Mortgage Rates in Jan.  19, 2024: Rate Reduction Beginning in the New Year

Mortgage Rates in Jan. 19, 2024: Rate Reduction Beginning in the New Year

Several closely watched mortgage rates fell last week. The average 15-year fixed mortgage rates rose, while the average 30-year fixed mortgage rates followed suit, while For variable rates, the 5/1 adjustable-rate mortgage decreased.

  • 30-year fixed mortgage: 7.00%
  • 15-year fixed mortgage: 6.46%
  • 5/1 adjustable-rate mortgage: 6.37%

In November, the average rate for a 30-year fixed mortgage began making a steady decline from an earlier high of 8%. The most common home loans today are in the 6% to 7% range. Yet the mortgage market has always had some level of volatility, and rates have started to rebound at the start of this year.

“It’s not unusual to see a change in the pattern of interest rates in January, sometimes positive, sometimes not,” said Keith Gumbinger, vice president of mortgage site

The current housing market is tough. High mortgage rates, high home prices and tight inventory keep home buying out of reach for many. If you’re looking to buy a home, don’t try to time the market. However, experts recommend patience and preparation: Think about what you can afford and take steps to improve your financial situation.

About these fees: Like CNET, Bankrate is owned by Red Ventures. This tool features partner rates from lenders that you can use to compare multiple mortgage rates.

The average mortgage interest rate today

If you’re in the market for a home, see how today’s mortgage rates compare to last week. We use rates collected by Bankrate to track daily mortgage rate trends. This table summarizes the average rates offered by lenders across the US:

Current mortgage interest rates

Loan term Today’s Rate Last week Renewal
30 year mortgage rate 7.00% 7.02% -0.02
15 year fixed rate 6.46% 6.39% +0.07
30 year jumbo mortgage rate 7.05% 7.06% -0.01
30-year mortgage refinance rate 7.21% 7.15% +0.06

Prices as of January 19, 2024

How to choose a mortgage

When choosing a mortgage, consider the loan term, or payment schedule. The most common mortgage terms are 15 and 30 years, although there are 10-, 20- and 40-year mortgages. You also have to choose between a fixed-rate mortgage, where the interest rate is set for the duration of the loan, and an adjustable-rate mortgage. With an adjustable-rate mortgage, the interest rate is only fixed for a certain amount of time (usually five, seven or 10 years), after which the rate adjusts annually based on the current market interest rate. . Fixed-rate mortgages offer more stability and are a better option if you plan to stay in a home for the long term, but adjustable-rate mortgages may offer lower interest rates. forward interest.

30-year fixed-rate mortgages

The average interest rate for a standard 30-year fixed mortgage is 7.00%, which is a decrease of 2 basis points from a week ago. (A basis point equals 0.01%.) A 30-year fixed mortgage is the most common loan term. It usually has a higher interest rate than a 15-year loan, but you have a lower monthly payment.

15-year fixed-rate mortgages

The average rate for a 15-year, fixed mortgage is 6.46%, which is an increase of 7 basis points from seven days ago. Although you will have a larger monthly payment than a 30-year fixed mortgage, a 15-year loan usually has a lower interest rate, allowing you to pay less interest over time and pay off your loan more quickly. early time.

5/1 adjustable-rate mortgages

A 5/1 adjustable-rate mortgage has an average rate of 6.37%, a slide of 4 basis points compared to last week. You can usually get a lower introductory interest rate with a 5/1 ARM for the first five years of the loan. But you may pay more after that time, depending on how the rate is adjusted each year. If you plan to sell or refinance your home within five years, an ARM may be a good option.

Calculate your monthly mortgage payment

Getting a mortgage should always depend on your financial situation and long-term goals. The most important thing is to make a budget and try to stick to your income. CNET’s mortgage calculator below can help home buyers prepare for monthly mortgage payments.

What influences mortgage rates today

Mortgage rates were near record lows, around 3%, at the start of the pandemic. That changed as inflation soared and the Federal Reserve began a series of aggressive interest rate hikes, which indirectly raised mortgage rates. Today, mortgage rates are more than double what they were just a few years ago.

However, with the central bank holding interest rates steady since late July, mortgage rates have finally seen some continued declines. With the Fed planning to announce the next policy step in late January (and again in mid-March), experts are waiting for the first reduction in interest rates. It may be months before that happens, but mortgage rates may stabilize and start getting lower in the coming months.

“”The history of economic cycles teaches us that when markets believe the Fed is done hiking rates, [mortgage rates] take a big step lower before the rate cuts happen,” said Logan Mohtashami, lead analyst at HousingWire.

What affects mortgage rates?

  • Federal Reserve monetary policy: The country’s central bank does not set interest rates, but when it adjusts the federal funds rate, the loans tend to go in the same direction.
  • Inflation: Mortgage rates tend to increase during high inflation. Lenders often charge higher interest rates on loans to compensate for the loss of purchasing power.
  • The bond market: Mortgage lenders often use long-term bond yields, such as the 10-Year Treasury, as a benchmark for setting interest rates on home loans. When yields go up, mortgage rates usually go up.
  • Geopolitical events: Global events, such as elections, pandemics or economic crises, can also affect home loan rates, especially when global financial markets face uncertainty.
  • Other economic factors: The bond market, employment data, investor confidence and trends in the housing market, such as supply and demand, can also affect the direction of mortgage rates.

Mortgage rate forecasts from the experts

While mortgage forecasters base their projections on a variety of data, most predict rates will remain near or above 7% for the rest of 2023. Here’s a look at where some of the major housing authorities expect the average mortgage rates to land by the end of the year.

How to find the best mortgage rates

Even if mortgage rates and home prices are high, the housing market won’t pay off forever. This is always a good time to save for a down payment and improve your credit score to help you get a competitive mortgage rate when the time is right.

  1. Save for a bigger down payment: Although a 20% down payment is not required, a larger down payment means taking on a smaller loan, which will help you save on interest.
  2. Improve your credit score: You can qualify for a conventional mortgage with a 620 credit score, but a higher score of at least 740 will get you better rates.
  3. Debt payment: Experts recommend a debt-to-income ratio of 36% or less to help you qualify for the best rates. Not carrying other debts will put you in a better position to manage your monthly payments.
  4. Research loans and grants: Government-sponsored loans have more flexible borrowing requirements than conventional loans. Other government-sponsored or private programs can also help with your down payment and closing costs.
  5. Shop around for lenders: Researching and comparing multiple loan offers from different lenders can help you secure the lowest mortgage rate for your situation.

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