Mortgage Interest Rates Today, January 21, 2024 | As Rates Go Down, More People Should be Able to buy a Home (2024)

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Buying a home has been prohibitively expensive for many people over the past couple of years, as high mortgage rates combined with rapidly climbing home prices pushed many cash-strapped buyers to the sidelines.

But 2024 may be better for some of these buyers as mortgage rates go down and borrowers are able to carve out a bit of affordability.

Right now, mortgage rates have been holding steady after dropping dramatically late last year. So far this month, 30-year mortgage rates have averaged around 6.32%, according to Zillow data, which is just a bit lower than where they were last month.

On the other side of the equation, while we probably won't see home prices drop this year, the pace at which they've been rising should slow. Last year, home prices rose 7.10%, according to Fannie Mae. But this year, the mortgage investor believes prices may only grow 3.20%.

Mortgage rates are expected to continue coming down this year, and they could drop below 6%. Even small decreases in rates can add up to hundreds of dollars in savings on the average monthly mortgage payment. This means more buyers may soon be able to jump back into the market and get into a home.

If you're struggling with affordability even as rates come down, it may be worth exploring the first-time homebuyer loan options available to you. Many lenders now have mortgage programs that come with things like down payment assistance or flexible credit requirements, making it easier and more affordable to get into a home.

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Use ourfree mortgage calculatorto see how today's mortgage rates would impact your monthly payments. By plugging in different rates and term lengths, you'll also understand how much you'll pay over the entire length of your mortgage.

Click "More details" for tips on how to save money on your mortgage in the long run.

30-year Fixed Mortgage Rates

The average 30-year fixed mortgage rate was 6.60% last week, according to Freddie Mac. This is a six-basis-point 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

Last week, average 15-year mortgage rates were 5.76%, an 11-basis-point decrease from the previous 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.

When Will Mortgage Rates Go Down?

Mortgage rates started ticking up from historic lows in the second half of 2021 and increased over three percentage points in 2022. Rates also increased dramatically last year, though they've been trending back down in recent months.

As inflation comes down, mortgage rates will recede as well. Most major forecasts expect rates to trend down throughout 2024.

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 Federal Reserve increased the federal funds rate a lot last year to try to slow economic growth and get inflation under control. Inflation has come down a lot in response to this, though it's still a little bit above the Fed's target rate of 2%.

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.

Fed hikes have pushed mortgage rates up over the last two years. But the Fed has indicated that it's likely done hiking rates and could start cutting in 2024. Once the Fed cuts rates, mortgage rates should fall even further.