Currently, some mortgage rates are rising while others are falling. For example, 30-year fixed mortgage rates are up 6 basis points to 6.76%, while 15-year fixed mortgage rates are down 7 basis points to end below 6% at 5.98%.
The U.S. Bureau of Labor Statistics released June employment data yesterday, showing that the national unemployment rate rose to 4.1% instead of the 4% economists had predicted. This could be good news for mortgage rates, as the Federal Reserve wants to see signs that the economy is cooling before lowering the federal funds rate. Some believe that the rise in unemployment could lead the Federal Reserve to lower interest rates at its July meeting. However, if this is not the case, the Federal Reserve will have a good opportunity to lower interest rates at its next meeting in September.
When the federal funds rate falls, mortgage rates tend to follow, and rates could fall later this summer or fall.
Read more: When will mortgage rates fall? Looking ahead to 2024 and 2025.
Today's mortgage rates
According to the latest Zillow data, current mortgage rates are as follows:
30-Year Fixed Rate: 6.76%
20-year fixed rate: 6.36%
15-year fixed rate: 5.98%
5/1 ARM: 6.50%
7/1 ARM: 6.67%
30-year VA: 5.87%
15-year VA: 5.49%
5/1 VA ARM: 6.25%
Please note that these are national averages and are rounded to one decimal place.
Use our mortgage calculator
Yahoo Finance's free mortgage calculator can help you see how different interest rates and repayment terms will affect your monthly mortgage payment, as well as how the price of the home and the size of your down payment will affect it.
Our calculator includes homeowners insurance and property taxes in estimating your monthly payment. You can also enter private mortgage insurance (PMI) and homeowners association dues, if applicable. These details give you a more accurate estimate of your monthly payment than if you were to calculate just mortgage principal and interest.
30-Year Fixed Mortgage Rates: Pros and Cons
A 30-year fixed mortgage offers two main benefits: lower payments and predictable monthly payments.
A 30-year fixed-rate mortgage has a relatively lower monthly payment because you spread your payments out over a longer period than, say, a 15-year mortgage. Unlike an adjustable-rate mortgage (ARM), your interest rate doesn't change from year to year, so your payments are predictable. In most years, the only things that can affect your monthly payment are changes to your homeowners insurance or property taxes.
The main disadvantage of a 30-year fixed rate mortgage is the mortgage interest rate, both in the short and long term.
A 30-year fixed term comes with a higher interest rate than a shorter fixed term, and it's higher than the introductory rate on a 30-year ARM. The higher the interest rate, the higher your monthly payment will be. And because of the higher rate and longer term, you'll pay significantly more in interest over the life of the loan.
Read more: How to get the lowest mortgage interest rate
15-Year Fixed Mortgage Rates: Pros and Cons
The pros and cons of a 15-year fixed mortgage are essentially swapped for a 30-year fixed rate one. Sure, your monthly payments are predictable, but another benefit is that the shorter the term, the lower your interest rate. Not to mention, you'll pay off your mortgage 15 years sooner, which means you could potentially save hundreds of thousands of dollars in interest over the life of your loan.
However, because you’re paying back the same amount over half the time, your monthly payments will be higher than if you opt for the 30-year term.
Learn more: 15-year vs. 30-year mortgages
Adjustable Rate Mortgages: Pros and Cons
With an adjustable-rate mortgage, your interest rate is fixed for a set period of time and then changes periodically. For example, with a 5/1 ARM, your interest rate stays the same for the first five years, but increases or decreases once a year for the remaining 25 years.
The main advantage is that the introductory rate is usually lower than a 30-year fixed rate, resulting in lower monthly payments (however, current average interest rates do not reflect this; fixed rates are actually lower; speak to your lender before deciding between a fixed and variable rate).
With an ARM, you run the risk of interest rates increasing later because you don't know what your mortgage interest rate will be after the introductory rate period ends, which can result in higher costs and makes your monthly payments less predictable from year to year.
However, if you plan to move before the introductory rate period ends, you may be able to take advantage of a lower interest rate without running the risk of interest rates rising in the future.
Learn more: Adjustable Rate Mortgages vs Fixed Rate Mortgages
Is now a good time to buy a house?
You might feel like now isn't a good time to buy a home: Lately, 30-year interest rates have been hovering between 6.50% and 7%, which is terrible compared to 2021, when you could lock in an interest rate of 3% or less.
But it may be a better time to buy than you think: The highest mortgage rate on record was 18.63% in October 1981, so a 6.76% rate doesn't seem so bad. It's also highly unlikely that rates will fall below 3% again anytime soon.
While home prices remain high, they are increasing at a slower rate than they were a few years ago, and new home construction is beginning to pick up.
In summary, with interest rates relatively high and prices remaining stable, now is not the best time to buy a home. However, if the timing is right, your budget can accommodate rising interest rates, and you've found the right home for you, now could be the perfect time.
Today's mortgage rates: FAQs
What are the current interest rates for a 30-year mortgage?
According to Zillow, the national average 30-year mortgage rate is currently 6.76%. But keep in mind that the average can vary depending on where you live. For example, if you're buying a home in a city with a high cost of living, your interest rate may be higher.
Are interest rates expected to fall?
Yes, mortgage interest rates are expected to gradually decline over the next few years. Experts predict that the average 30-year rate will fall to 6.6% to 6.7% by the end of 2024, and to 6% to 6.3% by late 2025.
Are mortgage rates falling?
Mortgage rates had been falling for several consecutive weeks, but recently rose for the first time since May, according to Freddie Mac.