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Buying a home for the holidays, and hoping for a bargain? Learn the pros and cons of buying a home during the winter months.

Buying a home for the holidays, and hoping for a bargain? Learn the pros and cons of buying a home during the winter months.

Today's Mortgage Rates - 12/11/2024

Personalize the results below to get your best mortgage rate

Downward Step For Mortgage Rates

Mortgage rates slid into the start of the holiday season.

Freddie Mac reported today that the average offered interest rate for a conforming 30-year fixed-rate mortgage (FRM) decreased by twelve basis points (0.12%) to 6.69%. returning to late October levels.

Average offered rates for 15-year fixed-rate mortgages managed a fourteen basis point (0.14%) decline, leaving the most popular short-term mortgage at 5.96%, about a six-week low.

A 5/1 ARM might offer a homebuyer slightly lower-cost alternative to a long-term fixed-rate mortgage, but the difference in rate between 30-year FRMs and 5/1 ARMs remains narrow. The Mortgage Bankers Association reported that the initial fixed interest rate on a hybrid 5/1 ARM posted a ten basis point (0.10%) fall to 6.24% this week. The current 45 basis point gap compared to a long-term fixed-rate loan renders the choice of this ARM rather less compelling for homebuyers seeking a break on monthly payments.

The economic data of late don't suggest much by way of change in what is a pretty solid pattern. Last week's report on inflation showed that price pressures did not wane in October, and the latest Job Openings and Labor Turnover Survey (JOLTS) showed an uptick in open positions, erasing nearly all of September's decline. Other broad indicators suggested a bit of a pick up in manufacturing activity but a softening in the service-sector side of the economy.

The Fed meets in about two weeks to decide policy. At a conference this week, Fed Chair Powell noted that the Fed "can afford to be a little more cautious [in cutting rates] as we try to find neutral." Futures markets place about a 70% chance that the Fed will cut rates by a quarter percentage point at the next meeting, but it may be the incoming reports on November employment conditions and consumer prices that determine whether the Fed moves or not. The employment report is due Friday; the CPI, next Wednesday.

In recent days, the bond yields that most influence mortgage rates have been fairly stable in a narrow range. That suggests we'll see little change in mortgage rates over the couple of days as investors (like the Fed) wait for data.

Each week in HSH's MarketTrends newsletter, we track and discuss economic conditions that affect mortgage rates and their impact on housing markets and consumers. Read the most recent edition of MarketTrends or subscribe for email delivery.

Week 30-year-Fixed 15-year-Fixed
12/05 6.690% 5.960%
11/27 6.810% 6.100%
11/21 6.840% 6.020%
11/14 6.780% 5.990%
11/07 6.790% 6.000%
10/31 6.720% 5.990%
10/24 6.540% 5.710%
10/17 6.440% 5.630%
10/10 6.320% 5.410%
10/03 6.120% 5.250%
09/26 6.080% 5.160%
09/19 6.090% 5.150%

Mortgage Choices at a Glance

Loan type/terms Fixed 30 years Fixed 15 years/
20 Years
Hybrid ARM Traditional ARM Balloon Mortgage
Rate changes
  • Never; Fully fixed for entire term
  • Never; Fully fixed for entire term
  • Usually after fixed period of 3, 5, 7 or 10 years
  • After that, annual change typical
  • Fully variable
  • Typically changing at one-year intervals
  • Some have shorter change intervals
  • Never; Fully fixed for entire term
Benefits
  • Low, stable payment
  • Usually easiest qualification
  • Stable payments
  • Builds equity faster
  • Lower total interest costs than 30-year term
  • Lower rates than fully fixed-rate mortgage
  • Can sometimes borrow larger loan amount for same income
  • Can have lowest interest rates
  • Qualification may not depend upon today's interest rate
  • Often has lower interest rate/monthly payment over balloon period than fixed rate
  • Similar to hybrid ARM
Drawbacks/Risks
  • Can have highest total interest cost over time
  • User may "buy" more rate stability than actually needed, increasing cost
  • Requires higher income to qualify
  • Less affordable monthly payment
  • Funds commited to payment cannot be used elsewhere
  • Stable payment for a number of years, then unpredictable
  • Rates can jump by as much as 6 percentage points at first adjustment
  • Payments fluctuate at each rate change
  • Unpredictable, rates can change as much as 2 percentage points at each adjustment
  • Loan fully due and payable when balloon period ends
  • Must be paid off or refinanced in unknown market conditions
Alternative strategy
  • Consider Hybrid ARM with appropriate fixed period
  • Consider 30-year term and prepaying loan to preserve cash-flow flexibility
  • Consider Fixed rate mortgage or longest possible fixed period, if loan hold period not known
  • Consider Hybrid ARM to ameliorate rate and payment risks for a given period
  • Consider Hybrid ARM to ensure continued loan availability
These may be useful for...
  • Purchasing a home
  • First-time homebuyers
  • Refinancing to improve cash flow/lower payment
  • Refinancing to lower total interest cost
  • Retiring mortgage more quickly
  • Building or rebuilding equity more quickly
  • Purchasing or refinancing when time horizon is seven years or shorter, and where borrower can handle increase in monthly payments
  • Purchasing or refinancing when interest rates are near top of cycle, and are likely to fall, or sale or refinance is anticipated within three years
  • Purchasing or refinancing when time horizon is three years or longer and home will be sold prior to end of balloon period
Consider if
  • Buying or refinancing a home and planning on owning for longer than 10 years
  • Buying second home
  • Refinancing to build equity
  • Paying off mortgage before life event (retirement, etc)
  • Buying a home and expect to move before fixed period ends, or know income will rise to offset payment risk, even in worst-case scenario
  • Buying or refinancing when income can handle frequent payment changes and worst-case scenario for rates over a four-year period
  • Buying a home and expect to move before balloon period ends, or have resources to pay off mortgage if refinance not available
When shopping, ask about
  • "Full cost" vs. "No cost" refinances, prepaying loan to shorten term if desired
  • If 20-year term makes payment too high, whether 25-year term is available
  • Interest rate caps, for first and subsequent adjustments, worst-case scenario
  • A history of the Index the loan is keyed off, margin and caps
  • Whether or not there is any built-in refinancing option when the balloon period ends
Useful tools & resources

Latest Mortgage Rate Analysis

HSH's longer-range outlook for mortgage rates, where we review our last forecast,discuss current market influences and provide our expectations for mortgage rates over the next nine weeks.

Mortgage Calculators

Mortgage rates and more

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