Average rates inch higher, pushing 30-year benchmark to 7.00%

Average mortgage rates inch higher across popular terms as of Tuesday, December 24, 2024, pushing the 30-year fixed rate to 7.00% nearly a week after the Federal Reserve announced a third consecutive cut to its benchmark interest rate. The year’s rate volatility for large loans like mortgages reflect continued uncertainty around inflation, 2025 Federal Reserve projections and the evolving economic agenda of a new presidential administration. Looking ahead to 2025, Freddie Mac forecasts a gradual decline in mortgage rates alongside continued economic growth, which could create more opportunities for both homebuyers and homeowners considering refinancing.

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The current average interest rate for a 30-year fixed mortgage is 7.00% for purchase and 7.05% for refinance, up 21 basis points from 6.79% for purchase and up 29 basis points from 6.76% for refinance last Tuesday. The average rate for shorter 15-year terms is 6.27% for purchase and 6.30% for refinance, up 16 basis points from 6.11% for purchase and up 17 basis points from 6.13% for refinance this time last week. The average purchase rate on a 30-year fixed jumbo mortgage is 7.02%.

⭐️ Must read: 6 ways to get the lowest rate on your next mortgage

Purchase rates for Tuesday, December 24, 2024

Refinance rates for Tuesday, December 24, 2024

Source: Bankrate lender survey

Mortgage rates are determined by many factors that include inflation rates, economic conditions, housing market trends and the Federal Reserve’s target interest rate. Lenders also consider your personal credit score, the amount available for your down payment, the property you’re interested in and other terms of the loan you’re requesting, like 30-year or 15-year offers.

Because rates can fluctuate daily, it’s best to lock in a mortgage rate when you’re comfortable with the overall conditions of your mortgage or home loan.

Dig deeper

Freddie Mac weekly mortgage report: Mortgage rates increase ahead of holidays

Freddie Mac reports an average 6.72% for a 30-year fixed-rate mortgage, up 12 basis points from last week’s average 6.60%, according to its weekly Prime Mortgage Market Survey of nationwide lenders published on December 19, 2024. The fixed rate for a 15-year mortgage is 5.92%, up 8 basis points from last week’s average 5.84%. These figures are lower than a year ago, when rates averaged 6.67% for a 30-year term and 5.95% for a 15-year term.

“This week, mortgage rates crept up to a similar average as this time in 2023,” says Sam Khater, Freddie Mac’s chief economist, of the latest data. “For the most part, mortgage rates have moved between 6 and 7 percent over the last 12 months. Homebuyers are slowly digesting these higher rates and are gradually willing to move forward with buying a home, resulting in additional purchase activity.”

Freddie Mac updates its Prime Mortgage Market Survey data weekly on Thursdays at noon ET.

4 top factors that affect your mortgage rate

The difference of even half a percentage point on your interest rate can save you hundreds of dollars a month and thousands of dollars over the life of your mortgage, but the mortgage rate you’re ultimately offered depends on the mortgage you’re interested in, payments you’re willing to pay up front and your overall financial health.

• Your credit score. Knowing your credit score can help you shop around for lenders you’re likely to get approval through, as well as understand the type of mortgage for your lifestyle and income. The best mortgage rates go to borrowers with good to excellent credit — typically a FICO credit score of at least 670 — though even with fair credit, you may be able to find a mortgage offering decent rates.

• Your down payment. The more money you can put down toward your home, the better it benefits your interest rate. Paying at least 20% of your home’s purchase price up front generally results in a lower interest rate — and you can avoid mortgage insurance, which increases your total cost.

• Your loan term. While the 30-year mortgage remains a popular way for Americans to purchase homes, you can find terms of 20 years, 15 years and 10 years. Shorter loan terms usually come with lower interest rates, though with higher monthly payments. Longer mortgage terms can result in smaller monthly payments, though you’ll pay higher total interest over the life of your loan.

• Interest rate type. Mortgage rates come with two basic types of rates — fixed and variable. Fixed-rate mortgages offer a consistent interest rate over the life of your loan, whereas adjustable-rate mortgages (ARMs) often start with a lower fixed rate for an agreed-on time and then adjust to a variable rate based on market conditions for the remainder of your term. Choosing between these two rates depends on your financial goals and tolerance for risk.

Prequalification vs. preapproval: What’s the difference?

Both processes help you determine how much house you can afford, though each in a different way. Think of prequalification as a quick peek into your wallet: It gives you a rough idea of what you can borrow based on the most basic information only. Preapproval, on the other hand, is when a lender takes a deeper dive into your finances to give you a more precise and reliable estimate of how much they’re willing to lend you. Learn more about these important steps of the homebuying journey in our comprehensive guide to prequalification and preapproval.

Dig deeper: How much does a change in mortgage rates actually matter?

Mortgage rates in the news

Mortgage lenders keep a close eye on the benchmark federal funds target interest rate set by the Federal Reserve, the U.S.’s central bank. Called the Fed rate, it’s the benchmark that affects rates on deposit accounts, loans and other financial products. Typically, as the fed rate rises, so do APYs on savings products like CDs, high-yield savings accounts, money market accounts and home equity loans. Mortgage rates don’t follow the Fed rate as closely, but they do reflect the same elements the Fed evaluates when making decisions on the benchmark — especially inflation — which means as the Fed rate increases, mortgage rates also tend to rise.

After increasing the target interest rate 11 times from March 2022 to July 2023 in an effort to combat the highest inflation in four decades coming out of the pandemic, the Federal Reserve announced a highly anticipated half-point cut to its federal funds target interest rate on Sept. 18, followed by two additional quarter-point cuts after its November and December policy meetings.

December 18, 2024: Fed cuts rates by another quarter point — third straight cut since Sept.

At the conclusion of its eighth and final rate-setting policy meeting of the year on December 18, 2024, the Federal Reserve announced it was lowering the federal funds target interest rate by 25 basis points to a range of 4.25% to 4.50%. The Fed’s third consecutive cut this year comes after slashing the Fed rate by a jumbo half point in September and quarter point in November.

Xem thêm : See How Today’s Rates Compare

In its post-meeting statement, the Federal Reserve said it was lowering the target range, citing “labor market conditions have generally eased, and the unemployment rate has moved up but remains low” while acknowledging a “somewhat elevated” inflation rate. “In considering additional adjustments,” the Fed said it would “carefully assess incoming data, the evolving outlook, and the balance of risks.”

Policymakers estimate just two additional cuts in 2025, down from four cuts projected after Sept.’s meeting — though in addition to mixed economic signals that include stubborn inflation and strong job growth, the impacts of a Trump presidency leave the market uncertain as to how deep the cuts to expect.

What to expect at the Fed’s next policy meeting: January 28–29, 2025

It’s too early to predict what the Federal Reserve will decide at its next policy meeting on January 28 and January 29, 2025, though many experts expect the Fed will announce additional cuts to the federal funds rate in the new year.

Economists are keeping a close eye on inflation and labor reports amid speculation as to timing of future cuts to the Fed rate, with inflation data indicating a continued decline from a peak of 9.1% in June 2022 to rates that have ranged from 2.5% and 4% since May 2023.

An eagerly awaited jobs report released on December 6 showed hiring rebounding sharply, strengthening the case for a federal rate cut this month. Employers added 227,000 jobs to payrolls in November — significantly higher than economists’ expectations and a dramatic increase from October’s revised gain of 36,000 jobs. The jobs report also showed upward revisions for previous months, with September payrolls revised up by 32,000 to 255,000 and October revised up by 24,000. The unemployment rate edged up moderately to 4.2% from October’s 4.1%.

Fresh economic readings the following week, however, revealed persistent inflation, starting with the consumer price index released on December 11 — a widely used indicator of inflation — which showed the prices of consumer goods and services rising 2.7% year over year in November, up from 2.6% in October though largely in line with forecasts. Producer price index data released on December 12 reported wholesale prices — or the prices manufacturers pay to producers of goods and services — rising 3% year over year in November, up from 2.4% in October, largely driven by a surge in food costs.

At a press conference following December’s FOMC meeting, Federal Reserve Chair Jerome Powell said about future Fed rate changes, “We’re not on any preset course,” adding, “we’re going to be cautious about new cuts” in the new year.

The Powell-led rate-setting panel will announce a rate decision at the conclusion of its meeting on Wednesday, January 29, 2025, at 2 p.m. ET.

Dig deeper: When’s the next Federal Reserve meeting? What to expect — and how it affects your finances

NAR settlement and realtor commission changes

On April 23, a judge granted preliminary approval to a $418 million antitrust settlement with the National Association of Realtors that ends customary real estate broker commissions of up to 6% of a home’s purchase price. Effective August 17, real estate agents are required to provide interested buyers with a representation agreement before touring a home. This agreement is a new step designed to introduce transparency into the buyer’s relationship with the agent, the agent’s fees and how those fees are paid. The settlement isn’t expected to affect mortgage rates, yet it paves the way for consumers to negotiate what they pay for an agent’s services, saving them money in the long run.

Frequently asked questions about mortgage rates

What are mortgage lenders?

Lenders are financial institutions that loan money to homebuyers. A lender is different from a loan servicer, which typically handles the operational tasks of your loan, like processing payments, talking directly with borrowers and sending monthly statements.

What does it mean to refinance a mortgage?

Refinancing is a process of trading in your current mortgage to another lender for lower rates and better terms than your current loan. With a refinance, the new lender pays off your old mortgage and you then pay your monthly statements from the new lender. Learn more about how the process works in our guide to timing your refinancing.

What is a mortgage rate lock?

A mortgage rate lock is a guarantee from your lender that your interest rate won’t change for a set period of time — often 30 to 60 days or more. It allows you to lock in today’s rates to protect you from market fluctuations during the homebuying or refinancing process. Learn more in our guide to mortgage rate locks, including how best to time this tool.

I’ve owned a home in the past. Can I still qualify for homebuyer assistance?

Yes. While many homebuyer assistance programs are for first-time buyers, both the IRS and the Department of Housing and Urban Development (HUD) consider you a first-time homebuyer if neither you nor your spouse has owned a principal residence within the past three years. Learn more about programs that might be available to you — even if you’ve already owned a home — in our guide to homebuyer assistance.

What is an adjustable-rate mortgage?

An adjustable-rate mortgage — commonly called an ARM — is a type of home loan with a variable rate. Unlike a fixed-rate mortgage, which locks in an interest rate and predictable payments that apply over the full loan term, an ARM starts at an initial fixed rate for a period of three years or longer, after which it adjusts to a higher rate and then further adjusts periodically over the remaining life of the loan.

For a 5/1 adjustable-rate mortgage, the first number indicates the number of years at the fixed rate — or five years — and the second number indicates the rate at which the mortgage rate readjusts after — in this case, each year or annually.

Can I negotiate my mortgage rate?

It’s not likely — lenders consider the market conditions and other financial factors when determining rates. You can, however, ask about how you can reduce costs in other ways when comparing mortgage lenders. For instance, many lenders offer lower rates in exchange for “mortgage points” — upfront fees you pay to your lender. A mortgage point could cost 1% of your mortgage amount, which means about $5,000 on a $500,000 home loan, with each point lowering your interest rate by about 0.25%, depending on your lender and loan. Learn more in our guide to getting the lowest rate on your next mortgage.

What happens to my mortgage after I die?

Your home’s mortgage is treated a little differently from your other debt, which is typically settled through your estate before any assets are passed along to your heirs. Most mortgages aren’t transferable, which means the home must be paid off in full to transfer the property title.

But that also means only those who signed on to the loan can be held liable for a mortgage. Learn more about what happens to your mortgage after death.

I already own a home. Can I borrow against my home’s equity to cover a high-dollar or unexpected cost?

Yes. If it’s cash you’re after to pay for home renovations, pay off high-interest credit card debt or cover an emergency, tapping into your home’s value is a way to unlock lower rates without refinancing — and without losing your low-rate mortgage. You typically need good to excellent credit and to have built enough equity in your home. Learn how to get equity out of your home as rates come down.

Editor’s note: Rates shown are as of Tuesday, December 24, 2024, at 6:15 a.m. ET. APYs and promotional rates for some products can vary by region and are subject to change.

Sources

• Mortgage Industry Insights, Bankrate. Accessed December 24, 2024.

• Economic, Housing and Mortgage Market Outlook – November 2024, Freddie Mac. Accessed December 24, 2024.

• Primary Mortgage Market Survey, Freddie Mac. Accessed December 20, 2024.

• Employment Situation Summary, U.S. Bureau of Labor and Statistics. Accessed December 9, 2024.

• Consumer Price Index Summary, U.S. Bureau of Labor and Statistics. Accessed December 12, 2024.

• Producer Price Index News Release summary, U.S. Bureau of Labor and Statistics. Accessed December 13, 2024.