Current Mortgage Rates: December 23, 2024

Current mortgage rates main takeaways:

• According to Money's daily survey, the average rate on a 30-year fixed-rate mortgage is 7.054%.

• Money's 30-year refinance rate is averaging 7.133%.

• Freddie Mac's average rate for a 30-year fixed-rate mortgage increased to 6.72%, a change of 0.12 percentage points over the past week.

• Freddie Mac's current rate for a 15-year fixed-rate mortgage is averaging 5.92%, a week-over-week increase of 0.08 percentage points.

Mortgage rate trends

Mortgage rates moved higher this past week as concerns over the future path of the Federal Reserve's monetary policy increased.

On Wednesday, the central bank announced a much anticipated 0.25% reduction in the federal funds rate, bringing the rate for short-term loans down to the 4.25%-4.5% target range. Most experts don't expect this cut to make an immediate impact on mortgage rates. However, the Fed's forecast for additional rate cuts was more conservative than previous outlooks and is expected to influence rate movement heading into 2025.

"The Fed is taking a more cautious and balanced outlook and suggests that neither the Federal Reserve nor market pricing expects a steep decline in mortgage rates next year," wrote Emanuel Santa-Donato, senior vice president and chief market analyst at Tomo Mortgage, in emailed comments to Money.

Average mortgage and refinancing rates for December 23, 2024

Beginning on July 31, Money's daily mortgage rates are a national average and reflect what a borrower with a 20% down payment, no points paid and a 780 credit score — considered an excellent score that qualifies a borrower for the best rates — might pay if they applied for a home loan right now. Each day's rates are based on the average rate 8,000 lenders offered to applicants the previous business day. Your individual rate will vary depending on your location, lender and financial details.

These rates differ from Freddie Mac’s, which represent a weekly average based on a survey of quoted rates offered to borrowers with strong credit, a 20% down payment and discounts for points paid.

If you're offered a higher rate than expected, make sure to ask why and compare offers from multiple lenders. (Money's list of the Best Mortgage Lenders is a good place to start. Homeowners considering a mortgage refinance should consider our list of the Best Mortgage Refinance Companies.)

Use Money's mortgage calculator to estimate your monthly payment, considering different rate scenarios.

Freddie Mac's mortgage rates for the week ending December 19, 2024

Freddie Mac mortgage rate trends

For its weekly rate analysis, Freddie Mac looks at rates offered for the week, ending each Thursday. The average rate roughly represents the rate a borrower with strong credit and a 20% down payment can expect to see when applying for a mortgage right now. Borrowers with lower credit scores will generally be offered higher rates.

Current mortgage rates guide

Mortgage rates, along with home prices, are an important part of the formula for homeownership. Most importantly, they can be key in determining how much home you can afford to buy. This guide answers some of the most common questions about rates and how they affect the housing market.

Types of mortgage rates

When shopping for a mortgage, you may be offered two types, each with a different interest-rate arrangement: fixed-rate and adjustable-rate loans. Understanding the difference between the two is important to decide which will best suit your needs.

Fixed-rate mortgages

As the name implies, fixed-rate loans have a stable interest rate which won’t change for the loan's duration. The most common term lengths are 30 and 15 years, although some lenders offer other options. Generally, the interest rate on a 30-year loan will be higher than that on a 15-year loan, but the monthly payment will be lower because you’re extending the payback period.

Most home buyers prefer fixed-rate loans because they don't change; the monthly mortgage payments are relatively constant throughout the life of the loan. However, other costs typically rolled into the mortgage, like homeowners insurance and property taxes, can change, leading to variations in your monthly payment over time.

Adjustable-rate mortgages (ARMs)

The interest rate on adjustable-rate mortgages does not adjust from the beginning. Rather, the rate will be fixed for a predetermined number of years. Once that fixed period ends, the rate becomes variable and adjusts at a regular interval, known as the "adjustment period" — with the period length defined in the mortgage terms. Depending on market conditions, rates could increase or decrease at the end of each period.

The most common terms for ARMs are 5/6 loans, in which the interest rate is fixed for five years and then starts to adjust every six months. There are also options for 7/6 loans and 10/6 loans. Because the interest rates on ARMs tend to be lower than those on fixed-rate loans during the initial (fixed-rate) phase, these adjustable loans are a good option for borrowers who don’t plan to stay in the home beyond the fixed-rate period of the loan.

Other information you should know about mortgage rates

When comparing rates from different lenders, you’ll see two different numbers: the interest rate and the annual percentage rate (APR).

The interest rate is what a lender will charge on the principal amount being borrowed. Consider it the basic cost of borrowing money for a home purchase.

An APR represents the total cost of borrowing money. It includes the interest rate plus any fees associated with generating the loan. The APR will always be higher than the interest rate.

For example, a $300,000 loan with a 3.1% interest rate and $2,100 in fees would have an APR of 3.169%.

When comparing rates from different lenders, look at the APR and the interest rate. The APR will represent the true cost over the full term of the loan and includes other costs like loan origination and lender fees. The interest rate is how much interest the lender charges on the borrowed loan amount, not including additional fees. You’ll also need to consider what you can pay upfront versus over time.

Mortgage refinance rates

Homeowners may decide to refinance for any number of reasons, including lowering their interest rate, changing the term of their loan, or tapping into their home equity. Refinance rates tend to be higher than purchase rates, so carefully consider the pros and cons when determining whether a "refi" is the right step.

Factors affecting today’s mortgage rates

Rates alone do not fully determine the cost of the loan and the size of your monthly payment. The following factors, which are detailed in the loan disclosures provided by your lender, also come into play.

Loan term

As a general rule, the longer the loan, the smaller the payments, but the more costly the loan overall. Choosing a 15-year mortgage instead of a 30-year one will increase the monthly mortgage payment but reduce the amount of interest paid throughout the life of the loan.

Loan type

With a fixed-rate mortgage loan, payments remain the same throughout the loan’s life. The mortgage rates on adjustable-rate mortgages reset regularly (after an introductory period), and the monthly payment changes with it.

A mortgage whose size exceeds the federal loan limit is known as a "jumbo" or "non-conforming" loan. Such mortgages usually have lower rates but more stringent credit requirements.

Taxes, HOA fees, insurance

Home insurance premiums, property taxes and homeowners association fees are often bundled into your monthly mortgage payment. Check with your real estate agent to get an estimate of these costs.

Private mortgage insurance

Private mortgage insurance can cost up to 1.5% of your home loan's yearly value. Borrowers with conventional loans can avoid private mortgage insurance by making a down payment of at least 20% of the cost of the property or by accumulating equity that's equal to 20% or more of the mortgage principal. FHA borrowers pay a mortgage insurance premium throughout the life of the loan.

Closing costs

Closing costs include origination fees and other loan expenses. These extra charges typically total between 2% to 5% of the mortgage value, and are usually paid upfront. Some buyers finance their new home's closing costs into the loan, adding to the principal and increasing monthly payments.

Loan-to-value ratio (LTV)

The LTV measures the risk a lender is taking by financing a property. The figure compares the loan amount to the home’s value. The higher the LTV, the higher the risk for the lender — and, ultimately, the higher the mortgage rate for the borrower.

Economic factors

Lenders use several factors to set mortgage rates every day. While every lender's formula will be slightly different, it will factor in the current federal funds rate (a short-term rate set by the Federal Reserve), competitors' rates and other factors — sometimes including how many staff they have available to underwrite loans. Your qualifications as a borrower will also affect the rate you are offered.

In general, rates track the yields on the 10-year Treasury note. Average mortgage rates are usually about 1.8 percentage points higher than the yield on the 10-year note. In times of economic uncertainty, such as periods of high inflation, Treasury yields tend to rise. That, in turn, pushes all types of interest rates higher, including those on home loans.

How mortgage rates affect affordability

The rate on your mortgage can make a big difference in how much home you can afford and the size of your monthly payments. That's true whether buying your primary residence, an investment property or refinancing an existing loan.

Here's an example. If you bought a $250,000 home and made a 20% down payment — of $50,000 — you would end up with a starting loan balance of $200,000. On a $200,000 home loan with a fixed rate for 30 years, here's what you would pay:

• At a 3% interest rate = $843 in monthly payments (not including taxes, insurance, or HOA fees)
• At a 4% interest rate = $955 in monthly payments (not including taxes, insurance, or HOA fees)
• At a 6% interest rate = $1,199 in monthly payments (not including taxes, insurance, or HOA fees)
• At an 8% interest rate = $1,468 in monthly payments (not including taxes, insurance, or HOA fees)

Experimenting with a mortgage calculator allows you to find out how much a lower rate or other changes could impact what you pay. A home affordability calculator can also estimate the maximum loan amount you may qualify for based on your income, debt-to-income ratio, mortgage interest rate and other variables. The Consumer Financial Protection Bureau can also provide a range of rates being offered by lenders in each state.

How to get the best mortgage rate

One of the most effective ways to find the best mortgage rate is to shop around. According to Freddie Mac, borrowers who get a rate quote from just one additional lender save an average of $600 over the life of the loan. Those savings go up to $1,200 if you get three quotes. A larger down payment amount will also result in a lower interest rate.

The best mortgage lender for you will be the one that can give you the lowest rate and the terms you want. Your local bank or credit union is one place to look. Online lenders have expanded their market share over the past decade and promise to get you pre-approved within minutes.

You can also lower the offered rate if you buy discount points, which are also known as mortgage points. A point typically costs 1% of the loan amount and can reduce the interest rate by 0.25 percentage points.

Compare loan options, rates and terms, and make sure your lender has the type of mortgage you need. Not all lenders write FHA loans, USDA-backed mortgages or VA loans, for example. If you're unsure about a lender's credentials, ask for its NMLS number and search for online reviews.

Once you find the best rate, get a rate lock to guarantee it won’t change before you can close the loan. Getting a preapproval letter can also help.

Summary of current mortgage rates

• According to Money's daily survey, the average rate on a 30-year fixed-rate mortgage is 7.054%.

• Money's 30-year refinance rate is averaging 7.133%.

• Freddie Mac's average rate for a 30-year fixed-rate mortgage increased to 6.72%, a change of 0.12 percentage points over the past week.

• Freddie Mac's current rate for a 15-year fixed-rate mortgage is averaging 5.92%, a week-over-week increase of 0.08 percentage points.