Interest rates on mortgages and refinancing today, December 18, 2024: Interest rates are falling again

Mortgage rates had risen for a few days in a row, but they have finally fallen again today. According to Zillow, the average 30-year fixed mortgage rate has dropped another basis point 6.45%. The 20-year fixed interest rate has fallen by 12 basis points 6.30%and the 15-year fixed rate has fallen by two basis points 5.82%.

The Federal Reserve’s last meeting of the year took place today. The central bank announced its decision to cut the federal funds rate by 25 basis points. Many economists predicted that the Fed would cut its interest rate, so the anticipation of the cut means that any related declines in mortgage rates have likely already occurred. It’s unclear when the Fed will cut rates again, so mortgage rates could remain high for a while.

Dig deeper: How the Federal Reserve’s rate decision affects mortgage rates

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

• 30 years fixed: 6.45%

• 20-year fixed: 6.30%

• 15-year fixed: 5.82%

• 5/1 ARM: 6.62%

• 7/1 ARM: 6.54%

• 30 years VA: 5.91%

• 15 years VA: 5.48%

• 5/1 VA: 6.13%

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

Get more information: 5 strategies to get the lowest mortgage rates

These are today’s mortgage refinance rates, according to the latest Zillow data:

• 30 years fixed: 6.50%

• 20-year fixed: 6.27%

• 15-year fixed: 5.83%

• 5/1 ARM: 6.11%

• 7/1 ARM: 6.56%

• 30-year VA: 5.79%

• 15 years VA: 5.52%

• 5/1 VA: 5.36%

Again, the figures given are national averages rounded to the nearest hundredth. Interest rates on mortgage refinancing are often higher than interest rates when buying a house, although this is not always the case.

Use Yahoo Finance’s free mortgage calculator to see how different interest rates and terms will affect your monthly mortgage payment. It also shows how the house price and the payment amount come into play.

Our calculator includes homeowner’s insurance and property taxes in your monthly payment estimate. You even have the option to enter private mortgage insurance (PMI) costs and homeowner association dues if they apply to you. This information results in a more accurate monthly payment estimate than if you simply calculated your mortgage and interest.

There are two main benefits of a 30-year fixed mortgage: Your payments are lower and your monthly payments are predictable.

A 30-year fixed-rate mortgage has relatively low monthly payments because you spread your repayments over a longer period than with, for example, a 15-year mortgage. Your payments are predictable because, unlike an adjustable-rate mortgage (ARM), your interest rate won’t change from year to year. Most years, the only things that can affect your monthly payment are any changes to your homeowner’s insurance or property taxes.

The biggest disadvantage of 30-year fixed mortgage rates is mortgage interest – both short and long term.

A 30-year fixed term comes with a higher rate than a shorter fixed term, and it is higher than the intro rate for a 30-year ARM. The higher your rate, the higher your monthly payment. You will also pay much more in interest over the term of your loan due to both the higher interest rate and the longer term.

The advantages and disadvantages of 15-year fixed mortgage interest rates are basically the swap from the 30-year interest rates. Yes, your monthly payments will still be predictable, but another benefit is that shorter terms come with lower interest rates. Not to mention, you’ll pay off your mortgage 15 years earlier. So you’ll potentially save hundreds of thousands of dollars in interest over the life of your loan.

But because you pay off the same amount in half the time, your monthly payments will be higher than if you choose a 30-year term.

Dig deeper: 15-year-olds vs. 30-year mortgage

Adjustable rate loans lock in your interest rate for a predetermined period of time, then change it periodically. For example, with a 5/1 ARM, your rate stays the same for the first five years and then goes up or down once a year for the remaining 25 years.

The biggest advantage is that the introductory rate is usually lower than what you get with a 30-year fixed rate, so your monthly payments will be lower. (However, current average interest rates do not reflect this – fixed rates are actually lower. Talk to your lender before deciding between a fixed or adjustable rate.)

With an ARM, you have no idea what mortgage rates will be like when the intro rate period ends, so you run the risk of your rate going up later. This can ultimately end up costing more, and your monthly payments are unpredictable from year to year.

But if you plan to move before the intro rate period is over, you can reap the benefits of a low rate without risking a rate increase down the road.

Get more information: Adjustable rate loan vs. fixed-rate mortgage loan

The national average 30-year mortgage rate is 6.45% right now, according to Zillow. But keep in mind that the average may vary depending on where you live. For example, if you buy in a city with a high cost of living, prices can be even higher.

Mortgage rates may fall slightly before the end of 2024, but they are not expected to fall. They are likely to fall in 2025, but while the country waits to see how Trump’s presidency will affect the economy, it is unclear how significantly interest rates could fall next year.

With a few exceptions, mortgage rates have fallen over the past few weeks in anticipation of today’s Fed meeting and federal funds rate cut.

In many ways, securing a low refinance rate is similar to when you bought your home. Try to improve your credit score and lower your debt to income (DTI). Refinancing for a shorter term will also give you a lower interest rate, although your monthly mortgage payments will be higher.