Today’s mortgage refinance rates: December 25, 2022

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Mortgage rates have held steady after trending downward over the past few weeks, and most major forecasts expect rates to continue to decline through 2023.

Inflation has continued to slow over the past few months, a sign that the economy is finally starting to cool. It is possible that we will experience a mild recession in 2023, which would put more pressure on mortgage rates.

Today’s mortgage rates

Type of mortgage Average rate today
This information was provided by Zillow. See more mortgage rates on Zillow

Today’s refinancing rates

Type of mortgage Average rate today
This information was provided by Zillow. See more mortgage rates on Zillow

Mortgage calculator

Use our free mortgage calculator to see how today’s interest rates will affect your monthly payments:

Mortgage calculator

Your estimated monthly payment

  • Payment a 25% a higher payment would save you $8,916.08 at the expense of interest
  • Interest rate reduction for 1% would save you $51,562.03
  • Additional payment 500 dollars every month would reduce the length of the loan by 146 months

By clicking on More Details, you’ll also see how much you’ll pay over the life of the mortgage, including how much goes toward principal versus interest.

Are HELOCs a good idea right now?

Many homeowners have built up a lot of equity over the past few years as home prices have risen at an unprecedented rate. But because rates are so high now, using that capital can be expensive.

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

A HELOC is a line of credit that allows you to borrow against the equity in your home. It works much like a credit card in that you borrow what you need instead of getting the full amount you borrow 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 cash out refinance. Just keep in mind that HELOC rates are variable, so if rates start to rise further, yours will likely increase as well.

Mortgage rate projection for 2023

Mortgage rates began rising from historic lows in the second half of 2021 and have risen by three percentage points so far in 2022. They are likely to remain near their current levels through the end of 2022.

But many forecasters expect rates to start falling next year. In its latest forecast, Fannie Mae researchers predicted that 30-year fixed rates will decline through 2023 and 2024.

But whether mortgage rates fall in 2023 depends on whether the Federal Reserve can control inflation.

In the last 12 months, the consumer price index increased by 7.1%. This is a significant slowdown from where inflation was earlier this year, a sign that mortgage rates could soon begin to fall as well.

If the Fed acts too aggressively and triggers a recession, mortgage rates could fall further than what is expected in current forecasts. But rates are unlikely to fall to the historic lows that borrowers have enjoyed in recent years.

When will house prices fall?

Home prices are starting to fall, but we probably won’t see big drops, even if there is a recession.

The S&P Case-Shiller home price index shows prices are still up year-over-year, although they fell on a monthly basis in July and August. Fannie Mae researchers expect prices to fall 1.5% in 2023, while MBA expects a 0.7% increase in 2023 and a 0.1% decrease in 2024.

High mortgage rates have pushed many hopeful buyers out of the market, slowing home-buying demand and putting downward pressure on home prices. But rates could start falling next year, taking some of that pressure off. The current supply of homes is also historically low, which is likely to keep prices from falling too far.

What happens to house prices in a recession?

House prices usually fall during recessions, but not always. When this happens, it’s mostly because fewer people can afford to buy homes and low demand forces sellers to lower their prices.

How much mortgage can I afford?

A mortgage calculator can help you determine how much you can afford to borrow. Play around with different home prices and down payment amounts to see what your monthly payment could be and think about how it fits into your overall budget.

Experts typically recommend that you spend no more than 28% of your gross monthly income on housing costs. This means that your entire monthly mortgage payment, including taxes and insurance, should not exceed 28% of your monthly pre-tax income.

The lower your rate, the more you’ll be able to borrow, so shop around and get pre-approved by multiple mortgage lenders to see who can offer you the best rate. But remember not to borrow more than what your budget can comfortably handle.

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