Mortgage Interest Rates Today, January 26, 2024 | As Rates Drop, Borrowers Could Save Hundreds Each Month (2024)

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Mortgage rates have inched up a bit over the past few days, but they're still relatively low compared to where they were in the fall of 2023, and rates should go down further in 2024.

Average 30-year mortgage rates increased to 6.69% this week, according to Freddie Mac, a nine-point increase from the previous week's average.

"The 30-year fixed-rate has remained within a very narrow range over the last month, settling in at 6.69% this week," Sam Khater, Freddie Mac's chief economist, said in a press release. "Given this stabilization in rates, potential homebuyers with affordability concerns have jumped off the fence back into the market. Despite persistent inventory challenges, we anticipate a busier spring homebuying season than 2023, with home prices continuing to increase at a steady pace."

When rates peaked in October 2023, average 30-year rates spiked up to 7.79%. On a $250,000 mortgage, this would amount to a $1,798 monthly mortgage payment. But with this week's average rate, a borrower would only pay $1,612 per month on that same loan amount — a $186 difference each month.

Lower mortgage rates can make a huge difference in how much you end up paying on your monthly housing payment, making homeownership more affordable for a larger number of people. In fact, Fannie Mae is currently predicting that rates could fall to 5.8% by the end of this year, which would translate to a $1,467 monthly payment on that $250,000 loan.

Mortgage Rates Today

Mortgage Refinance Rates Today

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Use ourfree mortgage calculatorto see how today's mortgage rates will affect your monthly and long-term payments.

By plugging in different term lengths and interest rates, you'll see how your monthly payment could change.

30-Year Fixed Mortgage Rates

The average 30-year fixed mortgage rate was 6.69% last week, according to Freddie Mac. This is just nine basis points higher than it was last 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

Average 15-year mortgage rates were 5.96% last week, according to Freddie Mac data, which is a 20-basis-point increase from the previous week.

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.

Are Mortgage Rates Going Down?

Mortgage rates increased throughout most of 2023. But mortgage rates are expected to trend down in the coming months and years.

In the last 12 months, the Consumer Price Index rose by 3.4%. As inflation comes down and the Federal Reserve is able to start cutting the federal funds rate, mortgage rates should fall further as well.

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 Fed aggressively raised the federal funds rate in 2022 and 2023 to slow economic growth and get inflation under control. As a result, mortgage rates spiked.

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.

Now that the Fed has paused hiking rates, mortgage rates have come down a bit. Once the Fed starts cutting rates, which is likely to happen this year, mortgage rates should fall even further.