Rates rise after strong employment report

Mortgage rates have gone up today. According to Zillow, the average 30-year fixed interest rate is up six basis points 6.78%and the 15-year fixed rate has risen three basis points to 6.07%.

You might be thinking, “Wait, aren’t rates supposed to drop in 2025?” Yes, that was the expectation for a long time, and ultimately mortgage rates are likely to decline by the end of the year. But many factors are keeping rates high for now. yesterday, the US Bureau of Labor Statistics released the jobs report for Decemberwhich showed that many more jobs were created last month than expected. These data lead many economists to suspect that the Federal Reserve will not cut the federal funds rate at its meetings in January or March.

If you’re not in a rush to buy a home, you can wait until late 2025 or 2026 to start looking for a home. But if you want to buy sooner rather than later, you might want to go ahead and start the process. After all, mortgage rates shouldn’t be plummeting anytime soon.

Deepen: What determines mortgage rates? It’s complicated.

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

Fixed at 30 years: 6.78%
Fixed at 20 years: 6.55%
Fixed at 15 years: 6.07%
5/1 ARM: 7.16%
7/1 ARM: 7.08%
VA of 30 years: 6.20%
15-year VA: 5.68%
5/1 GO: 6.36%

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

More information: 5 strategies to get the lowest mortgage rates

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

Fixed at 30 years: 6.84%
Fixed at 20 years: 6.66%
Fixed at 15 years: 6.15%
5/1 ARM: 7.50%
7/1 ARM: 7.44%
VA of 30 years: 6.13%
15-year VA: 5.86%
5/1 GO: 6.05%

Again, the figures provided are national averages rounded to the nearest hundredth. Mortgage refinance rates are usually higher than rates when you buy a home, although this is not always the case.

Use Yahoo Finance’s free service mortgage calculator to see how different interest rates and term lengths will affect your monthly mortgage payment. It also shows how the price of the home and the amount of the down payment influence it.

Our calculator includes homeowners insurance and property taxes in your estimated monthly payment. You even have the option to enter costs Private Mortgage Insurance (PMI) and homeowner association fees if applicable. These details result in a more accurate monthly payment estimate than if you just calculated the mortgage principal 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’re spreading your repayment over a longer period of time than, say, a 15-year mortgage. Your payments are predictable because, unlike an adjustable-rate mortgage (ARM), your rate won’t change from year to year. Most years, the only things that can affect your monthly payment are changes home owners insurance or property taxes.

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

A 30-year fixed term carries a higher rate than a shorter fixed term and is higher than the intro rate on a 30-year ARM. The higher the rate, the higher the monthly payment. You’ll also pay much more in interest over the life of your loan due to both the higher rate and longer term.

The pros and cons of 15-year fixed mortgage rates are basically interchangeable with 30-year 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. This will save you potentially hundreds of thousands of dollars in interest over the course of your loan.

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

Deepen: 15-year mortgages vs. to 30 years

Adjustable rate mortgages lock in your 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 main advantage is that the initial rate is usually lower than what you’ll get with a 30-year fixed rate, so your monthly payments will be lower. (Current average rates don’t necessarily reflect this, but in some cases, 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 after the introductory rate period ends, so you run the risk of your rate going up later. This could end up costing more, and your monthly payments are unpredictable from year to year.

But if you plan to move before the rate introduction period ends, you could reap the benefits of a low rate without risking a rate rise in the future.

More information: Adjustable rate mortgage vs. at fixed rate

First of all, now is a good time to buy a house compared to the last two years. Home prices are not rising as they were during the height of the COVID-19 pandemic. So if you want or need to buy a home soon, you should feel pretty good about the current climate.

Also, mortgage rates are not expected to fall as dramatically throughout 2025 as people expected a few months ago. Since rates are teetering now, and competition tends to be less fierce in the winter months, it could be a good time to buy.

According to Zillow, the national average 30-year mortgage rate is 6.78% right now. But keep in mind that averages may vary depending on where you live. For example, if you’re buying in a city with a high cost of living, rates could be higher.

Mortgage rates are expected to decline overall in 2025, although they likely won’t drop significantly anytime soon.

No, mortgage rates generally go up. They will probably fall later in the year, but the US is still in a high-rate environment.

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

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