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Mortgage of the day, refinancing rate: January 8, 2023

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According to Freddie Mac, average 30-year fixed mortgage rates have risen slightly over the past two weeks. Rates have remained relatively stable in recent days.

As the economy cools in response to Federal Reserve rate hikes, mortgage rates are likely to start falling later this year.

“While mortgage market activity has declined significantly over the past year, inflationary pressures are easing and should lead to lower mortgage rates in 2023,” said Sam Khater, chief economist at Freddie Mac, in a press release. “Homebuyers are waiting for rates to come down more significantly, and when they do, a strong job market and a significant demographic tailwind of millennial renters will support the buying market.”

Mortgage rates today

Type of mortgage Average rate today
This information was provided by Zillow. See more mortgage rates on Zillow

Mortgage refinance rates today

Type of mortgage Average rate today
This information was provided by Zillow. See more mortgage rates on Zillow

mortgage calculator

Use our free mortgage calculator to see the impact of today’s mortgage rates on your monthly payments. By plugging in different rates and terms, you’ll also understand how much you’ll pay over the life of your mortgage.

mortgage calculator

$1,161
Your estimated monthly payment

  • pay one 25% a higher down payment would save you $8,916.08 on interest charges
  • Lower the interest rate by 1% would save you $51,562.03
  • Pay an extra fee $500 each month would reduce the term of the loan by 146 month

Click “More Details” for tips on how to save money on your long-term mortgage.

30-year fixed mortgage rates

The current average 30-year fixed mortgage rate is 6.48%, according to Freddie Mac. This is an increase from the previous week.

The 30-year fixed rate mortgage is the most common type of mortgage. 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 long 30-year term allows you to spread your payments out over a long period, which means you can keep your monthly payments lower and more manageable. The tradeoff is that you’ll get a higher rate than with shorter terms or adjustable rates.

15-year fixed mortgage rates

The average 15-year fixed mortgage rate is 5.73%, a slight increase from the previous week, according to data from Freddie Mac.

If you’re looking for 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 right for you. Since 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 will have a higher monthly payment than you would with a longer term.

Are mortgage rates increasing?

Mortgage rates started to recover from historic lows in the second half of 2021 and increased significantly in 2022. But mortgage rates are expected to start falling later this year.

Over the past 12 months, the consumer price index has increased by 7.1%. The Federal Reserve has been struggling to control inflation and is expected to keep the federal funds rate high until it hits the Fed’s target rate of 2%.

Inflation remains high, but has started to slow, which is a good sign for mortgage rates and the economy in general.

How do Fed rate hikes affect mortgages?

The Fed raised the federal funds rate in an attempt to slow economic growth and bring inflation under control.

Mortgage rates are not directly affected by changes in the federal funds rate, but they often tend to rise or fall ahead of Fed policy changes. This is because mortgage rates change based on investor demand for mortgage-backed securities, and that demand is often influenced by how investors expect Fed hikes to affect the economy. in its entirety.

As inflation begins to decline, mortgage rates are also expected to decline. But the Fed has signaled it is watching for continued signs of slowing inflation and won’t stop raising rates anytime soon – although it has started opting for more modest hikes, at start with its 50 basis points in December.

Are HELOCs a good idea right now?

Many homeowners have acquired a lot of equity over the past few years as home prices have risen at an unprecedented rate. But since rates are so high today, tapping into that equity can be costly.

For homeowners looking to leverage the value of their home to cover a big purchase, like a home improvement, a home equity line of credit (HELOC) can still be a good option.

A HELOC is a line of credit that lets you borrow against the equity in your home. It works similar to a credit card in that you borrow what you need rather than getting the full amount you borrow in one lump sum.

Depending on your finances and the type of HELOC you get, you may be able to get a better rate with a HELOC than with a home equity loan or cash refinance. Just keep in mind that HELOC rates are variable, so if rates start to increase further, yours will likely increase as well.

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