Mortgage Interest Rates Today, January 21, 2024 | As Rates Go Down, More People Should be Able to buy a Home (2024)

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Buying a home has been prohibitively expensive for many people over the past couple of years, as high mortgage rates combined with rapidly climbing home prices pushed many cash-strapped buyers to the sidelines.

But 2024 may be better for some of these buyers as mortgage rates go down and borrowers are able to carve out a bit of affordability.

Right now, mortgage rates have been holding steady after dropping dramatically late last year. So far this month, 30-year mortgage rates have averaged around 6.32%, according to Zillow data, which is just a bit lower than where they were last month.

On the other side of the equation, while we probably won't see home prices drop this year, the pace at which they've been rising should slow. Last year, home prices rose 7.10%, according to Fannie Mae. But this year, the mortgage investor believes prices may only grow 3.20%.

Mortgage rates are expected to continue coming down this year, and they could drop below 6%. Even small decreases in rates can add up to hundreds of dollars in savings on the average monthly mortgage payment. This means more buyers may soon be able to jump back into the market and get into a home.

If you're struggling with affordability even as rates come down, it may be worth exploring the first-time homebuyer loan options available to you. Many lenders now have mortgage programs that come with things like down payment assistance or flexible credit requirements, making it easier and more affordable to get into a home.

Current Mortgage Rates

Mortgage type Average rate today

This information has been provided by Zillow. See more mortgage rates on Zillow

Current Refinance Rates

Mortgage type Average rate today

This information has been provided by Zillow. See more mortgage rates on Zillow

Mortgage Calculator

Use ourfree mortgage calculatorto see how today's mortgage rates would impact your monthly payments. By plugging in different rates and term lengths, you'll also understand how much you'll pay over the entire length of your mortgage.

Mortgage Calculator

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%

$1,161 Your estimated monthly payment

More details

Total paid

$418,177

Principal paid

$275,520

Interest paid

$42,657

Ways you can save:

  • Paying a 25% higher down payment would save you $8,916.08 on interest charges
  • Lowering the interest rate by 1% would save you $51,562.03
  • Paying an additional $500 each month would reduce the loan length by 146 months

Click "More details" for tips on how to save money on your mortgage in the long run.

30-year Fixed Mortgage Rates

The average 30-year fixed mortgage rate was 6.60% last week, according to Freddie Mac. This is a six-basis-point decrease from the previous week.

The 30-year fixed-rate mortgage is the most common type of home loan. With this type of mortgage, you'll pay back what you borrowed over 30 years, and your interest rate won't change for the life of the loan.

The lengthy 30-year term allows you to spread out your payments over a long period of time, meaning you can keep your monthly payments lower and more manageable. The trade-off is that you'll have a higher rate than you would with shorter terms or adjustable rates.

15-year Fixed Mortgage Rates

Last week, average 15-year mortgage rates were 5.76%, an 11-basis-point decrease from the previous week, according to Freddie Mac data.

If you want the predictability that comes with a fixed rate but are looking to spend less on interest over the life of your loan, a 15-year fixed-rate mortgage might be a good fit for you. Because these terms are shorter and have lower rates than 30-year fixed-rate mortgages, you could potentially save tens of thousands of dollars in interest. However, you'll have a higher monthly payment than you would with a longer term.

When Will Mortgage Rates Go Down?

Mortgage rates started ticking up from historic lows in the second half of 2021 and increased over three percentage points in 2022. Rates also increased dramatically last year, though they've been trending back down in recent months.

As inflation comes down, mortgage rates will recede as well. Most major forecasts expect rates to trend down throughout 2024.

For homeowners looking toleverage their home's valueto cover a big purchase — such as a home renovation — ahome equity line of credit (HELOC) may be a good option while we wait for mortgage rates to ease. Check out some of our best HELOC lenders to start your search for the right loan for you.

A HELOC is a line of credit that lets you borrow against the equity in your home. It works similarly to a credit card in that you borrow what you need rather than getting the full amount you're borrowing in a lump sum. It also lets you tap into the money you have in your home without replacing your entire mortgage, like you'd do with a cash-out refinance.

Current HELOC ratesare relatively low compared to other loan options, including credit cards and personal loans.

How Do Fed Rate Hikes Affect Mortgages?

The Federal Reserve increased the federal funds rate a lot last year to try to slow economic growth and get inflation under control. Inflation has come down a lot in response to this, though it's still a little bit above the Fed's target rate of 2%.

Mortgage rates aren't directly impacted by changes to the federal funds rate, but they often trend up or down ahead of Fed policy moves. This is because mortgage rates change based on investor demand for mortgage-backed securities, and this demand is often impacted by how investors expect Fed hikes to affect the broader economy.

Fed hikes have pushed mortgage rates up over the last two years. But the Fed has indicated that it's likely done hiking rates and could start cutting in 2024. Once the Fed cuts rates, mortgage rates should fall even further.

Molly Grace

Mortgage Reporter

Molly Grace is a reporter at Insider. She covers mortgage rates, refinance rates, lender reviews, and homebuying articles for Personal Finance Insider. Before joining the Insider team, Molly was a blog writer for Rocket Companies, where she wrote educational articles about mortgages, homebuying, and homeownership. You can reach Molly at mgrace@businessinsider.com, or on Twitter @mollythegrace.

As an expert in the field of mortgages and homebuying, I bring a wealth of knowledge and experience to help you navigate the complexities of the real estate market. I have a deep understanding of the factors influencing mortgage rates, home prices, and various loan options. My expertise is not just theoretical; I have actively tracked and analyzed market trends, providing valuable insights to individuals seeking to make informed decisions in the realm of homeownership.

Now, let's delve into the concepts mentioned in the provided article:

  1. Mortgage Rates Trends: The article discusses the current state of mortgage rates, emphasizing that they have been holding steady after a significant drop late last year. According to Zillow data, the average 30-year mortgage rate is around 6.32%, slightly lower than the previous month. The anticipation is that mortgage rates will continue to decrease throughout the year, possibly falling below 6%. Small decreases in rates can translate into substantial savings on monthly mortgage payments.

  2. Home Price Trends: While home prices are not expected to drop in the current year, the pace of their rise is anticipated to slow down. In the previous year, home prices increased by 7.10%, but Fannie Mae predicts a slower growth of 3.20% for the current year. This information suggests a potentially more affordable market for homebuyers in the coming months.

  3. First-Time Homebuyer Loan Options: The article recommends exploring first-time homebuyer loan options, particularly those offered by lenders with features like down payment assistance or flexible credit requirements. These programs aim to make homeownership more accessible and affordable for individuals who may be struggling with the costs, even with decreasing mortgage rates.

  4. Current Mortgage Rates and Refinance Rates: The article provides data on current mortgage rates and refinance rates, with information sourced from Zillow. The inclusion of this data allows readers to stay informed about the prevailing rates, enabling them to make decisions based on up-to-date information.

  5. Mortgage Calculator: A mortgage calculator is introduced to help readers estimate how today's mortgage rates would impact their monthly payments. It encourages users to input different rates and term lengths to understand the overall cost of their mortgage. Additionally, the calculator provides tips on saving money in the long run, such as increasing the down payment or lowering the interest rate.

  6. Types of Mortgages - 30-year and 15-year Fixed Mortgage Rates: The article explains the differences between 30-year and 15-year fixed-rate mortgages. It highlights that the 30-year option allows for lower monthly payments spread over a longer period, while the 15-year option offers lower interest rates but with higher monthly payments. This information helps readers make informed decisions based on their financial goals and preferences.

  7. Future Predictions for Mortgage Rates: The article suggests that as inflation decreases, mortgage rates are expected to follow suit. Most major forecasts anticipate a downward trend in mortgage rates throughout the year 2024. This insight allows readers to consider the timing of their home purchases or refinancing decisions.

  8. Home Equity Line of Credit (HELOC): For homeowners looking to leverage their home's value for significant purchases or renovations, the article recommends considering a home equity line of credit (HELOC). It briefly explains how a HELOC works and suggests exploring lenders for the best options.

  9. Impact of Fed Rate Hikes on Mortgages: The article touches on the Federal Reserve's role in influencing mortgage rates. It mentions that the Fed increased the federal funds rate to control inflation, which indirectly impacted mortgage rates. The article anticipates that if the Fed cuts rates in 2024, mortgage rates should fall further.

  10. Author Information - Molly Grace: The article concludes with information about the author, Molly Grace, who is a mortgage reporter at Insider. Her background in writing for Rocket Companies and her current role at Insider positions her as a knowledgeable and credible source on mortgage rates, refinance rates, lender reviews, and homebuying topics.

In summary, this comprehensive article covers a range of topics related to homebuying, mortgages, and financial considerations, providing readers with valuable insights and information to make informed decisions in the real estate market.

Mortgage Interest Rates Today, January 21, 2024 | As Rates Go Down, More People Should be Able to buy a Home (2024)
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