Average rates steady ahead of this week’s Fed policy meeting

The week opens steady, with mortgage rates on 30-year terms holding under 7.00% as of Monday, July 29, 2024, showing less volatility than earlier this month. It’s a big week for interest rates, with the Federal Reserve’s two-day policy meeting starting tomorrow, where it’s expected to announce another delay on cuts to the benchmark interest rate. Mortgage lenders keep a close eye on the Fed rate, which responds to many of the same economic factors that can influence borrowing rates on large loans like mortgages.

The current average rate for a 30-year fixed mortgage is 6.86% for purchase and 6.88% for refinance — up 1 basis point from 6.85% for purchase and 4 basis points from 6.84% for refinance last Monday. Rates on a 15-year mortgage stand at an average 6.29% for purchase and 6.31% for refinance, no change from 6.29% for purchase and down 1 basis point from 6.32% for refinance this time last week. The average rate on a 30-year fixed jumbo mortgage is 6.96%.

Purchase rates for Monday, July 29, 2024

• 30-year fixed rate — 6.86%

• 20-year fixed rate — 6.64%

• 15-year fixed rate — 6.29%

• 10-year fixed rate — 6.21%

• 5/1 adjustable rate mortgage — 6.43%

• 30-year fixed FHA rate — 6.94%

• 30-year fixed VA rate — 7.04%

• 30-year fixed jumbo rate — 6.96%

Refinance rates for Monday, July 29, 2024

• 30-year fixed rate — 6.88%

• 20-year fixed rate — 6.66%

• 15-year fixed rate — 6.31%

• 10-year fixed rate — 6.24%

• 5/1 adjustable rate mortgage — 6.33%

• 30-year fixed FHA rate — 6.99%

• 30-year fixed VA rate — 7.59%

• 30-year fixed jumbo rate — 6.97%

Source: Bankrate lender survey

Freddie Mac weekly mortgage report: Mortgage rates show little movement

Freddie Mac reports an average 6.78% for a 30-year fixed-rate mortgage, up 1 basis point from last week’s average 6.77%%, according to its weekly Prime Mortgage Market Survey of nationwide lenders published on July 25, 2024. The fixed rate for a 15-year mortgage is 6.07%, up 2 basis points from last week’s average 6.05%. These figures are lower than a year ago, when rates averaged 6.81% for a 30-year term and 6.11% for a 15-year term.

“Mortgage rates essentially remained flat from last week but have decreased nearly half a percent from their peak earlier this year,” says Sam Khater, Freddie Mac’s chief economist, of the latest data. “Despite these lower rates, buyers continue to pause, as reflected in tumbling new and existing home sales data.”

Freddie Mac updates its Prime Mortgage Market Survey data weekly on Thursdays at noon ET.

Mortgage rates for July 29, 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, money market accounts and home equity loans. Mortgage 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 kept the federal funds target interest rate steady 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 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 expected that the Federal Reserve will post a continued hold on the Fed rate at 5.25% to 5.50% after its policy meeting this week on July 30 and July 31, 2024. The CME FedWatch Tool, which measures market expectations for Fed fund rate changes, predicts a 95.9% chance that the Fed will keep rates where they are.

The latest jobs report released July 5 exceeded expectations, showing a 42nd consecutive month of job growth. Employers added 206,000 new jobs in June, returning the job market to pre-pandemic conditions and calling into question the odds of a September 2024 Fed rate cut.

Adding to the good news is data signaling a continued cooling of inflation, 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 July 11 revealed consumer prices rose 3% year over year in June, down from 3.3% in May, slowing more than expected. Producer price index data released on July 12, however, reported a sharper increase in wholesale prices — or the prices manufacturers pay to producers of goods and services — than forecast for June. The index increased 2.6% for the 12 months ending in June, the largest year-over-year gain since March 2023, which could further influence an already cautious Fed to skip July for a rate cut in September or later in the year.

Speaking to Congress on July 9, Federal Reserve Chair Jerome Powell said the Fed’s hold on benchmark interest rates at their highest in two decades has resulted in “considerable progress” toward lowering inflation, but echoed previous concerns at the timing of anticipated rate cuts. “Reducing policy restraint too late or too little could unduly weaken economic activity and employment,” he said, while lowering rates too soon could “stall or even reverse the progress we’ve seen on inflation.”

Powell reiterated this sentiment during an interview in Washington, D.C., on July 15, acknowledging the economy appears to be on the way to a “soft landing” but declining to commit to a rate cut for July: “We’re going to make these decisions meeting by meeting.”

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

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.

I already own a home. Can I borrow against my home’s equity to cover a high-dollar or unexpected cost?

Yes. If it’s cash you’re after to pay for home renovations, pay off high-interest credit card debt or cover an emergency, tapping into your home’s value is a way to unlock lower rates without refinancing — without losing your low-rate mortgage. You typically need good to excellent credit and to have built enough equity in your home. Learn how to get equity out of your home while rates are high.

Editor’s note: Rates shown are as of Monday, July 29, 2024, at 6:30 a.m. ET. APYs and promotional rates for some products can vary by region and are subject to change.

Sources

• Mortgage Industry Insights, Bankrate. Accessed July 29, 2024.

• Primary Mortgage Market Survey, Freddie Mac. Accessed July 15, 2024.

• Employment Situation Summary, U.S. Bureau of Labor and Statistics. Accessed July 8, 2024.

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

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

• CME FedWatch Tool, CME Group. Accessed July 29, 2024.