Current Mortgage Rates

Mortgage rates trended lower this week, reacting positively to the release of the latest Federal Reserve meeting minutes that reinforced the Fed's patient approach to monetary policy.  The favorable market development follows the Fed's decision to keep interest rates unchanged at its December meeting.  The Fed weighed a strong job market and household spending against low inflation and global economic uncertainty in holding the target range for the Federal Funds rate at 1.500% to 1.750%.

The Fed's meeting statement, subsequent remarks and minutes also suggest that interest rates could remain at their current level for the foreseeable future, absent a significant shift in the economy.  After three interest rate cuts in 2019, it appears that the Fed's strategy has shifted firmly into wait and see mode in 2020. 

This minutes were well received by the market which feared the Fed could signal near-term rate hikes in response to positive economic developments including higher than expected U.S. economic growth, a strong stock market, progress on multiple trade resolutions and a robust jobs report that showed unemployment at a 50 year low.  

The news had a positive impact on mortgage rates, which fell for several programs, and continue to sit near a multiyear low to kick off the new year.

The rate for a 30 year fixed rate mortgage dipped 0.125% to 3.375%, while the rate for a 15 year fixed rate mortgage remained at 3.000%.  Jumbo mortgage rates moved 0.125% lower to 3.500%, slightly higher than conforming loan rates.  In more good news, non-owner occupied mortgage rates improved 0.125% to 3.625%, offering an attractive financing option for rental property buyers.  The rate on a 5/1 adjustable rate mortgage (ARM) also slid 0.125% to 3.125%, as shorter term financing remains a less expensive option for risk tolerant borrowers.  While FHA and VA mortgage rates held steady at 3.250%, both programs remain appealing to borrowers focused on low or no down payment programs, especially first-time home buyers.

After nine increases over four years, the Fed's decision to lower interest rates in 2019 for the first time in over a decade represented an important policy change, although the rate cutting phase appears to in the past.

Going forward, we expect the Fed to apply a more flexible strategy that enables it to loosen or tighten monetary policy as economic conditions evolve, although any near-term moves are unlikely.  While the Fed continues to reiterate its measured outlook, the question is how long rates will stay at this level in light of favorable economic news and a rising equity market.

Because rates are impossible to predict, prospective borrowers looking to buy a home or refinance should take advantage of current low mortgage rates.  Additionally, as lenders react differently to changing market dynamics, we have seen a wider range in pricing, which means borrowers benefit more by comparing multiple lenders.

Market conditions constantly shift, so we continue to actively monitor the market for new developments.  Borrowers should check the FREEandCLEAR rate tables regularly to review personalized, updated mortgage rates for lenders in their area.  Our rate tables are free to use and require no personal information.