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The current average 30-year fixed mortgage rate is 6.20%, an increase of 0.01% from 7 days ago. The average interest rate for a 15-year fixed mortgage was 5.48%, down -0.02% from a week ago.
The Federal Reserve cut interest rates for the first time in four years on September 18th. With inflation at its lowest level since spring 2021 and a weak labor market, the Fed is now focused on maintaining a balance between price stability and maximum employment.
This initial 0.5% cut, and further cuts that could come into effect next year, will help lower mortgage rates and discourage more prospective home buyers from participating. However, lowering mortgage rates alone cannot fix today’s housing market, which is also plagued by soaring home prices and a lack of inventory.
Learn more about the weekly mortgage forecast, including Fed rate cuts, labor data, and future trends in inflation.
Current average mortgage interest rate
mortgage refinance
Today’s average mortgage interest rate on October 3, 2024 compared to one week ago. We use interest rate data collected by Bankrate as reported by lenders across the United States.
The Fed has started cutting interest rates, and mortgage rates are already falling. Compare multiple loan offers from different financial institutions to find the best interest rate for your situation. Enter your information below to receive a custom quote from CNET’s partner lenders.
About these rates: Like CNET, Bankrate is owned by Red Ventures. This tool includes lender partner rates that you can use to compare multiple mortgage rates.
Recent trends in mortgage interest rates
In recent years, the Fed has raised its benchmark interest rate multiple times in an effort to combat inflation, and mortgage rates have soared accordingly, topping 8% at the end of last year. Mortgage interest rates are not only affected by central bank monetary policy. These fluctuate daily depending on various economic factors such as the bond market, investor expectations, inflation, and labor statistics.
Although many homebuyers expected mortgage rates to fall at the beginning of the year, mortgage borrowings remained high. Interest rates finally fell significantly in August, and the downward trend continued due to market expectations for future rate cuts. The average interest rate on a 30-year fixed mortgage is currently around 6.2%, the lowest level since early 2023.
Now that the Fed has officially cut interest rates, mortgage rates are expected to continue easing. But experts stress that it will be a gradual process. The Fed doesn’t lower interest rates all at once or very quickly unless there are signs of an impending economic crisis.
“If we normalize interest rates, you’ll see the housing market normalize,” Fed Chairman Jerome Powell said in remarks after the Sept. 18 policy meeting. But he acknowledged that the central bank cannot solve other problems plaguing the housing market: high home prices and low inventory.
See the graph below to see how mortgage interest rates have changed over the past four years.
Mortgage interest rate predictions for 2024
Mortgage interest rates are already down about 1% from their 2024 peak. Following an initial 0.5% rate cut in September, the Fed expects to cut rates by another 0.5% this year and another in 2025.
“Mortgage rates have been on a downward trend since late July 2024, and that trend is likely to continue if the Fed cuts rates for the rest of this year,” said Matt Vernon, head of consumer finance at Bank of America. said.
Based on current projections, the average 30-year fixed mortgage rate could fall to 6% by the end of the year. However, there is always room for fluctuation in the mortgage market. If future inflation data or labor market reports show the economy is softening too much, the Fed could be forced to cut rates more broadly or more frequently. If that happens, mortgage interest rates could fall even further.
Still, many off-market buyers will continue to wait until mortgage rates drop a few more percentage points. Experts also warn that a return to the 2-3% mortgage rates of just a few years ago is unlikely.
Here’s a look at where some major housing authorities expect average mortgage rates to reach.
Which mortgage term and type should I choose?
Each mortgage has a loan term or repayment schedule. The most common mortgage terms are 15 and 30 years, but 10-, 20-, and 40-year mortgages also exist. Fixed-rate mortgages provide a stable interest rate because the interest rate is set over the term of the loan. With an adjustable rate mortgage, the interest rate is fixed for a set period of time (usually five, seven, or 10 years), after which the interest rate adjusts annually based on the market. A fixed-rate mortgage is a better option if you plan to live in your home for a long time, but an adjustable-rate mortgage may have a lower upfront interest rate.
30 year fixed rate mortgage
Currently, the average interest rate on a standard 30-year fixed mortgage is 6.20%. A 30-year fixed mortgage is the most common loan term. They often have higher interest rates than 15-year mortgages, but lower monthly payments.
15 year fixed rate mortgage
Currently, the average interest rate for a 15-year fixed mortgage is 5.48%. Although your monthly payments are higher than a 30-year fixed mortgage, 15-year loans typically have lower interest rates, so you pay less interest over the long term and can pay off your mortgage faster.
5/1 Floating rate home loan
Currently, the average interest rate for a 5/1 adjustable rate mortgage is 5.80%. Typically, a 5/1 ARM has a lower introductory interest rate for the first five years of the mortgage. However, depending on how the rate adjusts each year, you could end up paying more after that period. If you plan to sell or refinance your home within five years, an ARM may be a good option.
Calculate your monthly mortgage payment
Borrowing a mortgage should always be based on your financial situation and long-term goals. The most important thing is to create a budget and make sure it stays within your means. CNET’s mortgage calculator below helps homebuyers prepare for their monthly mortgage payments.
How can I get the lowest mortgage interest rate?
Mortgage rates and home prices are high, but the housing market won’t be unaffordable forever. It’s always a good time to save for a down payment and improve your credit score to secure a competitive mortgage rate when the time is right.
Make a bigger down payment: You don’t need a 20% down payment, but the more you put down, the less you’ll need to borrow on your mortgage, which will save you money on interest. Improve your credit score: A credit score of 620 will help you qualify for a conventional mortgage, but a higher score of at least 740 will get you a better interest rate. Pay off your debt: Experts recommend keeping your debt-to-income ratio below 36% to get the best interest rate. By not taking on other debts, you will be able to manage your monthly payments more favorably. Research Financing and Support: Government-backed loans have more flexible borrowing requirements than traditional loans. Some government-sponsored and private programs may help with down payments and closing costs. Consider lenders: Researching and comparing multiple loan offers from different lenders can help you secure the lowest mortgage rate for your situation.
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