Today's mortgage and refinance rates: December 11, 2022 | Rates are fluctuating around 6%
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Average 30-year fixed mortgage rates have been hovering around 6% for the past couple of weeks. This is a dramatic decrease compared to last month, when rates topped 7%.
The difference between a 6% rate and a 7% rate is significant. On a $300,000 mortgage, a 7% rate would equal a $1,996 monthly payment. A 6% rate comes with a $1,799 monthly payment — a nearly $200 difference.
Mortgage rates are expected to continue decreasing next year. This will both help boost buying power for home shoppers and enable those who purchased when rates were at their highest to refinance into a more affordable monthly payment.
Mortgage rates today
Mortgage refinance rates today
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30-year fixed mortgage rates
The current average 30-year fixed mortgage rate is 6.33%, according to Freddie Mac. This is a 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 5.67%, 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 this year 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 few meetings.
When will mortgage rates go down?
Mortgage rates have increased dramatically so far in 2022, but there are signs that they may finally have peaked.
In October, the Consumer Price Index rose 7.7% 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 just one month of promising price data isn't enough to say for certain that the worst of inflation is behind us. If price growth proves to be stubborn in the coming months and the Fed decides it needs to act more aggressively than it currently plans to, mortgage rates could start trending up again.
Are HELOCs a good idea right now?
Many homeowners gained a lot of equity over that past couple of 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.