It’s a better time to buy than to refinance

Most current mortgage rates have decreased. According to Zillow, the average 30-year fixed interest rate dropped five basis points 6.67%and the 15-year fixed rate fell four basis points to 5.95%.

Mortgage rates are still high, and probably won’t drop drastically in 2025. This can be a good time to buy a house since waiting for lower rates might not be very helpful. But if you want to refinance your existing mortgage at a better rate, you may want to hold onto it for a longer time.

Dig deeper: 6 times when it makes sense to refinance your mortgage

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

• 30 years fixed: 6.67%

• 20 years fixed: 6.45%

• 15 years fixed: 5.95%

• 5/1 ARM: 6.94%

• 7/1 ARM: 6.91%

• 30 years ago: 6.12%

• VA of 15 years: 5.56%

• 5/1 VA: 6.16%

• 30 year FHA: 6.33%

• 5/1 FHA: 6.38%

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

Read more: How to get the lowest mortgage rates possible

Do you have questions about buying, owning or selling a home? Submit your inquiry to the Yahoo Realtors panel using this form of Google.

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

• 30 years fixed: 6.67%

• 20 years fixed: 6.46%

• 15 years fixed: 5.92%

• 5/1 ARM: 7.24%

• 7/1 ARM: 7.45%

• 30 years ago: 6.10%

• VA of 15 years: 5.72%

• 5/1 VA: 6.04%

• 5/1 FHA: 6.50%

Again, the numbers provided are national averages rounded to the nearest hundredth. Refinance rates are usually higher than purchase rates.

A mortgage calculator can help you see how different mortgage lengths and interest rates affect your monthly payments. Use the free one Yahoo Finance Mortgage Calculator to play with different results.

Our calculator also considers factors such as property taxes and homeowner’s insurance when calculating your estimated monthly mortgage payment. This gives you a better idea of ​​your total monthly payment than if you just looked at the principal and interest on the mortgage.

As a general rule, 15-year mortgage rates are lower than 30-year mortgage rates. When compared 15 vs. 30 year mortgage ratesYou know the correct one will save you money on interest in the long run. However, your monthly payments will be higher because you pay the same amount of loan in half the time.

For example, with a $400,000 mortgage with a term of 30 years and a rate of 6.67%, you make a monthly payment of approx $2,573 towards your mortgage principal and interest. As the interest accumulates over decades, you will eventually pay it off $526,337 in interest

If you get a 15-year mortgage of $400,000 with a rate of 5.95%, you will pay about $3,365 monthly towards your principal and interest. However, you will only pay $205,634 in interest over the years.

If the monthly 15-year mortgage payment is too high, remember that you can always make extra mortgage payments on your 30-year loan at pay off your mortgage faster and ultimately pay less interest.

With a fixed rate mortgageyour rate is locked from day one. However, you will receive a new rate if you refinance your mortgage.

An adjustable rate mortgage keep your rate the same for a set period of time. Then the rate will go up or down depending on many factors, such as the economy and the maximum amount that your rate can change according to your contract. For example, with a 7/1 ARM, your rate would be locked for the first seven years, then change every year for the rest of your term.

Adjustable rates sometimes start lower than fixed rates, but once the initial rate lock period ends, you risk your interest rate going up. ARM rates have started even higher than fixed rates recently, so they’re not as good of a deal as they used to be.

Dig deeper: Adjustable Rate Mortgage vs. Fixed Rate Mortgage – Which Should You Choose?

In 2024, mortgage rates have trended downward from early August to the Federal Reserve meeting on September 18, when the central bank announced a slash of 50 basis points to the federal funds rate. Since that announcement, mortgage rates have either increased or stayed steady for the most part.

The Fed lowered its rate again in its November and December meetings (by 25bps each time). The trajectory of future mortgage rates will largely depend on the Federal Reserve’s decision on whether or not to cut them federal funds rates at their 2025 meetings.

When economists expect a rate hike from the Fed at its next meeting, mortgage interest rates usually decrease before the meeting instead of after. There is still almost another month until the next meeting of the Fed, but according to the CME FedWatch toolthat’s all, but guarantee that the rate of fed funds will remain the same at the January meeting. That means rates probably won’t drop significantly in the next couple of months.

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

According to Zillow data, today’s 30-year fixed rate for purchases and refinances is 6.67%. These are national averages, so keep in mind the average in your state or city could be different. Your rate will also vary based on your personal finances.

Mortgage rates will likely fall gradually throughout 2025, but are unlikely to fall quickly.

Mortgage rates should drop in 2025, although probably not as drastically as previously expected. Depending on what happens with the economy, inflation and the Fed, any decrease may be relatively small.