Today's Mortgage Rates, October 12, 2024 | Rates Are Flat for Now. But They Should Fall Next Year.

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• Mortgage rates for October 12, 2024, remain near 6.20%, according to Zillow data.
• Rates increased earlier this month and have been holding steady this week.
• Experts believe rates will ease in 2025, but they might not drop much further this year.

Mortgage rates held steady this week after rising earlier this month. Average 30-year rates remain around 6.20%, according to Zillow data. Last month, they were 5.74%. 

Mortgage rates have increased in response to stronger-than-expected labor market data and shifting expectations around future Federal Reserve rate cuts. Right now, investors are betting that the Fed will lower its benchmark rate by 25 basis points at each of its two remaining meetings this year. This is more conservative than what markets were initially pricing in.

Most experts believe mortgage rates will go down further in 2025 as the Fed continues cutting rates. But they're unlikely to drop much in the near term unless incoming data suggests that the labor market is weakening.

What Are Today's Mortgage Rates?

What Are Today's Refinance Rates?

Mortgage Calculator

Use our free mortgage calculator to see how today's interest rates will affect your monthly payments.

By clicking on "More details," you'll also see how much you'll pay over the entire length of your mortgage, including how much goes toward the principal vs. interest.

Current 30-Year Mortgage Rates

Average 30-year mortgage rates are around 6.20%, according to Zillow data. Rates have dropped over the last several months, and they averaged around 5.74% in September. 

The 30-year fixed-rate mortgage is the most popular 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, like a 15-year mortgage. 

Current 15-Year Mortgage Rates

Average 15-year mortgage rates are in the mid 5% range, according to Zillow data. In September, 15-year rates averaged 5.01%, but they've been trending higher so far this month.

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.

Current Mortgage Refinance Rates

After dropping last month, refinance rates have been a bit higher so far in October. In September, 30-year refinance rates averaged 5.89%, while 15-year refinance rates were around 5.19%. 

How Much Do Mortgage Rates Need to Drop to Refinance?

If you're wondering if you should refinance now that mortgage rates have dropped a bit, you'll need to crunch the numbers to see if it makes sense. Some experts advise only refinancing if you can reduce your rate by a percentage point or more, but it really comes down to whether it works for your individual circumstances.

If you can save enough each month by refinancing that you can recoup your costs in a reasonable amount of time, it might be worth it. You can calculate this by dividing your closing costs by the amount you're saving on your monthly mortgage payment. So, if you paid $3,000 to refinance and were able to lower your monthly payment by $200, it would take you 15 months to break even on your refinance. 

5-Year Mortgage Rate Trends

Here's how 30-year and 15-year mortgage rates have trended over the last five years, according to Freddie Mac data.

What Factors Influence Mortgage Rates?

Mortgage rates are determined by a variety of different factors, including larger economic trends, Federal Reserve policy, your state's current mortgage rates, the type of loan you're getting, and your personal financial profile.

While many of these factors are out of your control, you can work on improving your credit score, paying off debt, and saving for a larger down payment to ensure you get the best rate possible. 

How Does the Fed Rate Affect Mortgage Rates?

The Fed increased the federal funds rate dramatically in 2022 and 2023 to try to slow economic growth and get inflation under control. Inflation has since slowed significantly, but it's still a bit above the Fed's 2% target rate.

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 policy to affect the broader economy. 

Fed officials lowered rates at their meeting in September, and they're expected to lower rates two more times this year. This helped mortgage rates trend down last month.

Will Mortgage Rates Drop in October 2024?

Rates went down last month, but they've been slightly higher so far in October. Rates trended down as the economy cooled and the Fed geared up to start cutting the federal funds rate. Now that the Fed has cut rates, mortgage rates may not drop much in October. 

But if incoming data suggests that the economy is weakening, mortgage rates could fall.

How Low Will Mortgage Rates Go?

Mortgage rates are unlikely to drop back down to the historic lows of 2020 and 2021, when 30-year fixed rates fell below 3%. But rates are expected to continue to ease throughout the next year or two, and it's possible rates could ultimately settle in closer to 5% in a few years. 

Will Mortgage Rates Go Down in 2025? 

Most major forecasts expect mortgage rates to go down throughout 2025 as the Fed continues to lower its benchmark rate. But because mortgage rates are influenced by the economy, this forecast could change depending on how the economy evolves in 2025.