Today's Mortgage Rates | Rates Are Forecast to Drop. Trump's Policies Could Change That.

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• Mortgage rates for January 10, 2025, are around 6.70%.
• Rates have gone up thanks to uncertainty around how the economy will respond to President-elect Trump's policies.
• If inflation remains stubborn and the Fed doesn't cut rates as much as expected, mortgage rates might not drop much this year.

Mortgage rates are supposed to trend down this year, but this hinges on inflation continuing to slow so the Federal Reserve can lower the federal funds rate.

So far this month, mortgage rates have been hovering in the high 6% range, according to Zillow data.

In December, the Fed lowered the federal funds rate by 25 basis points, its third and final cut of 2024. But policymakers also dialed back their expectations for future cuts since inflation has recently been somewhat sticky. This could impact how much mortgage rates go down this year.

The minutes of this meeting, released on Wednesday, show that Fed officials expressed some uncertainty around whether they could get inflation back down to their 2% target, especially with the incoming Trump administration promising big changes to the economy.

"Almost all participants judged that upside risks to the inflation outlook had increased," the minutes said. "As reasons for this judgment, participants cited recent stronger-than-expected readings on inflation and the likely effects of potential changes in trade and immigration policy."

Depending on how inflation trends in the coming months and how the economy responds to policies implemented by the new administration, we could see fewer Fed cuts than expected this year, which means mortgage rates may remain elevated for longer.

What Are Today's Mortgage Rates?

What Are Today's Refinance Rates?

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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 hovering in the upper 6% range, according to Zillow data. Rates averaged around 6.42% in December.

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 around 6%, according to Zillow data. In December, 15-year rates averaged 5.32%.

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

Refinance rates have been similar to purchase rates recently. In December, 30-year refinance rates averaged 6.52%, while 15-year refinance rates were around 5.88%.

How Much Do Mortgage Rates Need to Drop to Refinance?

If you're wondering if you should refinance now, 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.

The Fed lowered rates three times in 2024, but it may not cut as much in 2025. This means mortgage rates may only ease a little bit this year.

Will Mortgage Rates Drop in January 2025?

It's possible rates could drop this month, but it's more likely that they'll remain near their current levels.

Mortgage rates are starting 2025 elevated compared to where they've been in recent months. Rates could drop a bit in January if incoming data shows that inflation is slowing more than expected, but recent data has been somewhat sticky.

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 6% in the next couple of 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 this year.