The average interest rate for a standard 30-year fixed mortgage dropped to 6.69% as of Aug. 6, 2024. This is a decrease of 0.19% from the previous week.
The average 30-year fixed mortgage rate slips to 6.34%
Lowest reading since April 7, 2023
Spread: 255 bps pic.twitter.com/cwsoYgNjEN
— Lance Lambert (@NewsLambert) August 5, 2024
The rate for a 15-year fixed mortgage also fell by 0.19% to an average of 6.14%. The drop in mortgage rates comes after a disappointing jobs report. It also follows signals from the Federal Reserve that it may cut interest rates in September.
Mortgage rates are likely to fall again today, setting another 52-week low
At Friday’s spread (258 bps), this would mark a 6.27% average 30-year fixed mortgage rate pic.twitter.com/Qo6bg5nEOi
— Lance Lambert (@NewsLambert) August 5, 2024
U.S. 30-year mortgage rates plunged last week by the most in two years, reaching their lowest level since May 2023 and sparking a surge in refinancing applications.https://t.co/94QTvBXOtg
— Scott Suttell (@ssuttell) August 7, 2024
Bond market performance, investor expectations, inflation, and the Fed’s monetary policy decisions have all played a role in the current mortgage rates. In recent years, the Fed raised short-term interest rates from near zero to a target range of 5.25% to 5.5%. This was in response to high inflation.
It caused mortgage rates to climb significantly. Experts predict that mortgage rates will decline later this year. However, they are unlikely to drop below 6% until some time in 2025.
Economic indicators like inflation and labor market data will be important factors in this forecast. “Once the cutting begins, it triggers a series of cuts over a long period of time,” said a managing director at NFM lending.
Mortgage rates influenced by economic trends
There are different types of mortgages that homebuyers should understand:
– 30-Year Fixed-Rate Mortgages: The current average rate is 6.69%. This type of mortgage is popular because it offers stability and lower monthly payments. However, it comes with higher interest over the loan term.
– 15-Year Fixed-Rate Mortgages: The average rate is 6.14%. These loans have higher monthly payments but lower interest costs overall. They allow borrowers to pay off their mortgage sooner.
– 5/1 Adjustable-Rate Mortgages (ARM): The average rate is 6.37%. These mortgages offer lower initial rates for the first five years. After that, the rate adjusts annually.
They can be a good choice if you plan to sell or refinance within five years. Despite high mortgage rates and home prices, there are some things you can do to secure competitive rates when the time is right:
– Save for a larger down payment: A larger upfront payment can reduce your total mortgage amount and save on interest. – Boost your credit score: A credit score of at least 740 can help you get better rates.
– Pay off existing debt: A debt-to-income ratio of 36% or lower will likely qualify you for the best rates. In summary, current mortgage rates are high but relief could be on the way if the Fed cuts interest rates later this year. Consistent financial planning and improving economic indicators could also help in securing better rates in the future.
