6.7% as of December 20, 2024

Mortgage rates have surged today, December 20, 2024, reaching 6.7%. This increase follows the Federal Reserve’s recent cut of 25 basis points to the federal funds rate, surprising many borrowers as they expect mortgage rates to decline with any Fed rate cut. However, current economic conditions and revised Federal Reserve projections for 2025 indicate that mortgage rates may remain elevated for a while, complicating affordability for potential homebuyers significantly.

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Today’s Mortgage Rates Rise to 6.7% – December 20, 2024

Key Takeaways:

• Mortgage rates today stand at 6.7%, up nearly 25 basis points from before the Fed meeting.
• The 30-year fixed mortgage rate averages 6.68%, while 15-year fixed rates hover around 6.01%.
• Recent economic projections suggest fewer Fed cuts in 2025, keeping mortgage rates high.
• To refinance, borrowers should consider whether their new rate is at least 1% lower than their current rate to see if it’s worth it.

Current Mortgage Rate Overview

As of December 20, 2024, the mortgage rates are as follows according to data from Zillow:

Table 1: Current Mortgage Rates

Mortgage Type	Average Rate (%)
30-year Fixed	6.68
20-year Fixed	6.40
15-year Fixed	6.01
7/1 ARM	6.50
5/1 ARM	6.68
30-year FHA	5.58
30-year VA	6.00

Table 2: Current Mortgage Refinance Rates

Mortgage Type	Average Rate (%)
30-year Fixed Refinance	6.73
20-year Fixed Refinance	6.37
15-year Fixed Refinance	6.00
7/1 ARM Refinance	6.75
5/1 ARM Refinance	5.91
30-year FHA Refinance	5.50
30-year VA Refinance	6.06

This surge in mortgage rates reflects the ongoing tension between the Federal Reserve’s monetary policy and broader economic indicators such as inflation and employment rates. The Fed’s decision on December 18 to cut the federal funds rate was intended to provide some relief amidst persistent inflation; however, the immediate reaction in the mortgage market has been an uptick in rates, illustrating how complex the relationship between Fed policy and mortgage rates can be.

Understanding Mortgage Rates

Mortgage rates are influenced by a set of complex factors including the Federal Reserve’s monetary policy, inflation rates, and the overall demand for housing. Here’s a deeper look at some of these elements:

1. Federal Reserve Impact: The Federal Reserve raises and lowers the federal funds rate to influence economic activity and inflation. Typically, when the Fed cuts rates, it signals easier borrowing conditions. However, mortgage rates often respond to anticipated Fed actions rather than the actions themselves. Investors tend to price in these expectations beforehand, which can cause mortgage rates to rise even when the Fed cuts rates.
2. Inflation and Investment: Currently, inflation has been quite stubborn. Even as the Fed implements rate cuts, rising inflation expectations can push mortgage rates higher. Economists anticipate that as inflation remains elevated, the Fed will adopt a cautious approach, signaling fewer cuts than previously expected, which has further pushed mortgage rates up.
3. Investor Sentiment: The sentiment among investors regarding future economic conditions also plays a pivotal role. If investors expect a stable or growing economy, they will demand higher yields on mortgage-backed securities, thus increasing mortgage rates.

Long-term Trends in Mortgage Rates

Historically, mortgage rates peaked at over 8% in late 2022 before trailing down slightly. As 2024 brought about additional Fed actions, rates were expected to improve; however, the latest adjustments reflect that high inflation rates may keep mortgage rates closer to the 6-7% mark for the foreseeable future.

Xem thêm : 30-Year Mortgage Rates Tick Down From Nearly 6-Month High

Over the last five years, here’s a trend of 30-year mortgage rates specifically:

Year	Average 30-Year Fixed Rate (%)
2020	2.82
2021	3.11
2022	5.43
2023	6.65
2024	6.70 (current)

Calculating the Costs

If you’re considering purchasing a home at the average price of $350,000 today with a 30-year fixed mortgage at a rate of 6.7%, your monthly payment would be roughly $2,273. Here’s a quick breakdown of how that calculation looks:

Table 3: Mortgage Calculation Example

Calculation Component	Amount
Loan Amount	$350,000
Interest Rate (APR)	6.7%
Loan Term	30 years
Estimated Monthly Payment	$2,273
Total Payment Over 30 Years	$816,880
Total Interest Paid	$466,880

When you plug these numbers into a mortgage calculator, you would find that the monthly principal and interest payment is approximately $2,273. Over the life of the loan, you’d pay around $466,880 in interest alone, showing how significantly interest rates affect long-term financial outcomes.

The Future of Mortgage Rates

Looking ahead, it is clear that while some experts predict a potential drop in rates in 2025, the downward shift may not be substantial. Current forecasts suggest that while home demand may stabilize, the challenges of inflation and economic infrastructure continue to discourage major decreases in mortgage rates.

Projections for 2025 include speculation of only a couple of rate cuts from the Fed, leading to higher mortgage rates compared to historical lows seen previously.

Table 4: Expected Mortgage Rate Trends for 2025

Expected Event	Impact on Rates (%)
Possible Fed Rate Cut	+0.25% to -0.00%
Inflation Remains Elevated	+0.00% to +0.50%
Stable Economic Conditions	+0.00% to -0.25%

If the stabilization of economic indicators shows positive movement, rates could gradually decrease towards the 5-6% range before the end of next year, but dropping back down to historic lows seems improbable.

Adjustable Rate Mortgages (ARMs)

In today’s market, many borrowers might consider adjustable-rate mortgages (ARMs) which often start at lower rates than the existing fixed-rate options. However, this comes with the risk of rates adjusting upwards after an initial fixed period. Here’s a quick comparison:

Table 5: Fixed-Rate vs. Adjustable-Rate Mortgages

Feature	Fixed-Rate Mortgage	Adjustable-Rate Mortgage
Payment Stability	Consistent monthly payments	Payments can fluctuate
Initial Rates	Higher initial rates	Lower initial rates
Long-Term Rate Guarantee	Yes	No, rates adjust after initial term
Best for	Long-term homeowners	Borrowers who expect to refinance or sell soon

Conclusion

Xem thêm : Most rates increase | Mortgage rates for December 31, 2024

With mortgage rates rising to 6.7% as of December 20, 2024, potential homebuyers and those seeking to refinance will need to carefully assess their options and financial situations. Increased awareness regarding how the Federal Reserve’s actions impact mortgage rates can help both new and seasoned borrowers make informed decisions.

As the economy continues to evolve and the Fed reviews its strategies for handling inflation, mortgage rates will likely stay at these elevated levels for a considerable time. Keeping an eye on economic indicators and Federal policy can help guide potential buyers through this complex, often intimidating journey.