Rates decrease across the board

Purchase rates have decreased on almost all mortgage terms today. According to Zillow, the 30-year fixed mortgage rate has dropped by eight basis points to 6.64%, and the 15-year fixed rate is down by nine basis points to 6.03%.

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Although mortgage interest rates are expected to go down in 2025, the decreases will likely be gradual. If you’re otherwise financially ready to buy a home, you may not want to hold out for lower rates — you could be waiting a while. And remember, you can always refinance your mortgage later when rates are lower.

Dig deeper: 2025 housing market — Is it a good time to buy a house?

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

• 30-year fixed: 6.64%

• 20-year fixed: 6.48%

• 15-year fixed: 6.03%

• 5/1 ARM: 6.71%

• 7/1 ARM: 6.57%

• 30-year VA: 6.08%

• 15-year VA: 5.63%

• 5/1 VA: 6.27%

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

Read more: How to get the lowest mortgage rates possible

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

• 30-year fixed: 6.67%

• 20-year fixed: 6.54%

• 15-year fixed: 6.05%

• 5/1 ARM: 5.89%

• 7/1 ARM: 6.47%

• 30-year VA: 6.11%

• 15-year VA: 5.99%

• 5/1 VA: 6.50%

Again, the numbers provided are national averages rounded to the nearest hundredth. Refinance rates are usually higher than purchase rates.

A mortgage calculator can help you see how various mortgage term lengths and interest rates will affect your monthly payments. Use the free Yahoo Finance mortgage calculator to play around with different outcomes.

Our calculator also considers factors like property taxes and homeowners insurance when calculating your estimated monthly mortgage payment. This gives you a better idea of your total monthly payment than if you just looked at mortgage principal and interest.

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As a rule of thumb, 15-year mortgage rates are lower than 30-year mortgage rates. When comparing 15- versus 30-year mortgage rates, know that the shorter term will save you money on interest in the long run. However, your monthly payments will be higher because you’re paying off the same loan amount in half the time.

For example, with a $400,000 mortgage with a 30-year term and a 6.64% rate, you’ll make a monthly payment of about $2,565 toward your mortgage principal and interest. As interest accumulates over decades, you’ll end up paying $523,476 in interest.

If you get a $400,000 15-year mortgage with a 6.03% rate, you’ll pay about $3,382 monthly toward your principal and interest. However, you’ll only pay $208,744 in interest over the years.

If that 15-year mortgage monthly payment is too high, remember you can always make extra mortgage payments on your 30-year loan to pay off your mortgage faster and ultimately pay less interest.

With a fixed-rate mortgage, your rate is locked in from day one. However, you will get a new rate if you refinance your mortgage.

An adjustable-rate mortgage keeps your rate the same for a set period of time. Then the rate will go up or down depending on several factors, such as the economy and the maximum amount your rate can change according to your contract. For example, with a 7/1 ARM, your rate would be locked in for the first seven years, then change every year for the remainder of your term.

Adjustable rates sometimes start lower than fixed rates, but once the initial rate-lock period ends, you risk your interest rate going up. ARM rates have also been starting higher than fixed rates recently, so they’re not as good of a deal as usual.

Dig deeper: Adjustable-rate vs. fixed-rate mortgage — Which should you choose?

Mortgage rates trended downward from early August to the Sept. 18 Federal Reserve meeting, when the central bank announced a 50-basis-point slash to the federal funds rate. Since that announcement, mortgage rates have increased or held steady for the most part. (With occasional exceptions, such as today, when rates have dropped.)

The Fed decreased its rate again at its November and December meetings (by 25bps each time). The trajectory of future mortgage rates will largely depend on the Federal Reserve’s decision on whether or not to cut the federal funds rate at its 2025 meetings. Currently, it’s expected the Fed will cut its target rate twice next year.

When economists expect a Fed rate cut at its upcoming meeting, mortgage interest rates typically decrease ahead of the meeting rather than after. There’s still almost another month until the next Fed meeting, but according to the CME FedWatch tool, it looks likely the fed funds rate will stay the same at the January meeting. This means rates probably won’t significantly drop before Jan. 29.

Dig deeper: How the Federal Reserve rate decision impacts mortgage rates

According to Zillow data, today’s 30-year fixed rate is 6.64%, and the 30-year refinance rate is 6.67%. These are the national averages, so keep in mind the average in your state or city could be different. Your rate will also vary depending on your personal finances.

Mortgage rates will probably gradually drop throughout 2025, but they’re unlikely to plummet anytime soon.

Mortgage rates should go down in 2025, though probably not as drastically as previously expected. The Federal Reserve has indicated it only plans to cut the federal funds rate twice next year, so the changes could be relatively small.