Mortgage rates are the lowest they’ve been all year. According to Freddie Mac, the 30-year fixed rate has dropped 15 basis points since early January and is now 6.76%. The 15-year fixed interest rate is down 19 basis points since the beginning of the year and is 5.94%.
Home loan rates tend to follow the 10-year Treasury yield, which has been decreasing for the last week and a half. Economists don’t expect mortgage interest rates to fall substantially in 2025, so it could be good to take advantage of the slight decrease in interest rates we’re experiencing now.
Dig deeper: Is 2025 a good time to buy a house?
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Here are the current mortgage rates, according to the latest Zillow data:
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30-year fixed: 6.31%
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20-year fixed: 5.96%
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15-year fixed: 5.61%
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5/1 ARM: 6.55%
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7/1 ARM: 6.25%
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30-year VA: 5.74%
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15-year VA: 5.21%
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5/1 VA: 5.92%
Remember, these are the national averages and rounded to the nearest hundredth.
Learn more:Â Should you lock in a mortgage rate?
These are today’s mortgage refinance rates, according to the latest Zillow data:
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30-year fixed: 6.34%
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20-year fixed: 6.04%
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15-year fixed: 5.62%
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5/1 ARM: 6.70%
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7/1 ARM: 6.77%
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30-year VA: 5.75%
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15-year VA: 5.46%
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5/1 VA: 6.06%
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30-year FHA: 6.06%
Again, the numbers provided are national averages rounded to the nearest hundredth. Mortgage refinance rates are often higher than rates when you buy a house, although that’s not always the case.
Learn more: Want to refinance your mortgage? Here are 7 home refinance options.
Your mortgage rate plays a large role in how much your monthly payment will be. Other factors that impact your monthly payment are your down payment, which type of loan you get, and whether you need mortgage insurance.
If you want to see how much house you can afford — regarding both home price and monthly payments — use our free Yahoo Finance home affordability calculator.
A mortgage interest rate is a fee for borrowing money from your lender, expressed as a percentage. You can choose from two types of rates: fixed or adjustable.
A fixed-rate mortgage locks in your rate for the entire life of your loan. For example, if you get a 30-year mortgage with a 6% interest rate, your rate will stay at 6% for the entire 30 years unless you refinance or sell.
An adjustable-rate mortgage locks in your rate for a predetermined amount of time and then changes it periodically. Let’s say you get a 7/1 ARM with an introductory rate of 6%. Your rate would be 6% for the first seven years, then the rate would increase or decrease once per year for the last 23 years of your term. Whether your rate goes up or down depends on several factors, such as the economy and housing market.
At the beginning of your mortgage term, most of your monthly payment goes toward interest. Your monthly payment toward mortgage principal and interest stays the same throughout the years — however, less and less of your payment goes toward interest, and more goes toward the mortgage principal or the amount you originally borrowed.
Learn more:Â Adjustable-rate vs. fixed-rate mortgages
A 30-year fixed-rate mortgage is a good choice if you want a lower mortgage payment and the predictability that comes with having a fixed rate. Just know that your rate will be higher than if you choose a shorter term and will result in paying significantly more in interest over the years.
You might like a 15-year fixed-rate mortgage if you want to pay off your home loan quickly and save money on interest. These shorter terms come with lower interest rates, and since you’re cutting your repayment time in half, you’ll save a lot in interest in the long run. But you’ll need to be sure you can comfortably afford the higher monthly payments that come with 15-year terms.
Read more: How to decide between a 15-year and 30-year fixed-rate mortgage
Typically, an adjustable-rate mortgage could be good if you plan to sell before the introductory rate period ends. Adjustable rates usually start lower than fixed rates, then your rate will change after a predetermined amount of time. However, 5/1 and 7/1 ARM rates have similar to (or even higher than) 30-year fixed rates recently. Before getting an ARM just for a lower rate, compare your rate options from term to term and lender to lender.
Mortgage rates have been inching down for six weeks. The decreases are relatively minor overall, though this week’s declines are the more noteworthy than usual.
Mortgage rates probably won’t plummet in the first half of 2025. Inflation is up, and it’s unlikely the Federal Reserve will cut the federal funds rate at its March meeting. Interest rates will probably be down by the end of the year, but any downturns will be gradual.
Read more: When will the housing market crash again?
According to Freddie Mac, the national average 30-year mortgage rate is down nine basis points from last week to 6.76%, and the average 15-year mortgage rate has decreased by 10 basis points to 5.94%.
According to their February housing forecasts, the Mortgage Bankers Association (MBA) expects the 30-year mortgage rate to end 2025 at 6.50%, and Fannie Mae predicts it will land at 6.60%.
Mortgage rates could increase here and there in 2025, but there’s a good chance they will actually decrease by the end of the year.