Mortgage Interest Rates Today, December 25, 2023 | Rates Drop by Over Half a Percentage

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Mortgage rates have been decreasing this month, and they plummeted last week. According to Freddie Mac, current 30-year mortgage rates are 0.55% lower than they were at the end of November.

As long as inflation continues to ease, rates should stick near their current levels or even continue inching down. Experts also expect mortgage rates to go down in 2024, giving borrowers even more affordability in the new year.

In its December forecast, the Mortgage Bankers Association predicted this rate could fall to 6.1% by the end of 2024, and 5.5% by the end of 2025. This would drastically improve mortgage affordability for borrowers.

Rates fell sharply following news from the Federal Reserve that it currently plans to lower the federal funds rate three times in 2024. Now some experts believe the Fed could even cut rates five times next year. If this happens, mortgage rates could fall even more than predicted.

Today’s mortgage rates

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Today’s refinance rates

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Mortgage Calculator

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

Mortgage Calculator

Your estimated monthly payment

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

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.

Mortgage Rate Projection for 2024

Mortgage rates started ticking up from historic lows in the second half of 2021 and increased over three percentage points in 2022.

But many forecasts expect rates to fall next year now that inflation has been coming down. In the last 12 months, the Consumer Price Index rose by 3.1%, a significant slowdown compared when it peaked at 9.1% last year.

For homeowners looking to leverage their home’s value to cover a big purchase — such as a home renovation — a home 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 rates are relatively low compared to other loan options, including credit cards and personal loans. 

When Will House Prices Come Down?

Home prices declined a bit on a monthly basis late last year, but we aren’t likely to see drops this year or next.

Fannie Mae researchers expect prices to increase 6.7% overall in 2023 and 2.8% in 2024, while the Mortgage Bankers Association expects a 5.7% increase in 2023 and a 4.1% increase in 2024.

Sky high mortgage rates have pushed many hopeful buyers out of the market, slowing homebuying demand and putting downward pressure on home prices. But rates may start to drop soon, which would remove some of that pressure. The current supply of homes is also historically low, which will likely keep prices from dropping too far.

What Happens to House Prices in a Recession?

House prices usually drop during a recession, but not always. When it does happen, it’s generally because fewer people can afford to purchase homes, and the low demand forces sellers to lower their prices.

How Much Mortgage Can I Afford?

A mortgage calculator can help you determine how much house you can afford. Play around with different home prices and down payment amounts to see how much your monthly payment could be, and think about how that fits in with your overall budget.

Typically, experts recommend spending no more than 28% of your gross monthly income on housing expenses. This means your entire monthly mortgage payment, including taxes and insurance, shouldn’t exceed 28% of your pre-tax monthly income.

The lower your rate, the more you’ll be able to borrow, so shop around and get preapproved with multiple mortgage lenders to see who can offer you the best rate. But remember not to borrow more than what your budget can comfortably handle.

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