Mortgage rates have fallen to a record low – for the 9th time this year | CNN Business (2024)

FAQs

Why have mortgage rates fallen back below 7%? ›

Mortgage rates stayed below the 7 percent barrier this week, according to Bankrate's latest lender survey. Last week was the first time since February that the average 30-year rate was in the sub-7 range. The reason: optimism that the Federal Reserve might cut rates in the near future.

The Lowest Mortgage Rate Ever Recorded

The lowest average mortgage rate for the 30-year, fixed-rate mortgage was recorded at 2.65% in January of 2021, whereas the lowest average rate for the 15-year, fixed-rate home loan came in at 2.10% in July of 2021.

While 30-year mortgage rates moved down slightly in July, it's unlikely there'll be a meaningful drop beyond that if the economy continues its strong streak. Forecasters expect rates to land closer to mid-6 percent by the end of 2024, according to Bankrate's August mortgage rate outlook.

Mortgage rates in the US slipped for a fourth straight week. The average for a 30-year, fixed loan was 6.86%, the lowest level in about three months, Freddie Mac said in a statement Thursday.

However, rates aren't expected to dip into the 3% or 4% range in the foreseeable future. At best, prospective homebuyers could expect rates to fall into the lower 6% range throughout the end of 2025.

On a $400,000 mortgage with an interest rate of 6%, your monthly payment would be $2,398 for a 30-year loan and $3,375 for a 15-year one.

The lowest historical mortgage rate ever for 30-year fixed-rate mortgages was not all that long ago. In January 2021, due largely to the effects of the COVID-19 pandemic, mortgage rates sank to an all-time low of 2.65%, according to Freddie Mac. Mortgage rates stayed low all year, with an average rate of 2.96% in 2021.

The lowest average annual mortgage rate on 15-year fixed mortgages since 1991 was 2.66%. This occurred in both late 2012 and in April 2013. As of 2020 and 2021, the average 15-year fixed mortgage rate has dropped even further to 2.61% and 2.27%, respectively.

Near the end of October 2022, the 30-year mortgage rate jumped from 6.94% to 7.08%, according to Mortgage buyer Freddie Mac. Prior to that, the last time the average mortgage rate hovered around 7% was in April of 2002.

Still, rates might not fall as far as some homeowners hope, as forecasters previously baked in a September rate cut. In fourth quarter 2024 outlooks, Fannie Mae analysts anticipate 30-year rates at 6.7 percent, while the Mortgage Bankers Association predicts 6.6 percent.

Will my mortgage go down if interest rates go down? ›

Your payments might go down if the base rate is reduced and go up if the rate increases. If you have a fixed-rate mortgage, your payments won't change until your fixed-rate period ends and you move to your lender's standard variable rate.

Once you find a rate that is an ideal fit for your budget, lock in the rate as soon as possible. There is no way to predict with certainty whether a rate will go up or down in the weeks or even months it sometimes takes to close your loan.

The average 30-year fixed rate reached an all-time record low of 2.65% in January 2021 before surging to 7.79% in October 2023, according to Freddie Mac.

Monday is the best day to lock-in mortgage rates; Wednesdays are risky. Mortgage rates are in constant flux, even changing multiple times a day. This volatility can make it challenging to know when to lock in your rate.

Mortgage rate predictions

Experts also don't expect any drastic dips in rates — say to 3% or 4%, as experienced during the height of the COVID-19 pandemic.

Mortgage rates in the US dropped back below 7%, helping to ease some of the pressures weighing on homebuyers. The average for a 30-year, fixed loan was 6.99%, down from 7.03% last week, Freddie Mac said in a statement Thursday.

Loan-to-value (LTV) ratio.

A lower LTV ratio typically results in a lower mortgage rate. Your down payment will dictate your LTV ratio; the more you put down (a 20 percent down payment equates to an 80 percent LTV ratio), the lower your LTV ratio and the less of a risk to the lender.