Mortgage rates rose last week, according to Bankrate's latest survey of lenders. Home prices hit record levels in late spring, inflation is slowing overall, and the Federal Reserve, at its latest meeting, hinted at just one rate cut by the end of the year.
The 30-year fixed mortgage rose slightly to 7.09%, the 15-year rose to 6.51% and the 30-year jumbo remained steady at 7.13%.
In this week's survey, discount points and origination points for a 30-year fixed mortgage averaged a total of 0.27. Discount points are a way to lower your mortgage interest rate, while origination points are a fee charged by lenders for originating, underwriting and processing the loan.
Monthly mortgage payment at current interest rate
According to the U.S. Department of Housing and Urban Development, the national median household income in 2024 will be $97,800, and according to the National Association of Realtors, the average price of an existing home sold in May 2024 was $419,300, the highest on record. Assuming a 20% down payment and a mortgage interest rate of 7.09%, a monthly payment of $2,276 represents 28% of a typical household's monthly income.
Will mortgage rates fall?
In the simplest sense, the economy determines whether mortgage rates go up or down. Thirty-year mortgage rates tend to fall during recessions, but they don't always do so. And that's definitely not the case with today's economy. The job market is strong, and inflation, while down from a few months ago, is still above the Federal Reserve's 2% target.
“We expect interest rates to decline moderately later this year, and rising inventory should help moderate price increases, which bodes well for those interested in buying a home,” said Sam Carter, chief economist at Freddie Mac.
To be clear, mortgage rates are not set directly by the Fed, but by investor interest, particularly in the 10-year Treasury note, which is a leading indicator of fixed mortgage prices. Rates can fluctuate wildly, spiking on news of Fed rate hikes and then plummeting in anticipation of rate cuts. The Fed is not expecting as big a rate cut this year as it initially expected, so mortgage rates may not fall anytime soon.
methodology
Bankrate.com's national survey of major lenders is conducted weekly. To compile its national averages survey, Bankrate obtains interest rate information from the 10 largest banks and thrifts in the 10 largest markets in the United States.
Bankrate.com's national survey is compiled by the company's market analysis team, which collects interest rates and yields on bank deposits, loans and mortgages. The survey has been conducted the same way for over 30 years and is consistently conducted in the same way, allowing for accurate apples-to-apples comparisons across the country.