Mortgage Interest Rates Today, March 21, 2024 | Rates Should Drop This Year as the Fed Forecasts Cuts

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Mortgage rates ticked down a bit following the Federal Reserve's announcement on Wednesday that it will keep the federal funds rate steady for now.

But rates are still elevated compared to where they've been in recent weeks. Average 30-year mortgage rates are over 20 basis points higher this week compared to last week's average, according to Zillow data.

Fed officials still expect to cut rates three times this year, in spite of data showing that inflation ticked up slightly last month. In his post-meeting press conference, Fed Chair Jerome Powell repeated what he's been saying in recent months: that it will "likely be appropriate" to cut rates at some point this year, but officials first want to have "greater confidence" that inflation is coming down to the Fed's 2% target.

This is overall good news for mortgage rates. Rates have increased in response to somewhat sticky inflation over the last couple of months. As inflation comes down and the Fed is able to start lowering rates, mortgage rates should go down, too.

The Fed doesn't directly impact mortgage rates, but investor expectations of how Fed policy moves will affect the broader economy can push rates up or down.

Powell acknowledged that officials will need to see more data to know for sure if inflation is continuing to slow, or if this recent stickiness is a sign that price growth settling in above 2%. As long as the economy continues to balance out, we should still see mortgage rates go down this year.

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Use our free mortgage calculator to 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 6.74% last week, according to Freddie Mac. This is a 14-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 6.16%, a six-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 trended back down toward the end of 2023.

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

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 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 rates are 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.