Today’s mortgage and refinance rates: December 15, 2022 | Rates trend down following smaller Fed hike

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Good news for hopeful homebuyers: The Federal Reserve has started pulling back on its aggressive rate hikes. This will likely take some of the upward pressure off of mortgage rates, allowing them to trend down in 2023.

Over the past couple of days, mortgage rates have inched down somewhat, but they’re still over three percentage points higher than they were a year ago.

On Wednesday, the Fed announced it will raise the federal funds rate by 50 basis points. The central bank has previously raised this rate 75 basis points at each of its last four meetings.

In his press conference following the announcement, Fed Chair Jerome Powell hinted that smaller hikes are likely coming in 2023 as inflation continues to slow.

Mortgage rates aren’t directly impacted by changes to the federal funds rate, but they often trend up or down based on how investors expect Fed policy decisions to impact the broader economy. Because inflation appears to be responding to the Fed’s efforts, the question now is whether the economy will slow so much we enter a recession, which could cause mortgage rates to plummet further than expected.

Mortgage rates today

Mortgage refinance rates today

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Use our free mortgage calculator to see how today’s mortgage rates would impact your monthly payments. By plugging in different rates and term lengths, you’ll also understand how much you’ll pay over the entire length of your mortgage.

Click “More details” for tips on how to save money on your mortgage in the long run.

30-year fixed mortgage rates

The current average 30-year fixed mortgage rate is 6.33%, according to Freddie Mac. This is a decrease from the previous week.

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

The average 15-year fixed mortgage rate is 5.67%, a decrease from the prior week, according to Freddie Mac data.

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 up?

Mortgage rates started ticking up from historic lows in the second half of 2021 and have increased significantly so far in 2022. But mortgage rates dropped recently, and they may not trend back up again this year.

In the last 12 months, the Consumer Price Index rose by 7.1%. The Federal Reserve has been working to get inflation under control, and is expected to increase the federal funds rate once more this year, following increases at its previous six meetings.

Inflation remains elevated, but has started to slow, which is a good sign for mortgage rates and the broader economy. 

How do Fed rate hikes affect mortgages?

The Fed has been increasing the federal funds rate this year to try to slow economic growth and get inflation under control.

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. 

As inflation starts to come down, mortgage rates should, too. But the Fed has indicated that it’s watching for sustained signs of slowing inflation, and it’s not going to stop hiking rates any time soon — though it may start opting for smaller hikes at its next few meetings. 

Are HELOCs a good idea right now?

Many homeowners gained a lot of equity over that past couple of years as home prices increased at an unprecedented rate. But because rates are so high now, tapping into that equity can be expensive. 

For homeowners looking to leverage their home’s value to cover a big purchase — such as a home renovation — a home equity line of credit (HELOC) may still be a good option. 

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. 

Depending on your finances and the type of HELOC you get, you may be able to get a better rate with a HELOC than you would with a home equity loan or a cash-out refinance. Just keep in mind that HELOC rates are variable, so if rates start to trend up further, yours will likely increase, as well.

Molly Grace

Mortgage Reporter