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Mortgage rates have been relatively low this week, with 30-year mortgage rates averaging around 6.65%, according to data from Zillow. Rates have remained generally stable after dropping earlier this month, but economic data could cause fluctuations next week.
Mortgage rates have become very sensitive to trends in the overall economy lately. Next week, the Bureau of Economic Analysis will release personal consumption expenditures data for April, based on the PCE price index, the Federal Reserve’s preferred inflation measure.
Mortgage rates are expected to fall as inflation slows and the Fed is able to start lowering the federal funds rate. According to the Federal Reserve Bank of Cleveland’s inflation forecast, the PCE Price Index may have slowed in April on both a monthly and annual basis, which is good news for mortgage rates.
But even if next week’s inflation report shows signs of cooling, mortgage rates are likely to fall only slightly: It will take several months of data showing inflation is slowing for rates to fall significantly.
Today’s mortgage rates
| Types of mortgages | Today’s Average Rate |
Today’s mortgage refinance rates
| Types of mortgages | Today’s Average Rate |
Mortgage Calculator
Use our free mortgage calculator to see how current mortgage rates will affect your monthly and long-term payments.
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$1,161
Estimated Monthly Payment
- pay twenty five% A higher down payment can save you money $8,916.08 About interest charges
- Lowering interest rates 1% Will save you $51,562.03
- Pay an additional fee $500 Each month your loan term will be shortened 146 months
Input different terms and interest rates to see how your monthly payment will change.
30-year fixed mortgage rate
The average interest rate on a 30-year fixed mortgage last week was 6.94%, 8 basis points lower than the week before, according to Freddie Mac.
A 30-year fixed rate mortgage is the most common type of mortgage. With this type of mortgage, you pay back the amount you borrow over 30 years, and your interest rate will remain the same for the life of the loan.
A long 30-year repayment term spreads your payments over a longer period of time, making your monthly payments lower and more manageable. The trade-off is that your interest rate will be higher than if you had a shorter repayment term or a variable rate loan.
15-year fixed mortgage rate
The average interest rate on a 15-year mortgage last week was 6.24%, down 4 basis points from the previous week, according to data from Freddie Mac.
If you want the predictability that a fixed rate offers, but want to lower your interest payments over the life of your loan, a 15-year fixed-rate mortgage may be right for you. These terms are shorter and have lower interest rates than 30-year fixed-rate mortgages, which could save you tens of thousands of dollars in interest. However, your monthly payments will be higher than you would with a longer term.
Will mortgage rates fall?
Mortgage rates have been rising for much of 2023. However, mortgage rates are expected to trend downwards in the coming months and years.
Over the past 12 months, the Consumer Price Index has risen 3.4%. As inflation falls and the Federal Reserve is able to start lowering the federal funds rate, mortgage rates should fall further.
For homeowners looking to use the value of their home to cover a major purchase, like a home improvement, a home equity line of credit (HELOC) may be a good option while they wait for mortgage rates to drop. To find the best loan for you, check out our best HELOC lenders.
A HELOC is a line of credit that allows you to borrow against the equity in your home. It’s similar to a credit card in that you only borrow what you need, rather than a lump sum. It also allows you to tap into the money you have left in your home without having to pay off your entire mortgage like a cash-out refinance would.
Current HELOC interest rates are relatively low compared to other loan options such as credit cards and personal loans.
How will the Federal Reserve’s interest rate hike affect mortgages?
The Federal Reserve has aggressively raised the federal funds rate in 2022 and 2023 in an effort to stave off economic growth and tame inflation, causing mortgage rates to skyrocket as a result.
While mortgage interest rates are not directly affected by changes in the federal funds rate, they often tend to rise or fall ahead of Fed policy shifts. This is because mortgage interest rates change based on investor demand for mortgage-backed securities, and this demand is often influenced by how investors expect Fed rate hikes to affect the overall economy.
Mortgage rates have fallen slightly since the Federal Reserve paused its rate hikes, and they should fall further once the Fed starts cutting rates, which will likely happen later this year.
