At the opposite end of the spectrum, the West Coast has the lowest share of mortgages more than 30 days delinquent, with Washington, Oregon, and California all reporting rates of delinquent mortgages under 1.5%.
If you're a first-time buyer, a tracker mortgage could be a good option if rates are low, but it might be wise to find a deal with a cap if you're not sure you could make higher payments should the rates increase.
Mortgages: Tracker mortgage rates will reduce by 0.25% for all (Tracker) mortgages linked to the ECB rate. The change will happen during December 2024 & January 2025 and we will write to our customers with Tracker mortgages confirming the new interest rate and the date it's changing.
Delinquency Rate: As of September 30, 2024, FHA's serious delinquency rate – those mortgages where the borrower is 90 or more days behind on their mortgage payment – remained consistent with pre-pandemic levels at 4.15 percent.
More than three-quarters of homeowners — 78.7 percent — have a mortgage rate below 5 percent, while nearly 6 in 10 — 59.4 percent — have a mortgage below 4 percent. Just 22.6 percent have a mortgage rate below 3 percent, according to Redfin.
However, nearly every economic forecast is predicting lower rates in 2024. The Mortgage Bankers Association's Mortgage Finance Forecast for September 2023 predicts 30-year fixed mortgage rates will be in the 5% range for most of 2024: Q1: 6.1%
This basically means that your rate can't go below a certain minimal level. This means if interest rates drop dramatically, your monthly mortgage payments won't suddenly decrease as well – there'll be a "collar' on your rate to make sure it won't follow interest rates to their lowest point.
You can make extra mortgage repayments or clear your mortgage earlier than agreed without having to pay any penalties. If you move from a tracker interest rate to an alternative interest rate, such as a fixed interest rate, you cannot go back to onto a tracker interest rate in the future.
For only the third time in 2024, the Federal Reserve has lowered the federal funds rate. On Dec. 18, the Fed cut the rate, which influences interest on everything from car loans to credit cards, by 25 basis points. That takes it from 4.50% to 4.75% to 4.25% to 4.50%, the lowest it's been since February 2023.
You can, but there may be an early redemption penalty to pay. However, not all tracker rate mortgages include penalties for an early exit, so you must be clear on the terms of your loan from the outset. Sometimes, paying the penalty is worth it in the long run if the deal you're switching to is low enough.
But while a tracker can initially be cheaper than a fixed rate, you are taking on the risk of what the underlying interest rate might do. If it is tracking the base rate and that rises during your mortgage deal, you could end up paying more than if you had opted to fix your rate.
Leaving a tracker mortgage works much the same as other mortgage types. This means that you might have to pay an Early Repayment Charge to leave your deal early. Some lenders will let you move onto a fixed rate deal without any repayment charges – always read the details of your deal before applying.
Similarly, states along the Pacific Coast—where home values skyrocketed during the pandemic—have some of the lowest rates of free-and-clear homeownership among the working-age population. California (22.7%), Washington (22.8%), and Oregon (22.9%) sit at 45th, 44th, and 43rd out of all 50 states, respectively.
In September 2024, the U.S. delinquency and transition rates and their year-over-year changes were as follows: Early-Stage Delinquencies (30 to 59 days past due): 1.6%, up from 1.5% in September 2023.
If your mortgage rate is higher than any savings accounts available, it's worth considering overpaying as it could save you more in interest than you'd earn. If you can invest in the long term, there may be more options open to you that a financial advisor can advise you on.
For example, with our 2 year tracker rate mortgages, you would be tied in for 2 years. Once this term ends, you will move on to a standard variable rate, unless you decide to switch to a new deal.
Paying off your mortgage early should not have a large impact on your credit score.
Whether a borrower should go for a tracker or fixed mortgage will depend on their circumstances, and priorities. Also, their foresight with interest rates will also play a crucial role. If they're able to get their timing right, tracker mortgage applicants could benefit from significant savings if the base rate drops.
At its February 2024 meeting, the Reserve Bank Board decided to leave the cash rate target unchanged at 4.35 per cent. This decision supports progress of inflation to the midpoint of the 2–3 per cent target range within a reasonable timeframe and continued moderate growth in employment.
Current Forecasts and Expert Opinions
The short answer is: It's highly unlikely we'll see mortgage rates drop back to 3% anytime soon. However, recent inflation numbers point to cooling of the pace of inflation.
There is technically no limit to how many times you can refinance your home. If you meet the lender's qualifications and it makes financial sense for your situation, you can refinance as often as you wish. However, just because you have the option to refinance multiple times doesn't mean it's always a wise choice.
Despite an overall reduction in borrowing costs over the past two years, the 30-year mortgage rate recently moved up from a little above 6% in September 2024 to closer to 7% in January 2025. That contrasts with longer term mortgage rates holding at historically low levels of between 2% and 3% for much of 2020 and 2021.