Rates have plummeted and should continue falling
For the most part, fixed mortgage rates have decreased since yesterday, and adjustable rates have increased. Fixed rates have fallen significantly since the beginning of August. According to Zillow data, the average 30-year fixed rate is down 55 basis points since August 1, and the 15-year fixed rate has dropped by 54 basis points.
Mortgage rates have been falling for almost seven weeks in anticipation of the Federal Reserve cutting the federal funds rate at today’s meeting. For weeks, many people expected the central bank to lower its rate by 25 basis points. However, the Fed announced it is slashing the fed funds rate by 50 basis points — and it expects to decrease the rate two more times in 2024 and four times in 2025.
This means mortgage rates should keep falling this year and and throughout next year.
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Dig deeper: Is now a good time to buy a house?
Today’s mortgage rates
Here are the current mortgage rates, according to the latest Zillow data:
30-year fixed: 5.58%
20-year fixed: 5.38%
15-year fixed: 4.86%
5/1 ARM: 5.99%
7/1 ARM: 6.00%
30-year FHA: 4.66%
15-year FHA: 4.25%
5/1 FHA: 4.69%
30-year VA: 4.97%
15-year VA: 4.57%
5/1 VA: 5.58%
Remember, these are the national averages and rounded to the nearest hundredth.
Learn more: 5 strategies for getting the lowest mortgage rates
Today’s mortgage refinance rates
These are today’s mortgage refinance rates, according to the latest Zillow data:
30-year fixed: 5.55%
20-year fixed: 5.29%
15-year fixed: 4.85%
5/1 ARM: 5.99%
7/1 ARM: 6.01%
5/1 FHA: 4.58%
30-year VA: 5.00%
15-year VA: 4.86%
5/1 VA: 5.19%
Again, the numbers provided are national averages rounded to the nearest hundredth. Mortgage refinance rates are often higher than rates when you buy a house, although that’s not always the case.
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Use our mortgage calculator
Use Yahoo Finance’s free mortgage calculator to see how various interest rates and term lengths will impact your monthly mortgage payment. It also shows how the home price and down payment amount play into things.
Our calculator includes homeowners insurance and property taxes in your monthly payment estimate. You even have the option to enter costs for private mortgage insurance (PMI) and homeowners’ association dues if those apply to you. These details result in a more accurate monthly payment estimate than if you simply calculated your mortgage principal and interest.
How does the Federal Reserve affect mortgage rates?
The Federal Reserve and federal funds rate don’t directly impact mortgage rates the way they do interest rates on your savings accounts or auto loans. That’s because mortgages are longer-term financial products — typically 15, 20, or 30 years.
However, the fed funds rate more closely tracks the 10-year Treasury yield, which has historically moved in tandem with longer-term rates such as — you guessed it — mortgage rates.
So, when the Federal Reserve lowers the federal funds rate, mortgage rates tend to follow suit. Economists have been expecting the Fed to cut the fed funds rate at today’s meeting, so the 10-year Treasury yield and mortgage rates have been decreasing for weeks.
Dig deeper: How the Federal Reserve impacts mortgage rates
Will mortgage rates keep dropping?
Yes, mortgage rates will likely keep dropping for the rest of the year. Mortgage interest rates have been falling mainly because people expected one fed funds rate cut in 2024, and they thought it would be a 25-basis-point decrease.
However, the Fed slashed the rate by 50 basis points today instead of 25. It also indicated it would lower the Fed rate two more times this year for three total cuts in 2024. Mortgage rates will probably fall in response to this news.
The Fed also announced that it predicts four rate cuts in 2025. This means rates should continue to drop next year too.
Mind Your Money
Fixed vs. adjustable mortgage rates
With a fixed-rate mortgage, your rate is locked in from day one. Your rate would change only if you refinance your mortgage.
An adjustable-rate mortgage keeps your rate the same for a set period of time. Then, the rate goes up or down depending on several factors, such as the broader interest rate environment and the terms of your loan. For example, with a 5/1 ARM, your rate would be locked in for the first five years, then change every year for the remainder of your term.
Adjustable rates sometimes start lower than fixed rates, but once the initial rate-lock period ends, you risk your interest rate going up. Some mortgage lenders are offering lower fixed-rate mortgages than adjustable rates right now, so talk with your lender about your options before choosing one or the other.
Dig deeper: Adjustable-rate vs. fixed-rate mortgage: Which should you choose?
Today’s mortgage rates: FAQsWhat is a 30-year mortgage rate right now?
The national average 30-year mortgage rate is 5.58% right now, according to Zillow. But keep in mind that averages can vary depending on where you live. For example, if you’re buying in a city with a high cost of living, rates could be even higher.
Are interest rates expected to go down?
Yes, mortgage rates are expected to go down in the short term due to the Fed’s 50-basis-point fed funds rate cut today and the announcement about future rate cuts. Mortgage rates will also probably decrease in 2025 as the Fed keeps slashing rates.
Are mortgage rates dropping?
Yes, mortgage rates are dropping overall. According to Zillow data, the 30-year fixed mortgage rate has been gradually inching down closer to 5.50% — and it will probably keep decreasing in coming weeks and months.
How do I get the lowest refinance rate?
In many ways, securing a low mortgage refinance rate is similar to when you bought your home. Try to improve your credit score and lower your debt-to-income ratio (DTI). Refinancing into a shorter term will also land you a lower rate, though your monthly mortgage payments will be higher.
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