These are today's mortgage and refinance rates. The bad news for homebuyers is that rates will probably stay elevated for a while longer. But they could fall next year.
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.
Average 30-year mortgage rates are the highest they've been in 23 years, and it could be a while before we see them go back down.
Inflation and hikes from the Federal Reserve have pushed mortgage rates up to record highs over the past year and a half. Now, inflation is at just 3.7% year over year and experts expect it to continue to come down. So when will mortgage rates finally fall?
The unsatisfactory answer is that we'll just have to wait and see. Mortgage rates will fall eventually, but there's still a decent amount of uncertainty in the economy. Inflation is anticipated to decelerate further, but the Fed wants to see that happen before it will consider cutting rates. This will keep consumer rates elevated in the near term.
Would-be homebuyers waiting for the chance to jump into the market will likely see affordability improve more substantially toward the end of 2024. If you need to buy in the meantime, the good news is that you'll likely have the opportunity to refinance into a lower rate within the next couple of years.
Use our free mortgage calculator to see how today's mortgage rates will affect your monthly and long-term payments.
By plugging in different term lengths and interest rates, you'll see how your monthly payment could change.
Mortgage rates started ticking up from historic lows in the second half of 2021 and increased over three percentage points in 2022.
But many forecasts expect rates to begin to fall later this year. In their latest forecast, Fannie Mae researchers predicted that 30-year fixed rates will trend down throughout 2023 and 2024.
But whether mortgage rates will drop in 2023 hinges on if the Federal Reserve can get inflation under control.
In the last 12 months, the Consumer Price Index rose by 3.7%. Inflation has decelerated quite a bit since it peaked last June, but the Fed has indicated it's waiting for inflation to come down further before it considers a longer pause in rate hikes.
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 the 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.
Home prices declined a bit on a monthly basis late last year, but we aren't likely to see huge drops this year, even if there's a recession.
Fannie Mae researchers expect prices to increase 3.9% in 2023, while the Mortgage Bankers Association expects a 1.5% increase in 2023 and a 1.1% increase in 2024.
Sky high mortgage rates have pushed many hopeful buyers out of the market, slowing homebuying demand and putting downward pressure on home prices. But rates may start to drop next year, which would remove some of that pressure. The current supply of homes is also historically low, which will likely keep prices from dropping too far.
Fixed-rate mortgages lock in your rate for the entire life of your loan. Adjustable-rate mortgages lock in your rate for the first few years, then your rate goes up or down periodically.
ARMs typically start with lower rates than fixed-rate mortgages, but ARM rates can go up once your initial introductory period is over. If you plan on moving or refinancing before the rate adjusts, an ARM could be a good deal. But keep in mind that a change in circumstances could prevent you from doing these things, so it's a good idea to think about whether your budget could handle a higher monthly payment.
Fixed-rate mortgage are a good choice for borrowers who want stability, since your monthly principal and interest payments won't change throughout the life of the loan (though your mortgage payment could increase if your taxes or insurance go up).
But in exchange for this stability, you'll take on a higher rate. This might seem like a bad deal right now, but if rates increase further in a few years, you might be glad to have a rate locked in. And if rates trend down, you may be able to refinance to snag a lower rate
ARMs start with an introductory period where your rate will remain fixed for a certain period of time. Once that period is up, it will begin to adjust periodically — typically once per year or once every six months.
How much your rate will change depends on the index that the ARM uses and the margin set by the lender. Lenders choose the index that their ARMs use, and this rate can trend up or down depending on current market conditions.
The margin is the amount of interest a lender charges on top of the index. You should shop around with multiple lenders to see which one offers the lowest margin.
ARMs also come with limits on how much they can change and how high they can go. For example, an ARM might be limited to a 2% increase or decrease every time it adjusts, with a maximum rate of 8%.
