Mortgage rates decline following weak jobs report

by / ⠀News / August 8, 2024
Decline Report

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 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.

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.

See also  Warren Buffett's Philanthropic Contributions Soar Past $51 Billion

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.

About The Author

Erica Stacey

Erica Stacey is an entrepreneur and business strategist. As a prolific writer, she leverages her expertise in leadership and innovation to empower young professionals. With a proven track record of successful ventures under her belt, Erica's insights provide invaluable guidance to aspiring business leaders seeking to make their mark in today's competitive landscape.

x

Get Funded Faster!

Proven Pitch Deck

Signup for our newsletter to get access to our proven pitch deck template.