As we enter the new year, low mortgage interest rates and sustained decreases are making it a great time for prospective buyers to purchase their dream homes. According to CNET's latest report, a variety of notable mortgage rates have dropped in the last seven days.
The average interest rates for both 15-year fixed mortgage rates and 30-year fixed mortgage rates dipped, and for variable rates, the 5/1 adjustable-rate mortgage also trended down.
As of January 2, 2024, the current mortgage interest rates are as follows:
- 30-year fixed mortgage: 6.99%
- 15-year fixed mortgage: 6.31%
- 5/1 adjustable-rate mortgage: 6.40%
The sustained reductions in interest rates since early November can be attributed to the Federal Reserve's less restrictive monetary policy, leading to cooling inflation and other economic factors. The most common home loans are now in the 6% to 7% range.
Even with the decline in rates, the mortgage market typically slows down towards the end of the year.
Holiday plans can also interfere with home shopping, leading Keith Gumbinger of HSH.com to suggest that after the holidays, borrowers may express seasonal pent-up demand by taking advantage of these low rates in January.
When choosing a mortgage, consider the loan term and its payment schedule. The most common mortgage terms are 15 and 30 years, although 10-, 20- and 40-year mortgages also exist.
Borrowers must also choose between a fixed-rate mortgage, where the interest rate is set for the duration of the loan, and an adjustable-rate mortgage.
- Fixed-rate mortgages offer more stability and are a better option if you plan to live in a home in the long term
- Adjustable-rate mortgages may offer lower interest rates upfront
If you’re in the market for a home, it is essential to shop around to ensure that you're getting the lowest rate. By entering your information on CNET's partner lenders, you can get a custom quote.
Experts also suggest saving for a bigger down payment to take out a smaller mortgage, which will help you save on interest. Simultaneously, paying off debt will put you in a better position to handle monthly payments and help you qualify for the best rates.
In conclusion, sustained low mortgage interest rates are making it an excellent time for prospective buyers to purchase their dream homes. With proper planning and by selecting the right mortgage option, buyers can take advantage of these historically low interest rates and move into their dream homes sooner than expected.
