Recent economic data has shown surprising strength, pushing mortgage rates up to around 6.80% as of January 12, 2025. The Federal Reserve's efforts to combat inflation have been somewhat successful, yet inflation remains sticky, keeping mortgage rates elevated. While forecasts suggest a potential decrease in rates later this year, much depends on the trajectory of inflation and the Fed's actions. Currently, 30-year mortgage rates hover in the upper 6% range, while 15-year rates are around 6%. Adjustable-rate mortgages (ARMs) offer competitive rates but come with the risk of future increases. FHA and VA loans remain viable options for first-time and low-income buyers, with rates averaging 5.58% and in the low 6% range, respectively. Looking ahead, while home prices are expected to rise due to low supply, mortgage rates may stabilize closer to 6% if economic conditions remain favorable. Homebuyers should carefully assess their budgets and consider various mortgage options.
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