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Mortgage rates fell last week and remain low today. As long as inflation continues to slow and the Federal Reserve begins to cut the federal funds rate, rates should continue to fall through the remainder of 2024.
So far this month, interest rates on 30-year mortgages have averaged about 6.59%, but have been trending lower in recent days, according to Zillow data.
The Consumer Price Index rose 3.0% year-over-year in June, down from 3.3% in May. Inflation has been slowing in recent months, increasing the likelihood that the Fed will begin cutting interest rates soon. According to the CME FedWatch tool, up to three rate cuts could occur by the end of 2024. This should significantly reduce upward pressure on mortgage rates and allow them to start trending lower.
However, it may still be a while before you see a significant improvement in your ability to afford your mortgage. If you're currently searching for a home, getting quotes from multiple mortgage lenders can help ensure you get the best interest rate available, improving your affordability in this high interest rate environment.
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
Mortgage Calculator
Use our free mortgage calculator to see how current interest rates will affect your monthly payment.
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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.
Clicking on “Details” will also show you how much you'll pay over the life of your mortgage, including the principal and interest ratios.
30-year fixed mortgage rate
The average interest rate on a 30-year fixed mortgage was 6.89% last week, down 6 basis points from the previous week, 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 fell slightly last week to 6.17%, a drop of 8 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.
How will the Federal Reserve's interest rate hike affect mortgages?
The Federal Reserve has significantly increased the federal funds rate in an effort to slow economic growth and tame inflation. So far, inflation has slowed significantly but is still just above the Fed's target rate of 2%.
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.
The Federal Reserve has signaled that it will probably stop raising rates and may start cutting them later this year, which could lead to mortgage rates trending lower later this year.
When will mortgage rates fall?
Mortgage rates have risen dramatically over the past two years but are expected to fall this year.
The Consumer Price Index increased 3.0% year-over-year in June 2024. Inflation has slowed significantly since peaking last year, and mortgage rates should start to trend lower soon.
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.
Molly Grace
Mortgage Reporter