#Average rates tick down after Fed rate pause

Average mortgage rates for 30-year and 15-year terms continue to tick down week over week as of Thursday, June 13, 2024, a day after the Federal Reserve concluded its fourth rate-setting policy meeting of the year with a decision to keep the current Fed rate unchanged — leaving prospective homebuyers and sellers to wait for more affordable rates.

The current average rate for a 30-year fixed mortgage is 7.05% for purchase and 7.09% for refinance — down 1 basis point from 7.06% for purchase and up 1 basis point from 7.08% for refinance last Thursday. Rates on a 15-year mortgage stand at an average 6.50% for purchase and 6.55% for refinance, down 6 basis points from 6.56% for purchase and 4 basis points from 6.59% for refinance this time last week. The average rate on a 30-year fixed jumbo mortgage is 7.15%.

Mortgage rates for Thursday, June 13, 2024

• 30-year fixed rate — 7.05%

• 20-year fixed rate — 6.80%

• 15-year fixed rate — 6.50%

• 10-year fixed rate — 6.37%

• 5/1 adjustable rate mortgage — 6.48%

• 30-year fixed FHA rate — 7.06%

• 30-year fixed VA rate — 7.11%

• 30-year fixed jumbo rate — 7.15%

Mortgage rates for Thursday, June 13, 2024

• 30-year fixed rate — 7.09%

• 20-year fixed rate — 6.83%

• 15-year fixed rate — 6.55%

• 10-year fixed rate — 6.37%

• 5/1 adjustable rate mortgage — 6.45%

• 30-year fixed FHA rate — 7.07%

• 30-year fixed VA rate — 7.75%

• 30-year fixed jumbo rate — 7.20%

Freddie Mac weekly mortgage report: Rates retreat after latest personal spending data

Freddie Mac reports an average 6.99% for a 30-year fixed-rate mortgage, down 4 basis points from last week’s average 7.03% for a 30-year fixed-rate mortgage, according to its weekly Prime Mortgage Market Survey of nationwide lenders published on June 6, 2024. The fixed rate for a 15-year mortgage is 6.29%, up 7 basis points from last week’s average 6.36%. These figures are higher than a year ago, when rates averaged 6.71% for a 30-year term and 6.07% for a 15-year term.

“Mortgage rates retreated this week given incoming data showing slower growth,” says Sam Khater, Freddie Mac’s chief economist, of the latest data. “Rates are just shy of 7 percent, and we expect them to modestly decline over the remainder of 2024. If a potential buyer is looking to buy a home this year, waiting for lower rates may result in small savings, but shopping around for the best rate remains tremendously beneficial.”

Freddie Mac updates its Prime Mortgage Market Survey data weekly on Thursday mornings.

Mortgage rates for June 13, 2024

Mortgage rates are determined by many factors that include inflation rates, economic conditions, housing market trends and the Federal Reserve’s target interest rate. Lenders also consider your personal credit score, the amount available for your down payment, the property you’re interested in and other terms of the loan you’re requesting, like 30-year or 15-year offers.

Because mortgage rates can fluctuate daily, it’s best to lock in a rate when you’re comfortable with the overall conditions of your mortgage or home loan.

Mortgage rates in the news

Mortgage lenders keep a close eye on the benchmark federal funds target interest rate set by the Federal Reserve, the U.S.’s central bank. Called the Fed rate, it’s the benchmark that affects rates on deposit accounts, loans and other financial products. Typically, as the fed rate rises, so do APYs on savings products like CDs, high-yield savings accounts and money market accounts. Mortgage and home loan rates don’t follow the Fed rate as closely, but they do reflect the same elements the Fed evaluates when making decisions on the benchmark — especially inflation — which means as the Fed rate increases, mortgage rates also tend to rise.

The Federal Reserve increased the target interest rate 11 times from March 2022 to July 2023 in an effort to combat the highest inflation in four decades coming out of the pandemic.

June 12, 2024: Fed holds benchmark rate unchanged for seventh time since July 2023

At the conclusion of its fourth rate-setting policy meeting of 2024 on June 12, 2024, the Federal Reserve left the federal funds target interest rate at a 23-year high of 5.25% to 5.50%, marking the seventh consecutive time the Fed’s held the benchmark rate unchanged since July 2023.

In its post-meeting statement, the Federal Reserve acknowledged “there has been modest further progress toward the Committee’s 2 percent inflation objective,” but also that the “economic outlook is uncertain, and the Committee remains highly attentive to inflation risks.”

The Federal Reserve is focused on a 2% inflation goal that’s ideal for keeping employment high and prices low. Despite speculation in March of three rate cuts by the end of the year, the Fed reiterated from its May statement that its rate-setting committee “does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent.”

Officials now estimate one rate cut this year with an additional four cuts anticipated in 2025.

What to expect at the Fed’s July policy meeting

It’s too early to predict what the Federal Reserve will decide at its next policy meeting on July 31 and July 31, 2024, though officials estimate one rate cut later this year.

Inflation appears to be cooling, falling from a peak of 9.1% in June 2022 to rates that have ranged from 3% and 4% since May 2023. The Consumer Price Index released on June 12 revealed consumer prices rose 3.3% year over year, unchanged from 3.3% in April, which was celebrated as “unequivocally good” by economists and puts pressure on the Fed’s timetable for rate cuts.

Adding to the good news is the June 7 jobs report that showed a surge in hiring, with employers adding 272,000 jobs in May — higher than the 175,000 positions added in March.

Producer Price Index data released on May 14 showed a moderate 0.5% increase in wholesale prices — or the prices paid to producers of goods and services — in the 12 months through April. New PPI data is due today.

When asked at a post-meeting press conference whether new inflation data changes the timeline on rate cuts, Federal Reserve Chair Jerome Powell said while it’s “plausible” a cut could come as early as September, “We want to gain further confidence. Certainly, more good inflation readings will help with that.”

The Powell-led rate-setting panel will announce a rate decision at the conclusion of its meeting on July 31, at 2 p.m. ET.

NAR settlement offers ray of hope to summer homebuyers

While high mortgage rates could convince current homeowners to delay selling their properties, resulting in low housing inventory, a major change in the way Americans buy and sell homes may offer a ray of sunshine to prospective homebuyers. On April 23, a judge granted preliminary approval to a $418 million antitrust settlement with the National Association of Realtors that ends customary real estate broker commissions of up to 6% of a home’s purchase price starting in July. The settlement isn’t expected to affect mortgage rates, yet it paves the way for consumers to negotiate what they pay for an agent’s services, saving homebuyers money in the long run.

Dig deeper: When’s the next Federal Reserve meeting? The FOMC — and how it affects your finances

4 top factors that affect your mortgage rate

The difference of even half a percentage point on your interest rate can save you hundreds of dollars a month and thousands of dollars over the life of your mortgage, but the mortgage rate you’re ultimately offered depends on the mortgage you’re interested in, payments you’re willing to pay up front and your overall financial health.

• Your credit score. Knowing your credit score can help you shop around for lenders you’re likely to get approval through, as well as understand the type of mortgage for your lifestyle and income. The best mortgage rates go to borrowers with good to excellent credit — typically a FICO credit score of at least 670 — though even with fair credit, you may be able to find a mortgage offering decent rates.

• Your down payment. The more money you can put down toward your home, the better it benefits your interest rate. Paying at least 20% of your home’s purchase price up front generally results in a lower interest rate — and you can avoid mortgage insurance, which increases your total cost.

• Your loan term. While the 30-year mortgage remains a popular way for Americans to purchase homes, you can find terms of 20 years, 15 years and 10 years. Shorter loan terms usually come with lower interest rates, though with higher monthly payments. Longer mortgage terms can result in smaller monthly payments, though you’ll pay higher total interest over the life of your loan.

• Interest rate type. Mortgage rates come with two basic types of rates — fixed and variable. Fixed-rate mortgages offer a consistent interest rate over the life of your loan, whereas adjustable-rate mortgages (ARMs) often start with a lower fixed rate for an agreed-on time and then adjust to a variable rate based on market conditions for the remainder of your term. Choosing between these two rates depends on your financial goals and tolerance for risk.

Frequently asked questions about mortgage rates

What are mortgage lenders?

Lenders are financial institutions that loan money to homebuyers. A lender is different from a loan servicer, which typically handles the operational tasks of your loan, like processing payments, talking directly with borrowers and sending monthly statements.

What does it mean to refinance a mortgage?

Refinancing is a process of trading in your current mortgage to another lender for lower rates and better terms than your current loan. With a refinance, the new lender pays off your old mortgage and you then pay your monthly statements from the new lender.

What is an adjustable-rate mortgage?

An adjustable-rate mortgage — commonly called an ARM — is a type of home loan with a variable rate. Unlike a fixed-rate mortgage, which locks in an interest rate and predictable payments that apply over the full loan term, an ARM starts at an initial fixed rate for a period of three years or longer, after which it adjusts to a higher rate and then further adjusts periodically over the remaining life of the loan.

For a 5/1 adjustable-rate mortgage, the first number indicates the number of years at the fixed rate — or five years — and the second number indicates the rate at which the mortgage rate readjusts after — in this case, each year or annually.

Why are mortgage rates so high?

Mortgage rates are influenced by complicated factors like inflation, employment rates, the bond market and the overall economy. While the Federal Reserve doesn’t set mortgage rates, this central bank of the U.S. sets benchmark rates that indirectly affect rates on financial products like mortgages, personal loans and deposit accounts.

March inflation data came in higher than expectations, which is among the main concerns driving mortgage rates higher in April.

Can I negotiate my mortgage rate?

It’s not likely — lenders consider the market conditions and other financial factors when determining rates. You can, however, ask about how you can reduce costs in other ways when comparing mortgage lenders. For instance, many lenders offer lower rates in exchange for “mortgage points” — upfront fees you pay to your lender. A mortgage point could cost 1% of your mortgage amount, which means about $5,000 on a $500,000 home loan, with each point lowering your interest rate by about 0.25%, depending on your lender and loan.

Editor’s note: Rates shown are as of Thursday, June 13, 2024, at 6 a.m. ET. APYs and promotional rates for some products can vary by region and are subject to change.

Sources

• Primary Mortgage Market Survey, Freddie Mac. Accessed May 31, 2024.

• Employment Situation Summary, U.S. Bureau of Labor and Statistics. Accessed June 7, 2024.

• Consumer Price Index Summary, U.S. Bureau of Labor and Statistics. Accessed June 12, 2024.

• Producer Price Index News Release summary, U.S. Bureau of Labor and Statistics. Accessed May 15, 2024.

• Mortgage Industry Insights, Bankrate. Accessed June 13, 2024.