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The weaker-than-expected inflation data has pushed mortgage rates to their lowest since March, with the average rate for a 30-year mortgage hovering in the low 6% range, according to Zillow data.
The Consumer Price Index rose 3.0% in June, slowing from 3.3% in May. As inflation continues to slow, the Federal Reserve is expected to begin cutting the federal funds rate, removing upward pressure on mortgage rates and lowering interest rates.
Thanks to recent inflation data, the market is expecting the Fed to cut interest rates as many as three times this year, according to the CME FedWatch tool. This could lead to lower mortgage rates even further than currently expected, increasing homebuyers' ability to afford homes later this year.
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 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.
Mortgage Calculator
$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.
Mortgage interest rates forecast for 2024
Mortgage rates began to rise from record lows in the second half of 2021 and have risen dramatically through 2022 and much of 2023.
With inflation calming down, many are predicting that interest rates will fall this year. Over the past 12 months, the Consumer Price Index has risen by 3.0%, a significant slowdown from its peak of 9.1% in 2022, meaning mortgage rates will soon start trending lower.
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. To find the best loan for you, check out our best HELOC lenders.
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.
When will house prices fall?
Home prices are unlikely to fall this year. In fact, they are more likely to rise.
Fannie Mae researchers expect prices to rise 4.8% in 2024 and 1.5% in 2025, while the Mortgage Bankers Association expects prices to rise 4.5% in 2024 and 3.3% in 2025.
High mortgage rates have driven many would-be buyers out of the market, slowing home buying demand and putting downward pressure on home prices. However, interest rates have since fallen, relieving some of that pressure. Current housing supply is also historically low, which will likely push up prices.
What happens to house prices during a recession?
Home prices usually fall during a recession, but they don't always do. When they do fall, it's usually because fewer people are able to buy homes and low demand forces sellers to lower their prices.
How much of a mortgage can you afford?
A mortgage calculator like the one above can help you determine how much home you can afford. Try out different home prices and down payment amounts to see what your monthly payments will be and consider how that fits into your overall budget.
Generally speaking, experts recommend that you shouldn't spend more than 28% of your gross monthly income on housing costs — that is, your monthly mortgage payment, including taxes and insurance, shouldn't be more than 28% of your pre-tax monthly income.
The lower the interest rate, the more you can borrow, so shop around and get pre-approved among multiple mortgage lenders to find the one that offers you the best interest rate, but be sure not to borrow more than you can comfortably afford.
Molly Grace
Mortgage Reporter