Today’s Mortgage Rates, December 27, 2024

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• Mortgage rates for December 27, 2024 are approximately 6.70%.
• Mortgage rates rose after the Fed meeting last week in anticipation of fewer rate cuts in 2025.
• Unless inflation slows or the economy slows, mortgage rates may only fall slightly next year.

Since the Federal Reserve meeting last week, mortgage rates have been hovering in the high 6% range.

Although the Fed cut interest rates at this meeting, it also released new forecasts showing that policymakers expect to cut interest rates just twice next year – fewer than the four cuts originally expected.

Inflation has risen slightly again in recent months and the job market remains strong, meaning the Fed has little reason to cut rates again any time soon.

Mortgage rates were forecast to fall throughout 2025 as the Fed cut its key interest rate. Now they are unlikely to fall as much unless inflation slows or the economy begins to weaken.

Mortgage rates today

Mortgage refinance rates today

Mortgage Calculator

Use our free mortgage calculator to find out how current mortgage rates will affect your monthly and long-term payments.

By entering different terms and interest rates, you can see how your monthly payment might change.

30-year mortgage rates

According to Zillow data, average mortgage rates for 30-year mortgages are around 6.70%. In November this rate was 6.56%. Interest rates rose significantly last month, although they are slightly lower now.

The 30-year fixed-rate mortgage is the most popular home loan. With this type of mortgage, you repay the money you borrow over 30 years and your interest rate doesn’t change over the life of the loan.

The long term of 30 years allows you to spread your payments over a long period of time, allowing you to keep your monthly payments lower and more manageable. The downside is that you’ll get a higher interest rate than with a shorter term mortgage, such as a 15-year mortgage.

15 year mortgage rates

According to Zillow data, average mortgage rates for 15-year mortgages are over 6%. In November, interest rates on 15-year bonds averaged 5.92%.

If you want the predictability of a fixed interest rate but want to spend less on interest over the life of your loan, a 15-year fixed-rate mortgage could be right for you. Because these terms are shorter and have lower interest rates than 30-year fixed-rate mortgages, you can potentially save tens of thousands of dollars in interest. However, you will receive a higher monthly rate than with a longer term.

ARM Pricing

Interest rates on adjustable rate mortgages have been comparable to fixed rates in recent days. Last month, the average mortgage rate for a 7/1 ARM was 6.82%, while the average rate for a 5/1 ARM was 6.83%, according to Zillow data.

When you get an ARM, you have a fixed mortgage interest rate for a set period of time, after which your interest rate adjusts periodically. For example, with a 7/1 ARM, your interest rate stays fixed for seven years and then adjusts once a year until you pay off the loan or refinance.

ARM interest rates are often (but not always) lower than their fixed-rate counterparts, making ARM a good deal if you want to save on your monthly mortgage payment. The risk with an ARM, however, is that if rates go up as your rate begins to adjust, your monthly payment could increase.

FHA interest rates

FHA interest rates were 5.41% last month and are higher today.

FHA loans are insured by the Federal Housing Administration. This government support allows lenders to work with borrowers with lower credit scores and less money for a down payment, making these loans a good option for low-income earners and first-time home buyers. They also typically have lower interest rates compared to traditional mortgages.

To get an FHA loan, you need a credit score of at least 580 and a down payment of 3.5%. If you can afford to put a 10% down payment on a home, you could qualify for an FHA loan with a score of up to 500, although not all lenders offer this option.

VA mortgage rates

According to Zillow data, current VA mortgage rates are around 6.20%. Last month, VA rates averaged 5.97%.

VA loans are available to veterans and military members who meet minimum service requirements. They are backed by the Department of Veterans Affairs and require no down payment or mortgage insurance.

Mortgage refinance rates

The refinancing interest rates are slightly higher than the purchase interest rates. Last month, 30-year refinance rates averaged 6.62%, while 15-year refinance rates hovered around 5.96%.

How much do mortgage interest rates need to be lowered to refinance?

If you’re wondering whether you should refinance now, you need to run the numbers to see if it makes sense. Some experts recommend refinancing only if you can lower your interest rate by a percentage point or more, but it really depends on whether it works for your individual circumstances.

If you can save enough each month by refinancing that you can recoup your costs in a reasonable amount of time, it could be worth it. You can calculate this by dividing your closing costs by the amount you save on your monthly mortgage payment. So if you paid $3,000 to refinance and could lower your monthly payment by $200, it would take you 15 months to break even on your refinance.

5-Year Mortgage Rate Trends

Here’s how mortgage rates for 30- and 15-year mortgages have moved over the past five years, according to data from Freddie Mac.

What factors affect mortgage interest rates?

Mortgage rates are determined by a variety of different factors, including major economic trends, Federal Reserve policies, your state’s current mortgage rates, the type of loan you receive, and your personal financial profile.

Although many of these factors are out of your control, you can work to improve your credit score, pay off debt, and save for a larger down payment to ensure you get the best interest rate possible.

How does the Fed affect mortgage rates?

The Fed has aggressively raised interest rates in 2022 and 2023 to slow economic growth and control inflation. As a result, mortgage rates skyrocketed.

Mortgage rates are not directly affected by changes in the federal funds rate, but they often trend up or down in advance of Fed action. This is because mortgage rates change based on investor demand for mortgage-backed securities, and that demand is often influenced by how investors expect the Fed’s interest rate increases to affect the overall economy.

The Fed cut interest rates three times in 2024, but is expected to slow its pace in 2025. That means mortgage rates may only fall slightly next year.

Mortgage Rate Predictions 2025

Mortgage rates rose last month and are expected to fall slightly next year. However, this forecast could change depending on how the economy performs in 2025. Currently, the Fed is facing a so-called “soft landing,” in which it manages to bring inflation back down to its 2% target without triggering an economic downturn. However, it is taking a little longer than expected for inflation to fall completely, which could potentially keep interest rates high next year.

If the economy slows too much and a recession becomes likely, interest rates could fall more sharply. Or if inflation stops slowing or starts rising again, mortgage rates could rise.

Molly Grace

Mortgage Reporter