Mortgage Interest Rates Today, January 20, 2024 | Rates Didn't Move Much This Week (2024)

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Mortgage rates are nearly flat from last week, and they've held surprisingly steady this month even as some of the latest economic data has led investors to tweak their expectations around future Federal Reserve rate cuts.

Average 30-year mortgage rates remained around 6.31% this week, down just six points from last week's average of 6.37%, according to Zillow data.

After dropping substantially toward the end of 2023, mortgage rates are expected to go down further in 2024. But when exactly they'll start dropping hinges on when the Fed decides to start cutting the federal funds rate.

At its last meeting, the Fed indicated it could cut rates at least three times this year. The Fed first started aggressively raising rates in 2022 to try and tackle too-high inflation. Its efforts have brought inflation down significantly, but they also put a lot of upward pressure on mortgage rates, causing them to skyrocket.

Mortgage rates have already dropped somewhat in anticipation of coming Fed cuts. But they might not drop any further until we get closer to a likely cut. Currently, investors are pricing in a 50% likelihood of the Fed cutting rates at its March meeting, according to the CME FedWatch Tool.

The Fed has its first meeting of 2024 at the end of this month. While we most likely won't see the Fed cut rates at this meeting, we may get some hints regarding when it might. If a rate cut in March seems likely, mortgage rates could trend down a bit. But if officials suggest we might not see a cut until the following meeting in May or later, mortgage rates will likely remain near their current levels.

Mortgage Rates Today

Mortgage Refinance Rates Today

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Use ourfree mortgage calculatorto 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 6.60% last week, according to Freddie Mac. This is a six-basis-point decrease from 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 5.76% last week, according to Freddie Mac data, which is an 11-basis-point drop 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 3.4%. 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 toleverage their home's valueto cover a big purchase — such as a home renovation — ahome 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 ratesare 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.