Image credit: PM Images/Getty Images; Illustration by Hunter Newton/Bankrate
Mortgage rates fell this week, according to Bankrate's latest survey of lenders. Home prices hit record highs 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.
Current mortgage interest rates
Loan Type Current 4 weeks ago 1 year ago 52 week average 52 week low 30 year 7.02% 7.09% 6.84% 7.22% 6.84% 15 year 6.39% 6.46% 6.24% 6.56% 6.13% 30 year jumbo 7.06% 7.19% 6.66% 7.16% 6.66%
In this week's survey, discount points and origination points for a 30-year fixed mortgage averaged a total of 0.28. 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. With a 3% down payment and a mortgage interest rate of 7.02%, a monthly payment of $2,711 would be 33% 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.
“The Fed's reduction in rate cuts from three to one will disappoint those hoping for lower interest rates over the summer,” said Lisa Sturtevant, chief economist at Bright MLS, a major real estate services firm in the Mid-Atlantic region. “Mortgage rates, which have been high for a long time, are likely to remain in the high 6% range through the second half of the year.”
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. This can lead to wild fluctuations in interest rates, with rates spiking on news of a Fed rate hike and then plunging in anticipation of a rate cut. Since the Fed is not expecting as big a rate cut this year as initially expected, mortgage rates may not fall anytime soon.
methodology
Bankrate.com's national survey of leading lenders is conducted weekly. To conduct its national average survey, Bankrate obtains interest rate information from the 10 largest banks and thrifts in the 10 largest markets in the United States. For Bankrate.com's national survey, our market analysis team collects interest rates and/or yields on bank deposits, loans, and mortgages. We have conducted this survey the same way for over 30 years, and it is conducted consistently, allowing for accurate apples-to-apples comparisons across the country. Our rates differ from other national surveys, especially the rates published weekly by Freddie Mac. Each week, Freddie Mac surveys lenders for interest rates and points based on first-lien prime conventional conforming home purchase mortgages with 80 percent LTV. According to Freddie Mac, “The lenders surveyed each week represent a mix of lender types, including thrifts, credit unions, commercial banks, and mortgage lenders, roughly proportional to the level of mortgage business each type controls nationwide.”