Today's mortgage and refinance rates: December 22, 2022

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Average 30-year fixed mortgage rates have increased slightly after holding steady below 6% for several days. But rates are still significantly lower than they have been over the past several months.Rates are expected to decrease throughout the next couple of years. For those who purchased a home when rates were peaking, refinancing will likely start to look more attractive toward the end of 2023.Interest in refinancing has plummeted this year, as it typically doesn't make sense to get a new mortgage when rates are high, as they have been for much of 2022.

Compared to a year ago, refinance applications are down 85%, according to the Mortgage Bankers Association.But as rates drop, refinance activity will likely start to pick up again as homeowners look to lower their monthly payments with a lower rate. Current mortgage rates Mortgage type Average rate today This information has been provided by Zillow. See more mortgage rates on Zillow Current refinance rates Mortgage type Average rate today This information has been provided by Zillow. See more mortgage rates on Zillow Mortgage calculatorUse 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 ratesThe current average 30-year fixed mortgage rate is 6.31%, 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 ratesThe average 15-year fixed mortgage rate is 5.54%, 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.Should I get a HELOC? Pros and consIf you're looking to tap into your home's equity, a HELOC might be the best way to do so right now — especially considering how much home prices have increased over the past couple of years. Unlike a cash-out refinance, you won't have to get a whole new mortgage with a new interest rate, and you'll likely get a better rate than you would with a home equity loan.But HELOCs don't always make sense. It's important to consider the pros and cons.HELOC prosOnly pay interest on what you borrowTypically have lower rates than alternatives, including home equity loans, personal loans, and credit cardsIf you have a lot of equity, you could potentially borrow more than you could get with a personal loanHELOC consRates are variable, meaning your monthly payments could go upTaking equity out of your home can be risky if property values decline or you default on the loanMinimum withdrawal amount may be more than you want to borrowWhen will mortgage rates go down?Mortgage rates started ticking up from historic lows in the second half of 2021 and have increased over three percentage points since January 2022.

But rates have recently trended down, and they'll likely decrease further in 2023 and 2024. However, rates aren't likely to drop dramatically any time soon. As inflation starts to come down, mortgage rates will recede somewhat as well. If we experience a recession, rates may drop a little faster.

But average 30-year fixed rates will likely remain somewhere in the 5% to 6% range throughout 2023.How do Fed rate hikes affect mortgages?The Federal Reserve has been increasing the federal funds rate this year to try to slow economic growth and get inflation under control. So far, inflation has slowed somewhat, but it's still well above the Fed's 2% target rate.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.