in January 2021. Interest rates are unlikely to fall to this low level again any time soon.

Some experts say it’s worth refinancing when you can secure a rate that’s 2% lower than your current mortgage rate. Others say 1% is the magic number. It all depends on your financial goals when refinancing and when you will break even after paying the refinancing closing costs.