Most mortgage rates fell today: The average 30-year fixed rate fell 10 basis points to 6.70%, the 15-year fixed rate fell 8 basis points to 6.05%, and the 5/1 ARM rate fell 4 basis points to 6.67%, according to Zillow data.
The Bureau of Labor Statistics will release its June Consumer Price Index (CPI) report next week, which will provide some insight into inflation. Mortgage rates could edge lower if inflation slows or rise if inflation rose more quickly last month than economists expected.
Read more: Best Mortgage Lenders June 2024
Current mortgage interest rates
According to the latest Zillow data, current mortgage rates are as follows:
30-Year Fixed Rate: 6.70%
20-Year Fixed Rate: 6.25%
15-year fixed rate: 6.05%
5/1 ARM: 6.67%
7/1 ARM: 6.69%
30-year VA: 6.02%
15-year VA: 5.53%
5/1 VA ARM: 6.25%
Remember, these are national averages, rounded to the nearest hundredth: 5/1 VA ARM rates are up by just 1 basis point, while all other mortgage rates are down.
Read more: 5 strategies to get the lowest mortgage interest rate
Free Mortgage Calculator
Yahoo Finance has a free mortgage payment calculator. Use the calculator to see how different mortgage rates and loan terms will affect your monthly payment.
Our calculator also takes into account homeowner's insurance, property taxes and other costs that affect your monthly payment, giving you a more accurate idea of how much you'll actually pay per month than just looking at mortgage principal and interest.
How mortgage interest rates work
A mortgage interest rate is the fee that you charge for borrowing money from a lender and is expressed as a percentage. There are two types of interest rates to choose from: fixed and variable.
A fixed-rate mortgage keeps your interest rate constant for the life of your loan. For example, if you take out a 30-year mortgage with a 6.5% interest rate, your interest rate will stay at 6.5% for all 30 years unless you refinance or sell.
With an adjustable rate mortgage, your interest rate is fixed for a set period of time and then changes periodically. For example, say you take out a 7/1 adjustable rate mortgage with an introductory rate of 6%. For the first seven years, your interest rate will be 6%, and then each year for the remaining 23 years, your interest rate will go up or down. Whether your interest rate goes up or down depends on several factors, including the economy and the housing market.
At the beginning of a mortgage term, most of your monthly payment goes towards interest. Over the years, your monthly payments towards mortgage principal and interest stay the same, but gradually less of your payment goes towards interest and more goes towards the mortgage principal, or original amount borrowed.
Learn more: Adjustable Rate Mortgages vs Fixed Rate Mortgages
What should be the mortgage term?
A 30-year fixed rate mortgage is a good choice if you want a lower mortgage payment and the predictability that comes with a fixed interest rate, but keep in mind that your interest rate will be higher than if you choose a shorter term, meaning you'll pay significantly more in interest over the years.
If you want to pay off your mortgage faster and save money on interest, a 15-year fixed-rate mortgage may be the way to go. The shorter repayment term means a lower interest rate, and you'll pay off the loan in half, saving you a lot in interest in the long run. However, you'll need to make sure you can comfortably afford the higher monthly payments that come with a 15-year repayment term.
Read more: Should you choose a 15-year fixed rate mortgage or a 30-year fixed rate mortgage?
Adjustable-rate mortgages are usually a good choice if you plan to sell before the introductory rate period ends. Adjustable rates usually start at a lower rate than fixed rates and change after a set period of time. However, 5/1 and 7/1 ARM rates are currently very similar to 30-year fixed rates. Compare interest rate options by term and lender before getting an ARM just for a lower rate.
When will mortgage rates fall?
It feels like we've been hearing about interest rates coming down for months now, but when will mortgage rates finally fall?
Nobody has a crystal ball, but Fannie Mae's June interest rate forecast showed the government-sponsored agency expecting 30-year fixed rates to hit 6.7% by the end of 2024. That's hardly reassuring.
When the Federal Reserve cuts the federal funds rate, mortgage rates typically fall in response. However, according to the CME FedWatch tool, there is about a 91% chance that the Federal Reserve will not cut rates at its July meeting. If the central bank does indeed cut rates once in 2024, that cut would come at the September, November, or December meeting. So we probably won't see a dramatic drop anytime soon.
If you're ready to buy a home but are waiting for interest rates to plummet first, it might not be worth the wait. Interest rates are falling, home prices are dropping in certain markets, and inventory tends to increase over the summer. Now might be a good time to start your home search.
Today's mortgage rates: FAQs
What are mortgage rates like today?
Currently, most mortgage rates are trending downwards. The only period in which rates have increased is the 5/1 VA ARM rate, which increased by just 0.01%.
How much will mortgage rates fall in 2024?
Mortgage rates probably won't fall much in 2024. Economists currently expect 30-year fixed mortgage rates to be between 6.5% and 6.7% by the end of the year.
How much higher could mortgage rates be by 2025?
In fact, mortgage rates are more likely to fall, not rise, in 2025. The Federal Reserve will likely cut the federal funds rate several times next year, which will lead to lower mortgage rates.