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Thirty-year mortgage rates averaged about 6.58% last week, according to Zillow data, down about 30 basis points from rates a month ago.
Recent economic developments suggest mortgage rates may decline further through the remainder of 2024. On Friday, the Commerce Department reported that the core personal consumption expenditures price index, the Federal Reserve's preferred inflation measure, rose 2.6% year-over-year in May, slowing from 2.8% in April.
As inflation slows, the Fed is expected to start lowering the federal funds rate. While mortgage rates are not directly affected by the Fed's benchmark interest rate, interest rates tend to rise or fall depending on how investors anticipate how Fed policy actions will affect the overall economy. As the central bank cuts interest rates, mortgage rates are expected to decline somewhat.
Today's mortgage rates
Mortgage Type Today's Average Interest Rates
This information is provided by Zillow. See more mortgage rates on Zillow. Zillow Real Estate
Today's mortgage refinance rates
Mortgage Type Today's Average Interest Rates
This information is provided by Zillow. See more mortgage rates on Zillow. Zillow Real Estate
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Use our free mortgage calculator to see how current mortgage rates will affect your monthly and long-term payments.
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$1,161 Estimated Monthly Payment
Paying a 25% higher down payment would save you $8,916.08 in interest. Lowering your interest rate by 1% would save you $51,562.03. Paying an extra $500 per month would shorten the term of your loan by 146 months.
Input different terms and interest rates to see how your monthly payment will change.
30-year fixed mortgage rate
The average interest rate on a 30-year fixed mortgage last week was 6.86%, one basis point lower than the week before, according to Freddie Mac.
A 30-year fixed rate mortgage is the most common type of mortgage. With this type of mortgage, you pay back the amount you borrow over 30 years, and your interest rate will remain the same for the life of the loan.
A long 30-year repayment term spreads your payments over a longer period of time, making your monthly payments lower and more manageable. The trade-off is that your interest rate will be higher than if you had a shorter repayment term or a variable rate loan.
15-year fixed mortgage rate
The average interest rate on a 15-year mortgage last week was 6.16 percent, up 3 basis points from the previous week, according to data from Freddie Mac.
If you want the predictability that a fixed rate offers, but want to lower your interest payments over the life of your loan, a 15-year fixed-rate mortgage may be right for you. These terms are shorter and have lower interest rates than 30-year fixed-rate mortgages, which could save you tens of thousands of dollars in interest. However, your monthly payments will be higher than you would with a longer term.
Will mortgage rates fall?
Mortgage rates have been rising for much of 2023. However, mortgage rates are expected to trend downwards in the coming months and years.
Over the past 12 months, the Consumer Price Index has risen 3.3%. As inflation falls and the Federal Reserve is able to start lowering the federal funds rate, mortgage rates should fall further.
For homeowners looking to use the value of their home to cover a major purchase, like a home improvement, a home equity line of credit (HELOC) may be a good option while they wait for mortgage rates to drop. Check out our best HELOC lenders to find the best loan for you.
A HELOC is a line of credit that allows you to borrow against the equity in your home. It's similar to a credit card in that you only borrow what you need, rather than a lump sum. It also allows you to tap into the money you have left in your home without having to pay off your entire mortgage like a cash-out refinance would.
Current HELOC interest rates are relatively low compared to other loan options such as credit cards and personal loans.
How will the Federal Reserve's interest rate hike affect mortgages?
The Federal Reserve has aggressively raised the federal funds rate in 2022 and 2023 in an effort to stave off economic growth and tame inflation, causing mortgage rates to skyrocket.
While mortgage interest rates are not directly affected by changes in the federal funds rate, they often tend to rise or fall ahead of Fed policy shifts. This is because mortgage interest rates change based on investor demand for mortgage-backed securities, and this demand is often influenced by how investors expect Fed rate hikes to affect the overall economy.
Mortgage rates have fallen slightly since the Federal Reserve paused its rate hikes, and they should fall further once the Fed starts cutting rates later this year.
Molly Grace
Mortgage Reporter