As of Thursday, July 18, 2024, average mortgage interest rates are trending downwards across the board, with 30-year fixed rates staying below 7.00% for one consecutive week. This is good news for anyone looking to buy a home this summer.
The current average interest rate for a 30-year fixed mortgage is 6.83% for purchases and 6.85% for refinances, down 14 basis points from 6.97% for purchases and 6.99% for refinances last Thursday. Interest rates for 15-year mortgages are 6.31% for purchases and 6.38% for refinances, down 13 basis points from 6.44% for purchases and 6.49% for refinances at the same time last week. The average interest rate for a 30-year fixed jumbo mortgage is 6.89%.
Mortgage rates for Thursday, July 18, 2024
30 Year Fixed Rate — 6.83%
20-year fixed rate — 6.65%
15 Year Fixed Rate — 6.31%
10-year fixed rate — 6.25%
5/1 Adjustable Rate Mortgage — 6.29%
30-year fixed FHA rate — 6.90%
30-Year Fixed VA Rate — 7.41%
30-year fixed jumbo rate — 6.89%
Mortgage rates for Thursday, July 18, 2024
30 Year Fixed Rate — 6.85%
20 Year Fixed Rate — 6.71%
15 Year Fixed Rate — 6.38%
10-year fixed rate — 6.27%
5/1 Adjustable Rate Mortgage — 6.22%
30-year fixed FHA rate — 6.91%
30-Year Fixed VA Rate — 7.67%
30-year fixed jumbo rate — 6.97%
Freddie Mac Weekly Mortgage Report: Mortgage rates fall
According to Freddie Mac's weekly Prime Mortgage Market Survey of lenders nationwide released on July 11, 2024, the average interest rate for a 30-year fixed-rate mortgage was 6.89%, down 6 basis points from last week's average of 6.95%. The average interest rate for a 15-year mortgage was 6.17%, down 8 basis points from last week's average of 6.25%. These figures are lower than a year ago, when the average interest rate for a 30-year mortgage was 6.96% and the average interest rate for a 15-year mortgage was 6.30%.
“Following the June employment report, which showed a cooling in the labor market, the 10-year Treasury yield fell this week, and mortgage rates followed suit,” Freddie Mac chief economist Sam Carter said of the latest data. “In addition, there is more inventory on the market, including at reduced prices, which is an encouraging sign for potential buyers.”
Freddie Mac updates its prime mortgage market research data every Thursday at noon Eastern time.
Mortgage interest rates for July 18, 2024
Mortgage interest rates are determined by many factors, including inflation, economic conditions, housing market trends, Federal Reserve target interest rates, etc. Lenders also consider other terms of the loan you want, such as your personal credit score, the amount of money you have available for a down payment, the property you're interested in, and whether you're looking for a 30-year or 15-year offer.
Mortgage interest rates change daily, so it's best to lock in your rate when you're happy with the overall terms of your mortgage and home loan.
Mortgage interest rates in the news
Mortgage lenders closely monitor the benchmark federal funds rate target set by the Federal Reserve, the central bank of the United States. This is known as the Fed rate, and it is the benchmark that influences interest rates on savings accounts, loans, and other financial products. Typically, when the Fed rate rises, so do the APYs on savings products like CDs, high-yield savings accounts, and money market accounts. While mortgage and mortgage interest rates don't track the Fed rate as closely, they do reflect the same factors the Fed evaluates when making its benchmark determination, especially inflation. This means that when the Fed rate rises, mortgage interest rates tend to rise as well.
The Fed raised its target interest rate 11 times between March 2022 and July 2023 to combat the highest inflation in 40 years following the pandemic.
June 12, 2024: The Fed keeps interest rates on hold for the seventh time since July 2023
The Federal Reserve Board left its target for the federal funds rate unchanged at a 23-year high of 5.25% to 5.50% at the conclusion of its fourth interest rate-setting policy meeting of 2024 on June 12, 2024, marking the seventh consecutive time since July 2023 that the base rate has been kept unchanged.
In a statement after the meeting, the Fed acknowledged that “some further progress had been made toward the Committee's 2 percent inflation objective,” but also said that “the economic outlook remains uncertain and the Committee remains very vigilant about inflation risks.”
The Fed is focused on a 2 percent inflation target, which is ideal for keeping employment high and prices low. Despite speculation in March that there could be three rate cuts by the end of the year, the Fed reiterated in a May statement that its rate-setting committee “does not consider it appropriate to lower its target range until we have greater confidence that inflation is moving sustainably toward 2 percent.”
Officials expect one rate cut this year, with four more cuts expected in 2025.
What to expect at the Fed's July policy meeting
The Federal Reserve is expected to keep the Fed rate unchanged at 5.25%-5.50% at its next policy meeting on July 30 and July 31, 2024. The CME FedWatch tool, which gauges market expectations for changes in the federal funds rate, projects a 95.3% probability that the Fed will keep rates at their current level.
The latest jobs report, released on July 5, beat expectations, marking the 42nd consecutive month of job growth. Employers added 206,000 new jobs in June, returning the job market to pre-pandemic conditions, casting doubt on the possibility of a Fed interest rate cut in September 2024.
Adding to the good news, there is data showing that inflation continues to slow, falling from a peak of 9.1% in June 2022 to the 3% to 4% range since May 2023. The Consumer Price Index released on July 11 reported that consumer prices rose 3% year-over-year in June, down from a 3.3% increase in May, slowing more than expected. However, Producer Price Index data released on July 12 reported that wholesale prices, or the prices that manufacturers pay producers of goods and services, rose sharper than expected in June. The index rose 2.6% in the 12 months through June, the biggest year-over-year increase since March 2023, further increasing the likelihood that an already cautious Fed will skip July and cut rates in September or later in the year.
Federal Reserve Chairman Jerome Powell, speaking to Congress on July 9, said the Fed has made “significant progress” in containing inflation by keeping benchmark interest rates at their highest levels in two decades, but he reiterated long-standing concerns about the timing of expected rate cuts: “Reducing policy restraints too late or by too little could weaken economic activity and employment too much,” while cutting rates too soon “could stall or reverse progress in containing inflation,” he said.
Chairman Powell reiterated this view in an interview in Washington, D.C. on July 15, acknowledging that the economy appears to be headed for a “soft landing,” but declined to comment on whether the Fed will cut rates in July, saying, “We intend to make a decision at each meeting.”
The interest rate setting committee, led by Chairman Powell, is scheduled to announce its interest rate decision at the end of its meeting at 2:00 p.m. ET on July 31.
Learn more: When is the next Federal Reserve meeting? The FOMC and its impact on your finances
The four main factors that affect mortgage interest rates
Even a half-percentage point difference in interest rate can save you hundreds of dollars each month and thousands over the life of your mortgage, but the mortgage rate you end up being offered will depend on the mortgage you're interested in, how much you can pay down, and your overall financial situation.
Your credit score. Knowing your credit score can help you shop around for lenders you might be approved for and understand what type of mortgage fits your lifestyle and income. The best mortgage rates apply to borrowers with good to excellent credit (typically a FICO credit score of at least 670), but even if you have average credit, you might be able to find a mortgage with a decent rate.
Down payment. The more money you can put down for a home purchase, the greater your interest rate advantage. Paying at least 20 percent of the home's purchase price down will generally result in a lower interest rate and allow you to avoid mortgage insurance, which adds to your total costs.
Loan term. While 30-year loans remain a popular way for Americans to buy a home, 20-, 15-, and 10-year terms are also available. A shorter loan term usually means a lower interest rate but higher monthly payments. A longer loan term means lower monthly payments but higher total interest paid over the life of the loan.
Types of interest rates. There are two basic types of mortgage interest rates: fixed and adjustable. Fixed-rate mortgages offer a consistent interest rate over the life of the loan, while adjustable-rate mortgages (ARMs) often start you off with a low, fixed interest rate for an agreed-upon period and then adjust to a variable rate based on market conditions for the remaining term. Choosing between these two interest rates depends on your financial goals and risk tolerance.
Frequently asked questions about mortgage interest rates
What is a mortgage lender?
A lender is a financial institution that lends money to homebuyers. Lenders are different from loan servicing companies, which typically handle the operational aspects of a loan, like processing payments, negotiating directly with borrowers, and sending monthly statements.
What does it mean to refinance a mortgage?
Refinancing is the process of selling your current mortgage to another lender in order to get a lower interest rate and better terms than your current loan. With a refinance, the new lender pays off your old mortgage, and then you pay your monthly statements from the new lender.
What is an adjustable rate mortgage?
An adjustable-rate mortgage (commonly referred to as an ARM) is a type of adjustable-rate mortgage. Whereas a fixed-rate mortgage fixes your interest rate and predictable payments for the life of the loan, an ARM has an initial fixed rate for three or more years that then adjusts to a higher interest rate, then adjusts periodically over the remaining life of the loan.
In the case of a 5/1 adjustable rate mortgage, the first number indicates the number of years for which your interest rate will be fixed (i.e. 5 years), and the second number indicates the rate at which your mortgage rate will subsequently re-adjust (in this case, annually).
Why are mortgage interest rates so high?
Mortgage interest rates are influenced by a complex set of factors, including inflation, employment rates, the bond market, and the overall economy. While the Federal Reserve doesn't set mortgage interest rates, the US central bank does set a benchmark interest rate that indirectly influences interest rates on financial products like home loans, personal loans, and savings accounts.
March inflation data came in better than expected, which is one of the main concerns for mortgage rate hikes in April.
Can I negotiate my mortgage interest rate?
It's unlikely. Lenders consider market conditions and other financial factors when determining your interest rate. However, when comparing mortgage lenders, you can ask about other ways you can reduce costs. For example, many lenders offer lower interest rates in exchange for “mortgage points.” A mortgage point is an upfront fee you pay to the lender. A mortgage point might cost 1% of the mortgage amount, which equates to about $5,000 for a $500,000 mortgage. Each point lowers your interest rate by about 0.25%, depending on the lender and the loan.
I already own a home. Can I borrow against the equity in my home to cover large or unexpected expenses?
Yes. If you need cash to pay for home improvements, pay off high-interest credit card debt, or prepare for an emergency, you can tap into the equity in your home to get a lower interest rate without having to refinance and therefore lose your low-interest mortgage. You usually need to have good to excellent credit and have enough equity in your home. Learn how to unlock the equity in your home while interest rates are high.
Editor's note: Rates shown are accurate as of 6:45 a.m. ET on Thursday, July 18, 2024. APY and promotional rates for some products may vary by location and are subject to change.
source
Primary Mortgage Market Study, Freddie Mac. Accessed July 15, 2024.
Employment Overview, U.S. Bureau of Labor Statistics. Accessed July 8, 2024.
Consumer Price Index Summary, U.S. Bureau of Labor Statistics. Accessed July 12, 2024.
Producer Price Index News Release Summary, U.S. Bureau of Labor Statistics. Accessed July 15, 2024.
CME FedWatch Tools, CME Group. Accessed July 18, 2024.
Mortgage Industry Insights, Bankrate. Accessed July 18, 2024.