Insider's experts choose the best products and services to help make smart decisions with your money (here’s how). In some cases, we receive a commission from our partners, however, our opinions are our own. Terms apply to offers listed on this page.
Mortgage rates have trended down in recent weeks. As inflation slows and the economy cools off, rates will likely continue to drop throughout 2023.
Lower mortgage rates have provided a modest boost to the housing market. According to the latest data from the National Association of Realtors, pending home sales increased in 2.5% month-over-month in December — the first time sales have increased since May.
"This recent low point in home sales activity is likely over," NAR chief economist Lawrence Yun said in a press release. "Mortgage rates are the dominant factor driving home sales, and recent declines in rates are clearly helping to stabilize the market."
Mortgage rates today
Mortgage refinance rates today
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.
30-year fixed mortgage rates
The current average 30-year fixed mortgage rate is 6.13%, according to Freddie Mac. This is a slight 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
The average 15-year fixed mortgage rate is 5.17%, a decrease from the prior 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.
How do Fed rate hikes affect mortgages?
The Federal Reserve has been increasing the federal funds rate to try to slow economic growth and get inflation under control. So far, inflation has slowed somewhat, but it's still well 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 hikes to affect the broader economy.
As inflation starts to come down, mortgage rates should, too. But the Fed has indicated that it's watching for sustained signs of slowing inflation, and it's not going to stop hiking rates any time soon — though it may start opting for smaller hikes at its next couple of meetings.
When will mortgage rates go down?
Mortgage rates increased dramatically in 2022, but they've started to trend down somewhat over the past couple of months.
In December 2022, the Consumer Price Index rose 6.5% year-over-year, a significant slowdown compared to the previous month. This is good news for mortgage borrowers and the broader economy.
As inflation comes down, mortgage rates likely will, too. But the Fed is looking for sustained signs of slowing inflation, which means it's not likely to stop hiking rates any time soon, though officials have said they expect to start slowing the pace of hikes. This should help ease the upward pressure on mortgage rates.
Are HELOCs a good idea right now?
Many homeowners gained a lot of equity over the past few years as home prices increased at an unprecedented rate. But because rates are so high now, tapping into that equity can be expensive.
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 still be a good option.
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.
Depending on your finances and the type of HELOC you get, you may be able to get a better rate with a HELOC than you would with a home equity loan or a cash-out refinance. Just keep in mind that HELOC rates are variable, so if rates start to trend up further, yours will likely increase, as well.