Mortgage Interest Rates Today, Feb. 25, 2024

Mortgage rates have been increasing this month, and they could remain elevated for at least the next few months.

Average 30-year mortgage rates started the month low, but they’ve increased substantially since then and are now nearing 7%. The last time rates were above this threshold was in November 2023. 

As the economy balances out and inflation continues to cool, mortgage rates are expected to go down. But recent economic data has come in hotter than expected, making it less likely that rates will drop anytime soon.

Mortgage rates should trend down once the Federal Reserve starts lowering federal funds rate. But the Fed isn’t likely to cut rates until we get more data showing that inflation is sustainably slowing.

In a recent speech titled “What’s the Rush?” Fed Governor Christopher Waller said that latest hotter-than-expected GDP, labor market, and Consumer Price Index data “has reinforced my view that we need to verify that the progress on inflation we saw in the last half of 2023 will continue and this means there is no rush to begin cutting interest rates to normalize monetary policy.”

He did note that he still expects that the Fed will start lowering rates this year, but he wants to see more data to be sure that inflation will reach the Fed’s 2% target.

Markets currently believe that the Fed won’t start cutting rates until June at the earliest, according to the CME FedWatch Tool. But whether we get a rate cut in June depends on how the economy trends in the coming months. It’s possible we’ll have to wait until later in the year before we get a Fed cut and mortgage rates start trending down.

Mortgage Rates Today

Mortgage Refinance Rates Today

Mortgage Calculator

Use our free mortgage calculator to see how today’s mortgage rates will affect your monthly and long-term payments.

By plugging in different term lengths and interest rates, you’ll see how your monthly payment could change.

30-Year Fixed Mortgage Rates

The average 30-year fixed mortgage rate was 6.90% last week, according to Freddie Mac. This is 13 basis points higher than it was the week before.

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

Average 15-year mortgage rates were 6.29% last week, according to Freddie Mac data, which is a 17-basis-point increase from the previous week.

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.

Are Mortgage Rates Going Down?

Mortgage rates increased throughout most of 2023. But mortgage rates are expected to trend down in the coming months and years.

In the last 12 months, the Consumer Price Index rose by 3.1%. As inflation comes down and the Federal Reserve is able to start cutting the federal funds rate, mortgage rates should fall further as well.

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 Fed aggressively raised the federal funds rate in 2022 and 2023 to slow economic growth and get inflation under control. As a result, mortgage rates spiked.

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. 

Now that the Fed has paused hiking rates, mortgage rates have come down a bit. Once the Fed starts cutting rates, which is likely to happen this year, mortgage rates should fall even further.