Mortgage interest rate falls: today’s mortgage rate on August 13, 2024

The average for a 30-year fixed mortgage is 6.59% today, down -0.10% from seven days ago. The average rate for a 15-year fixed mortgage is 5.99%, down -0.15% from a week ago. For a look at the movement of mortgage rates, see the chart below.

With inflation falling, the Federal Reserve is positioning itself to make its first rate cut later this year. The housing market won’t recover overnight, but mortgage rates are expected to fall in the coming months.

Now that mortgage rates are starting to drop, you need to be ready to take advantage. Experts recommend shopping around and comparing multiple offers to get the lowest rate. Enter your information here to receive a customized quote from one of CNET’s partner lenders.

About these rates: Like CNET, Bankrate is owned by Red Ventures. This tool includes partner rates from lenders that you can use when comparing multiple mortgage rates.

How can I choose a mortgage term?

Every mortgage has a term or payment schedule. The most common mortgage terms are 15 and 30 years, although mortgages of 10, 20 and 40 years also exist. With a fixed-rate mortgage, the interest rate is fixed for the life of the loan, which provides stability. With a variable-rate mortgage, the interest rate is only fixed for a certain period of time (usually five, seven or 10 years), after which the interest rate is adjusted annually based on the market. Fixed-rate mortgages are a better option if you plan to live in a home for the long term, but variable-rate mortgages can offer lower interest rates up front.

Mortgages with a fixed interest rate of 30 years

For a 30-year fixed-rate mortgage, you currently pay an average of 6.59%. A 30-year fixed-rate mortgage is the most common term. This often has a higher interest rate than a 15-year fixed-rate mortgage, but you do pay a lower monthly payment.

Mortgages with a fixed interest rate of 15 years

Today, the average rate for a 15-year fixed mortgage is 5.99%. While you will have a higher monthly payment than a 30-year fixed mortgage, a 15-year loan typically has a lower interest rate, meaning you will pay less interest in the long run and pay off your mortgage sooner.

5/1 variable interest rate mortgages

A 5/1 variable rate mortgage currently carries an average interest rate of 6.33%. You’ll typically get a lower introductory rate with a 5/1 ARM for the first five years of your mortgage. But you could end up paying more after that, depending on how the rate adjusts annually. If you plan to sell or refinance your home within five years, an ARM may be a good option.

Current mortgage rate trends

Homebuyers are facing an uphill battle with high mortgage rates, high home prices, and limited housing inventory. While mortgage rates have shown some modest improvements recently, they are still more than double the average rates we saw in 2020 and 2021.

Mortgage rates depend on a number of factors, including the bond market, investor expectations, inflation and the Fed’s monetary policy decisions.

When inflation is high, the Fed raises short-term interest rates to slow the economy and ease pressure on prices. Higher interest rates make it more expensive for banks to borrow money, so banks raise rates on consumer loans, such as mortgages, to compensate.

In recent years, the Fed has raised short-term interest rates from near zero to a target range of 5.25% to 5.5%. In response, mortgage rates have soared.

Will mortgage rates fall this year?

Most experts predict that the average mortgage rate will fall to nearly 6.5% in the coming months. It is unlikely that we will see rates below 6% until later in 2025.

A sustained decline in mortgage rates will depend on several factors, including upcoming inflation and labor data. If economic growth continues to slow, investors and market watchers are confident the Fed will cut interest rates.

“As history shows, once the cutting begins, it leads to a series of cuts over a long period of time,” he said. Greg Shermanaging director at NFM Lending. “That first cut will give those who are housing-bound or interested in buying a chance to take a breather.”

Most experts are betting on a September rate cut, though some believe the Fed will wait until the end of the year to take action. The central bank normally refrains from making major policy decisions too close to elections, so a November cut is essentially out of the question.

One thing is for sure: it is unlikely that we will return to the 2-3% mortgage rates of a few years ago.

Below you can see where some major housing authorities expect the average mortgage rate to end up.

Calculate your monthly mortgage payment

Getting a mortgage should always depend on your financial situation and your long-term goals. The most important thing is to create a budget and try to stay within it. CNET’s mortgage calculator below can help homebuyers prepare for monthly mortgage payments.

How can I get the lowest mortgage rate?

Although mortgage rates and home prices are high, the housing market won’t remain unaffordable forever. It’s always a good time to save for a down payment and improve your credit score to help you get a competitive mortgage rate when the time is right.

1. Save for a larger down payment: Although a 20% down payment is not required, a higher down payment will mean you take out a smaller mortgage, saving you money on interest.
2. Increase your credit score: You qualify for a conventional mortgage with a credit score of 620, but a higher score of at least 740 will get you better interest rates.
3. Paying off debts: Experts recommend a debt-to-income ratio of 36% or less to help you qualify for the best rates. If you have no other debt, you’ll be better able to handle your monthly payments.
4. Research loans and assistance: Government-sponsored loans have more flexible borrowing requirements than conventional loans. Some government-sponsored or private programs can also help with your down payment and closing costs.
5. Compare different lenders: By researching and comparing multiple mortgage offers from different lenders, you can find the lowest mortgage rate for your situation.