Home » Rates edge higher on 30-year, 15-year terms after positive jobs report

Rates edge higher on 30-year, 15-year terms after positive jobs report

by Marko Florentino
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Average mortgage rates for 30-year and 15-year terms edge higher above 7.00% as of Monday, July 8 2024, to open the week after a new report on Friday showed the U.S. economy added more jobs than expected in June, raising the odds of a September Fed rate cut.

The current average rate for a 30-year fixed mortgage is 7.08% for purchase and 7.09% for refinance — up 8 basis points from 7.00% for purchase and 9 basis points from 7.00% for refinance last Monday. Rates on a 15-year mortgage stand at an average 6.56% for purchase and 6.60% for refinance, up 6 basis points from 6.50% for purchase and 6 basis points from 6.54% for refinance. The average rate on a 30-year fixed jumbo mortgage is 7.16%.

Mortgage rates for Monday, July 8, 2024

  • 30-year fixed rate — 7.08%

  • 20-year fixed rate — 6.89%

  • 15-year fixed rate — 6.56%

  • 10-year fixed rate — 6.46%

  • 5/1 adjustable rate mortgage — 6.60%

  • 30-year fixed FHA rate — 6.97%

  • 30-year fixed VA rate — 7.03%

  • 30-year fixed jumbo rate — 7.16%

Mortgage rates for Monday, July 8, 2024

  • 30-year fixed rate — 7.09%

  • 20-year fixed rate — 6.88%

  • 15-year fixed rate — 6.60%

  • 10-year fixed rate — 6.47%

  • 5/1 adjustable rate mortgage — 6.50%

  • 30-year fixed FHA rate — 7.02%

  • 30-year fixed VA rate — 7.60%

  • 30-year fixed jumbo rate — 7.17%

Freddie Mac weekly mortgage report: Mortgage rates increase

Freddie Mac reports an average 6.95% for a 30-year fixed-rate mortgage, up 9 basis points from last week’s average 6.86%, according to its weekly Prime Mortgage Market Survey of nationwide lenders published on July 3, 2024. The fixed rate for a 15-year mortgage is 6.25%, up 9 basis points from last week’s average 6.16%. These figures are higher than a year ago, when rates averaged 6.81% for a 30-year term and 6.24% for a 15-year term.

“Mortgage rates increased this week, coming in just under 7%,” says Sam Khater, Freddie Mac’s chief economist, of the latest data. “Both new home and pending home sales are down, causing active listings to rise. We are still expecting rates to moderately decrease in the second half of the year and given additional inventory, price growth should temper, boding well for interested homebuyers.”

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 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.

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

It’s expected that the Federal Reserve will hold the Fed rate at 5.25% to 5.50% at its next policy meeting on July 30 and July 31, 2024. The CME FedWatch Tool, which measures market expectations for Fed fund rate changes, predicts a 93.3% chance that the Fed will keep rates where they are — though Fed officials have signaled a cut to the key interest rate later this year as inflation data nears its targets.

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. Producer Price Index data released on June 13 reports a 0.2% increase in wholesale prices — or the prices manufacturers pay to producers of goods and services — from April’s 0.5% increase, adding evidence to cooling inflation.

Adding to the good news is the July 5 jobs report that 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 raising the odds of a September 2024 Fed rate cut.

Speaking at a panel discussion on July 2, Federal Reserve Chair Jerome Powell said that while recent inflation data may “suggest we are getting back on a disinflationary path,” the Fed wants to be “more confident” that inflation is falling before cutting rates.

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.

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

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.

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.

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.

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.

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.

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.

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 8, 2024, at 6:20 a.m. ET. APYs and promotional rates for some products can vary by region and are subject to change.



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