Mortgage rates fall to 16-month low – August 6, 2024

National Averages of Top Lender Rates – New Purchase
Loan Type	New purchase rates	Daily shift
30-year-old permanent	6.28%	-0.07
FHA 30-year fixed	5.81%	-0.37
VA 30 year fixed	5.62%	-0.10
20-year permanent	5.98%	-0.09
15-year permanent	5.32%	-0.10
FHA 15 year fixed	5.71%	Without changes
10-year fixed	5.26%	-0.10
7/6 ARM	7.24%	-0.01
5/6 ARM	7.51%	+0.01
Jumbo 30 year old permanent	6.80%	+0.13
Jumbo 15 year old permanent	6.60%	+0.04
Jumbo 7/6 arm	7.37%	-0.09
Jumbo arm 5/6	7.57%	-0.02
Provided via Zillow Mortgage API

Freddie Mac’s Weekly Average

Every Thursday, Freddie Mac, a government-sponsored company that buys mortgages, releases a weekly average of 30-year mortgage rates. Last week’s reading fell 5 basis points to 6.73%. The Freddie Mac Average hit a historic 23-year peak of 7.79% in October. It then fell significantly, registering a low of 6.60% in mid-January.

The Freddie Mac average is different from the one we quote for 30-year rates because Freddie Mac calculates every week an average that combines the previous five days of rates. In contrast, our 30-year Investopedia average is a daily reading, offering a more precise and timely indicator of rate movement. In addition, the criteria for loans included (e.g., down payment amount, credit score, consideration of discount points) vary between Freddie Mac’s methodology and our own.

Calculate monthly payments for different loan scenarios with our mortgage calculator.

What causes mortgage interest rates to rise or fall?

Mortgage interest rates are set based on a complex interaction of macroeconomic and industry factors, such as:

Since fluctuations can be caused by many factors simultaneously, it is generally difficult to attribute a change to a single factor.

Macroeconomic factors have kept the mortgage market relatively subdued for most of 2021. In particular, the Federal Reserve has been buying billions of dollars of bonds in response to economic pressures from the pandemic. This bond-buying policy has had a major impact on mortgage rates.

However, starting in November 2021, the Fed began gradually tapering its bond purchases, making significant reductions each month until it reached net zero in March 2022.

Between then and July 2023, the Fed aggressively raised the federal funds rate to combat inflation that has persisted for decades. While the federal funds rate can affect mortgage rates, it does not do so directly. In fact, the federal funds rate and mortgage rates can move in opposite directions.

However, given the historical speed and scale of the Fed’s rate hikes in 2022 and 2023 — raising the benchmark rate by 5.25 percentage points over 16 months — even the indirect impact of the federal funds rate has caused mortgage rates to rise dramatically over the past two years.

The Fed has kept the federal funds rate at its current level since last July, and yesterday it announced its eighth consecutive rate hold. While inflation has fallen significantly, it is still above the Fed’s 2% target. Until the central bank feels confident that inflation is falling sufficiently and sustainably, it has said it will hesitate to cut rates.

The Fed will hold three more meetings this year, with the next one scheduled to end on September 18.

How We Track Mortgage Interest Rates

The national and state averages listed above are provided “as is” via the Zillow Mortgage API, assuming a loan-to-value (LTV) ratio of 80% (i.e. a down payment of at least 20%) and an applicant’s credit score of 680-739. The rates received represent what borrowers should expect when receiving offers from lenders based on their qualifications, which may differ from advertised teaser rates. © Zillow, Inc., 2024. Use subject to Zillow’s Terms of Use.