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Mortgage rates dropped last week and remain low today. Rates should fall further throughout the remainder of 2024 as long as inflation continues to slow and the Federal Reserve starts lowering the federal funds rate.
So far this month, 30-year mortgage rates have averaged around 6.59%, but they've been trending lower in recent days, according to Zillow data.
In June, the Consumer Price Index rose 3.0% year over year, a downtick from May's 3.3% reading. Inflation has been decelerating for several months now, raising the likelihood that the Fed will start cutting rates soon. According to the CME FedWatch Tool, we may get as many as three rate cuts by the end of 2024. This should remove a lot of upward pressure off of mortgage rates and allow them to trend down.
But it may be a while before we see mortgage affordability improve significantly. If you're shopping for a home right now, getting quotes from multiple mortgage lenders can help ensure you get the best rate available, boosting affordability even in this high-rate environment.
Use our free mortgage calculator to see how today's interest rates will affect your monthly payments.
By clicking on "More details," you'll also see how much you'll pay over the entire length of your mortgage, including how much goes toward the principal vs. interest.
Last week's average 30-year fixed mortgage rate was 6.89%, according to Freddie Mac. This is a six-basis-point 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.
Average 15-year mortgage rates inched down to 6.17% last week, according to Freddie Mac data. This is an eight-basis-point decrease from the week before.
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.
The Federal Reserve increased the federal funds rate dramatically to try to slow economic growth and get inflation under control. So far, inflation has slowed significantly, but it's still a bit 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.
The Fed has indicated that it's likely done hiking rates and that it could start cutting this year. This would allow mortgage rates to trend down later this year.
Mortgage rates increased dramatically over the last two years, but they're expected to go down at some point this year.
In June 2024, the Consumer Price Index rose 3.0% year-over-year. Inflation has slowed significantly since it peaked last year, which means mortgage rates should soon start trending down.
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 be a good option while we wait for mortgage rates to ease. Check out some of our best HELOC lenders to start your search for the right loan for you.
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. It also lets you tap into the money you have in your home without replacing your entire mortgage, like you'd do with a cash-out refinance.
Current HELOC rates are relatively low compared to other loan options, including credit cards and personal loans.
