Mortgage interest rate falls: mortgage interest rate on September 17, 2024

For a 30-year fixed-rate mortgage, the average rate you’ll pay today is 6.34%, down -0.05% from a week ago. The average rate for a 15-year fixed-rate mortgage is 5.66%, down -0.08% from last week. For a closer look at this week’s mortgage forecasts, see here.

Of inflation At their lowest level since spring 2021 and a weakening labor market, the Federal Reserve is set to deliver its first rate cut in September, which should push mortgage rates lower in the coming months. Generally speaking, bad news for the economy is good news for mortgage rates. While potential homebuyers are starting to emerge from the margins, it will take more than lower mortgage rates to fix the currently unaffordable housing market.

Mortgage rates are at their lowest point in over a year. You can benefit by comparing multiple offers to get the best deal on your mortgage. Enter your details here to receive a custom quote from one of CNET’s 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.

Recent trends in mortgage rates

Mortgage rates change daily in response to a range of economic factors, including the bond market, investor expectations, inflation and labor market data, and the Fed’s monetary policy decisions.

When inflation is high, the Fed raises 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.

Mortgage rates fell sharply in early August in response to a worrying labor report that stoked recession fears. While the average rate on a 30-year fixed-rate mortgage fell to a record low of 6.5% in August, that’s still more than double what it was in 2020-21.

See the graph below for an overview of the development of mortgage rates over the past four years.

Mortgage rate forecasts

Mortgage rates have already fallen in 2024, largely due to market volatility. As markets stabilize, we could see mortgage rates rise slightly. However, in the long term, experts predict a gradual decline in mortgage rates.

How far rates fall this year still depends on upcoming inflation and labor data. With economic growth expected to continue to slow, the Fed is likely to cut rates at its September meeting. The central bank could also cut one or two more times this year.

“As history shows, once a cut is initiated, it will trigger a series of rate 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.”

But 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.

What different types of mortgages are there?

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

The average interest rate for a 30-year fixed mortgage is currently 6.34%. A 30-year fixed mortgage is the most common term. This often has a higher interest rate than a 15-year 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 5.66%. 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 ARM currently has an average interest rate of 5.90%. 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.

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.