Mortgage Rates Continue to Trend Down, Offering Hopeful Homebuyers a Chance to Enter the Market

Strategic Insights -

Average 30-year mortgage rates continue to hover in the mid-6% range after dropping earlier this month, according to Zillow data. This decrease is expected to continue as inflation slows, and the Federal Reserve lowers the federal funds rate. Homebuyers who were priced out by high rates may soon have the opportunity to jump back into the market. For those who are currently shopping for a home, reducing the impact of today's still-high mortgage rates can be achieved by shopping around with multiple mortgage lenders and making sure their finances are in a good spot before applying for a mortgage.

Key Takeaways:

  • The average 30-year fixed mortgage rate was 6.77% last week, a 12-basis-point decrease from the previous week, according to Freddie Mac.
  • The 30-year fixed-rate mortgage is the most common type of home loan, and its lengthy 30-year term allows borrowers to spread out their payments over a long period of time, keeping their monthly payments lower and more manageable.
  • A borrower with a score above 760 could get a rate as low as 6.447% on a $300,000 loan, saving $323 less per month in mortgage payments compared to a borrower with a score between 620 and 639.
  • To save money on mortgage payments, borrowers can consider shopping around with multiple mortgage lenders, having a higher credit score (at least 620), and choosing a shorter term, such as a 15-year fixed-rate mortgage.
  • According to myFICO, a borrower with a score between 620 and 639 may need to pay more than 8% to get a mortgage, while a borrower with a score above 760 could get a rate as low as 6.447%.
  • The current 15-year fixed mortgage rate is 6.05%, allowing borrowers to save tens of thousands of dollars in interest compared to a 30-year fixed-rate mortgage.

Statistics:

  • Average 30-year fixed mortgage rate: 6.77% (Freddie Mac)
  • 12-basis-point decrease in 30-year fixed mortgage rate from the previous week (Freddie Mac)
  • Average 15-year fixed mortgage rate: 6.05% (Freddie Mac)
  • Borrowers with a credit score above 760 can save up to $323 per month compared to those with a score between 620 and 639 (myFICO)

Sources:

  • Freddie Mac (https://www.freddiemac.com/pmms)
  • Zillow (https://www.businessinsider.com/personal-finance/mortgages/30-year-mortgage-rates)
  • myFICO (https://www.businessinsider.com/personal-finance/credit-score/what-credit-score-is-needed-to-buy-a-house)