Mortgage interest rates on January 16, 2024: Lower interest rates for borrowers and Trends in mortgage

Mortgage interest rates on January 16, 2024: Throughout the previous seven days, a few significant mortgage rates decreased. The rates on both 15-year and 30-year fixed mortgages dropped. The 5/1 adjustable-rate mortgage fell as well for variable rates.

• 30-year fixed mortgage: 6.94%
• 15-year fixed mortgage: 6.32%
• 5/1 adjustable-rate mortgage: 6.38%

From its earlier top of 8%, the average rate on a 30-year fixed mortgage began to decline steadily in November. These days, the most typical house loans fall between 6% and 7%. However, there is always some degree of volatility in the mortgage market, and at the beginning of this year, rates began to slowly rise again.

According to Keith Gumbinger, vice president of the mortgage website HSH.com, “It’s not uncommon to see a shift in the pattern for interest rates in January, sometimes positive, sometimes not.”

The housing market is challenging right now. Many people are unable to purchase a home due to high mortgage rates, high home costs, and limited supply. Don’t try to time the market if you’re trying to purchase a house. Experts advise waiting and planning instead. Determine your affordability and make the necessary changes to your financial circumstances.

Mortgage Rate 2024: Predicting The Rates This Year

The average interest rate on a mortgage today

If you’re looking to buy a property, see how the mortgage rates from this week compare to those from the previous week. We monitor changes in these daily rates using rates gathered by Bankrate. The average rates that lenders nationwide are offering are shown in this table:

Today’s mortgage interest rates

Loan term	Today’s Rate	Last week	Change
30-year mortgage rate	6.94%	7.04%	-0.10
15-year fixed rate	6.32%	6.41%	-0.09
30-year jumbo mortgage rate	6.97%	7.08%	-0.11
30-year mortgage refinance rate	7.10%	7.23%	-0.13

Rates as of Jan. 16, 2024

How to pick a mortgage

Think about the loan term or payment plan while choosing a mortgage. Although 10-, 20-, and 40-year mortgages are also available, 15- and 30-year mortgage durations are the most popular. Additionally, you will have to decide between an adjustable-rate mortgage and a fixed-rate mortgage, in which the interest rate is locked throughout the term of the loan. An adjustable-rate mortgage has an interest rate that is only set for a predetermined period (usually five, seven, or ten years), after which it changes every year under the interest rate that is currently available on the market. If you want to dwell in a house for an extended period, fixed-rate mortgages are a better alternative because they provide more stability, but adjustable-rate mortgages may have lower initial interest rates.

30-year mortgages with fixed rates

The average 30-year fixed mortgage rate is at 6.94%, down 10 basis points from the previous week. (A 0.01% basis point is equal to.) For a fixed mortgage, a 30-year term is the most typical. Although your monthly payment will be less than that of a 15-year mortgage, it will frequently have a higher interest rate.

Fixed-rate mortgages for 15 years

A 15-year fixed mortgage’s average rate is 6.32%, down 9 basis points from this time last week. A 15-year loan often has a lower interest rate than a 30-year fixed mortgage, so even though your monthly payment will be higher, you’ll be able to pay off your mortgage sooner and pay less interest overall.

January Mortgage Rate Forecast in Anticipation of Spring

5/1 mortgages with adjustable rates

The average rate on a 5/1 adjustable-rate mortgage is currently 6.38%, which is 2 basis points lower than it was at this time last week. With a 5/1 ARM, you will normally receive a reduced introductory interest rate throughout the first five years of the mortgage. However, based on how the rate changes annually, you might have to pay more after that point. An ARM can be a wise choice if you want to sell or refinance your home within the next five years.

What to know about trends in mortgage rates

Around 3% was the record low for mortgage rates at the beginning of the epidemic. That changed when the Federal Reserve began an aggressive program of interest rate hikes in response to a spike in inflation, which also indirectly increased mortgage rates. Even now, mortgage rates are over twice as high as they were a few years ago.

Nonetheless, mortgage rates experienced some significant drops in the fall after the central bank had been maintaining stable interest rates since late July. Experts are waiting for the first interest rate cut because the Fed is scheduled to announce its next policy move in late January (and again in mid-March). Although it might take many months for that to occur, in the upcoming months, mortgage rates might level out and begin to decline even further.

According to Logan Mohtashami, principal economist at HousingWire, “the history of economic cycles has taught us that when the markets believe the Fed is done hiking rates, [mortgage rates] make a big move lower before rate cuts happen.”

What factors influence rates on mortgages?

1. Monetary policy of the Federal Reserve: Although the central bank of the country does not control interest rates, mortgage rates often follow its changes to the federal funds rate.
2. Inflation: During periods of strong inflation, mortgage rates typically rise. Typically, lenders increase loan interest rates to make up for the diminished purchasing power.
3. The bond market: When determining interest rates for house loans, mortgage lenders frequently look to long-term bond yields, such as those of the 10-year Treasury, as a benchmark. Usually, mortgage rates go up when yields go up.
4. Geopolitical events: When there is uncertainty in the global financial markets, events such as elections, pandemics, or economic crises can also have an impact on home loan rates.
5. Additional economic factors: The bond market, employment data, investor confidence, and supply and demand in the housing market can all affect the direction of mortgage rates.
   Expert predictions for mortgage rates

Mortgage forecasters use a variety of data sources to inform their estimates, but most believe that rates will stay at or above 7% for 2023. Here are the average mortgage rates that several of the leading housing authorities predict will be at the end of the year.

How to locate the greatest mortgage rates

Despite the high cost of homes and mortgage rates, the housing market won’t remain unaffordable indefinitely. When the timing is perfect, it’s always a good idea to increase your credit score and save for a down payment to get a competitive mortgage rate.

• Save more for a larger down payment: While a 20% down payment is not necessary, a higher initial payment will result in a smaller mortgage, which will lower your interest costs.
• Improve your credit score: A credit score of 620 will get you approved for a traditional mortgage, but a higher score—at least 740—will result in lower interest rates.
• Pay off debt: To be eligible for the best rates, experts advise having a debt-to-income ratio of no more than 36%. You’ll be better able to manage your monthly payments if you don’t have any other debt.
• Loans and support for research: Compared to traditional loans, government-sponsored loans have more accommodating borrowing requirements. Certain public or private programs may also cover your down payment and closing costs.
• Look around for a lender. You can get the best mortgage rate possible for your circumstances by investigating and contrasting many loan offers from several lenders.