Average mortgage rates for 30-year fixed terms are relatively flat as of Thursday, September 5, 2024, while rates for 15-year fixed terms continue to tick down. Economists are eagerly awaiting tomorrow's job report that will shed light on whether July's data — which fell short of forecasts with softer growth and a rise in employment, sparking market volatility — were overstated or the start of a trend. Those details will influence how deep a cut the Federal Reserve makes when it meets next week, by either a quarter point or a half point. Lenders keep a close eye on the Fed's benchmark rate, which responds to many of the same economic factors that can affect borrowing rates on large loans like mortgages.
The current average rate for a 30-year fixed mortgage is 6.43% for purchase and 6.44% for refinance — no change from 6.43% for purchase and up 2 basis points from 6.42% for refinance last Thursday. Rates on a 15-year mortgage stand at an average 5.78% for purchase and 5.82% for refinance, down 5 basis points from 5.83% for purchase and down 4 basis points from 5.86% for refinance this time last week. The average rate on a 30-year fixed jumbo mortgage is 6.53%.
Purchase rates for Thursday, Sept. 5, 2024
30-year fixed rate — 6.43%
20-year fixed rate — 6.20%
15-year fixed rate — 5.78%
10-year fixed rate — 5.75%
5/1 adjustable rate mortgage — 5.88%
30-year fixed FHA rate — 6.75%
30-year fixed VA rate — 6.90%
30-year fixed jumbo rate — 6.53%
Refinance rates for Thursday, Sept. 5, 2024
30-year fixed rate — 6.44%
20-year fixed rate — 6.27%
15-year fixed rate — 5.82%
10-year fixed rate — 5.76%
5/1 adjustable rate mortgage — 5.81%
30-year fixed FHA rate — 6.77%
30-year fixed VA rate — 7.47%
30-year fixed jumbo rate — 6.47%
Source: Bankrate lender survey
Freddie Mac weekly mortgage report: Rates continue to drop
Freddie Mac reports an average 6.35% for a 30-year fixed-rate mortgage, down 11 basis points from last week's average 6.46%, according to its weekly Prime Mortgage Market Survey of nationwide lenders published on August 29, 2024. The fixed rate for a 15-year mortgage is 5.51%, down 11 basis points from last week's average 5.62%. These figures are lower than a year ago, when rates averaged 7.18% for a 30-year term and 6.55% for a 15-year term.
"Mortgage rates fell again this week due to expectations of a Fed rate cut,” says Sam Khater, Freddie Mac’s chief economist, of the latest data. “Rates are expected to continue their decline and while potential homebuyers are watching closely, a rebound in purchase activity remains elusive until we see further declines."
Freddie Mac updates its Prime Mortgage Market Survey data weekly on Thursdays at noon ET.
Mortgage rates are determined by many factors that include inflation rates, economic conditions, housing market trends and the Federal Reserve's target interest rate. Lenders also consider your personal credit score, the amount available for your down payment, the property you're interested in and other terms of the loan you're requesting, like 30-year or 15-year offers.
Because mortgage rates can fluctuate daily, it's best to lock in a rate when you're comfortable with the overall conditions of your mortgage or home loan.
Mortgage lenders keep a close eye on the benchmark federal funds target interest rate set by the Federal Reserve, the U.S.'s central bank. Called the Fed rate, it's the benchmark that affects rates on deposit accounts, loans and other financial products. Typically, as the fed rate rises, so do APYs on savings products like CDs, high-yield savings accounts, money market accounts and home equity loans. Mortgage rates don't follow the Fed rate as closely, but they do reflect the same elements the Fed evaluates when making decisions on the benchmark — especially inflation — which means as the Fed rate increases, mortgage rates also tend to rise.
The Federal Reserve increased the target interest rate 11 times from March 2022 to July 2023 in an effort to combat the highest inflation in four decades coming out of the pandemic.
At the conclusion of its fifth rate-setting policy meeting of 2024 on July 31, the Federal Reserve left the federal funds target interest rate at a 23-year high of 5.25% to 5.50% for an eighth straight time since July 2023.
In its post-meeting statement, the Federal Reserve said "risks to achieving its employment and inflation goals continue to move into better balance,” acknowledging “there has been modest further progress toward the Committee's 2 percent inflation objective,” but reiterated from its June statement that its rate-setting committee "does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent."
Economists estimate at least one rate cut this year — from 25 to 50 basis points — with an additional four cuts anticipated in 2025.
It's widely expected the Federal Reserve will announce the first of anticipated cuts to the federal funds rate at its next policy meeting on September 17 and September 18, 2024 — its first rate cut in four years. In question is how low the Fed will go: whether 25 basis points or 50 basis points. The CME FedWatch Tool, which measures market expectations for Fed fund rate changes, projects a 57% chance the Fed will cut rates to a range of 5.00% to 5.25%, with a 43% chance that the Fed will cut rates to a range of 4.75% to 5.00%.
Signs of cooling inflation have bolstered a September cut prediction, with economic data indicating a continued decline from a peak of 9.1% in June 2022 to rates that have ranged from 3% and 4% since May 2023. Economists have kept a close eye on inflation reports amid speculation as to the timing of Fed rate cuts.
Good news supporting slowing inflation came from the one-two punch of twin inflation reports in mid-August. The producer price index data released on August 13 reported a mild increase in wholesale prices — or the prices manufacturers pay to producers of goods and services — in July, with wholesale prices increasing 2.2% for the 12 months ending in July, slowing as expected from 2.7% in June, which at the time was the largest year-over-year gain since March 2023 and likely influenced an already cautious Fed to skip cutting the rate earlier. The consumer price index released on August 14 showed consumer prices rose 2.9% year over year in July, down from 3% in June — the first time the index has come in under 3% in three years.
The initial jobs report released August 2 revealed softer growth and a rising jobless rate for a fourth consecutive month to 4.3% — its highest since October 2021, which stoked fears the Fed might have waited too long to lower rates. An August 21 revision to employment data indicated the labor market may have been cooling before initially thought, with 818,000 fewer jobs created from April 2023 through March 2024. Fresh employment data is due on September 6.
In prepared remarks for his keynote at the Fed's annual economic conference in Jackson Hole, Wyoming, on August 24, Federal Reserve Chair Jerome Powell said the "time has come" for the Fed to begin reducing interest rates, noting "there is good reason to think that the economy will get back to 2% inflation while maintaining a strong labor market" and making it more likely a cut is to come in September.
The Powell-led rate-setting panel will announce a rate decision at the conclusion of its meeting on September 18, 2024, at 2 p.m. ET.
Dig deeper: When’s the next Federal Reserve meeting? The FOMC — and how it affects your finances
On April 23, a judge granted preliminary approval to a $418 million antitrust settlement with the National Association of Realtors that ends customary real estate broker commissions of up to 6% of a home’s purchase price. Effective August 17, real estate agents are required to provide interested buyers with a representation agreement before touring a home. This agreement is a new step designed to introduce transparency into the buyer's relationship with the agent, the agent's fees and how those fees are paid. The settlement isn’t expected to affect mortgage rates, yet it paves the way for consumers to negotiate what they pay for an agent’s services, saving them money in the long run.
The difference of even half a percentage point on your interest rate can save you hundreds of dollars a month and thousands of dollars over the life of your mortgage, but the mortgage rate you're ultimately offered depends on the mortgage you're interested in, payments you're willing to pay up front and your overall financial health.
Your credit score. Knowing your credit score can help you shop around for lenders you're likely to get approval through, as well as understand the type of mortgage for your lifestyle and income. The best mortgage rates go to borrowers with good to excellent credit — typically a FICO credit score of at least 670 — though even with fair credit, you may be able to find a mortgage offering decent rates.
Your down payment. The more money you can put down toward your home, the better it benefits your interest rate. Paying at least 20% of your home's purchase price up front generally results in a lower interest rate — and you can avoid mortgage insurance, which increases your total cost.
Your loan term. While the 30-year mortgage remains a popular way for Americans to purchase homes, you can find terms of 20 years, 15 years and 10 years. Shorter loan terms usually come with lower interest rates, though with higher monthly payments. Longer mortgage terms can result in smaller monthly payments, though you'll pay higher total interest over the life of your loan.
Interest rate type. Mortgage rates come with two basic types of rates — fixed and variable. Fixed-rate mortgages offer a consistent interest rate over the life of your loan, whereas adjustable-rate mortgages (ARMs) often start with a lower fixed rate for an agreed-on time and then adjust to a variable rate based on market conditions for the remainder of your term. Choosing between these two rates depends on your financial goals and tolerance for risk.
Dig deeper
Lenders are financial institutions that loan money to homebuyers. A lender is different from a loan servicer, which typically handles the operational tasks of your loan, like processing payments, talking directly with borrowers and sending monthly statements.
Refinancing is a process of trading in your current mortgage to another lender for lower rates and better terms than your current loan. With a refinance, the new lender pays off your old mortgage and you then pay your monthly statements from the new lender.
An adjustable-rate mortgage — commonly called an ARM — is a type of home loan with a variable rate. Unlike a fixed-rate mortgage, which locks in an interest rate and predictable payments that apply over the full loan term, an ARM starts at an initial fixed rate for a period of three years or longer, after which it adjusts to a higher rate and then further adjusts periodically over the remaining life of the loan.
For a 5/1 adjustable-rate mortgage, the first number indicates the number of years at the fixed rate — or five years — and the second number indicates the rate at which the mortgage rate readjusts after — in this case, each year or annually.
Mortgage rates are influenced by complicated factors like inflation, employment rates, the bond market and the overall economy. While the Federal Reserve doesn't set mortgage rates, this central bank of the U.S. sets benchmark rates that indirectly affect rates on financial products like mortgages, personal loans and deposit accounts.
March inflation data came in higher than expectations, which is among the main concerns driving mortgage rates higher in April.
It's not likely — lenders consider the market conditions and other financial factors when determining rates. You can, however, ask about how you can reduce costs in other ways when comparing mortgage lenders. For instance, many lenders offer lower rates in exchange for "mortgage points" — upfront fees you pay to your lender. A mortgage point could cost 1% of your mortgage amount, which means about $5,000 on a $500,000 home loan, with each point lowering your interest rate by about 0.25%, depending on your lender and loan.
Yes. If it’s cash you’re after to pay for home renovations, pay off high-interest credit card debt or cover an emergency, tapping into your home’s value is a way to unlock lower rates without refinancing — and without losing your low-rate mortgage. You typically need good to excellent credit and to have built enough equity in your home. Learn how to get equity out of your home as rates come down.
Editor's note: Rates shown are as of Thursday, September 5, 2024, at 6.10 a.m. ET. APYs and promotional rates for some products can vary by region and are subject to change.
Mortgage Industry Insights, Bankrate. Accessed September 5, 2024.
U.S. Economic, Housing and Mortgage Market Outlook – August 2024, Freddie Mac. Accessed August 23, 2024.
Primary Mortgage Market Survey, Freddie Mac. Accessed August 30, 2024.
Employment Situation Summary, U.S. Bureau of Labor and Statistics. Accessed August 5, 2024.
2024 Preliminary Benchmark Revision, U.S. Bureau of Labor and Statistics. Accessed August 5, 2024.
Consumer Price Index Summary, U.S. Bureau of Labor and Statistics. Accessed August 15, 2024.
Producer Price Index News Release summary, U.S. Bureau of Labor and Statistics. Accessed August 14, 2024.
CME FedWatch Tool, CME Group. Accessed September 5, 2024.
