Mortgage Interest Rates Today, Jan. 4, 2023

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Mortgage rates appear to have steadied a bit following recent drops. Average 30-year mortgage rates plummeted in the first half of December, but in the weeks since, they’ve generally remained in the 6.15% to 6.3% range, according to Zillow data.

The lastest forecasts predict that mortgage rates will go down in 2024. But after decreasing so much at the end of last year, how much further could we see rates fall?

As inflation has come down, so have mortgage rates. It’s likely that price growth will continue to cool this year. As that happens, the Federal Reserve has indicated that it will start cutting the federal funds rate. This will take some of the upward pressure off of mortgage rates and likely help them fall a bit further.

In the near term, we’ll likely see rates stay near their current levels — they could even tick up a bit as markets try to get a clearer picture of what the economy will look like this year. But right now, most signs point to lower rates in 2024 and beyond. We may even see 30-year rates finally drop back below 6%. 

Mortgage Rates Today

Mortgage Refinance Rates Today

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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 6.61%, according to Freddie Mac. This is a six-point decrease 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 5.93% last week, according to Freddie Mac data. This is a two-point decrease 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 next year. This has allowed mortgage rates to trend down somewhat.

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 next year.

In November 2023, 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.