Mortgage Interest Rates Today, December 10, 2023 | Rates Plummet to Lowest Level Since Late July

Mortgage rates have hit their lowest point in over four months as a result of cooling inflation and economic data. The decision made by the Federal Reserve on the federal funds rate is expected to have a significant influence on whether these rates will continue to decrease.

Experts are predicting that the Fed might choose to maintain the federal funds rate at its current level or even cut rates during the first half of 2024. Lowering the federal funds rate would help alleviate the upward pressure on mortgage rates and could potentially result in further decreases. However, if inflation remains high, the Fed may decide to hike rates, thereby causing mortgage rates to increase.

At present, the average 30-year fixed mortgage rate stands at 7.03%, which is a 19-basis-point decrease from the previous week. This type of mortgage is the most common choice for homeowners, as it provides a stable interest rate for the entire duration of the loan.

Meanwhile, the average 15-year fixed mortgage rate has dropped by 27 basis points from the previous week, reaching 6.29%. While this option allows borrowers to pay less interest over the life of the loan, it also entails higher monthly payments.

Going forward, mortgage rates are expected to continue trending downward as inflation decreases. In the meantime, homeowners who are looking to leverage their home’s value for significant purchases may consider a home equity line of credit (HELOC) while they wait for mortgage rates to ease.

HELOC rates are currently quite low in comparison to other loan options. It is important to note that the Federal Reserve’s actions, particularly their decision regarding the federal funds rate, have a considerable impact on mortgage rates. Often, these rates change in anticipation of any policy moves made by the Fed, as they are influenced by investor demand for mortgage-backed securities.

With the Fed currently on pause for rate hikes, mortgage rates have seen a decrease. If the Fed opts to cut rates, it is expected that mortgage rates will fall even further in the future.