It was a mixed bag for home affordability in early 2024. See the income you need to buy a median-priced home in the top 50 metro areas for details.

It was a mixed bag for home affordability in early 2024. See the income you need to buy a median-priced home in the top 50 metro areas for details.

Today's Mortgage Rates - 05/24/2024

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Rates Dip Below 7%

Mortgage continued their downward trend this week.

Freddie Mac reported today that the average offered interest rate for a conforming 30-year fixed-rate mortgage (FRM) decreased by another eight basis points (0.08%), retreating to 6.94%, the lowest level it has seen since mid-April.

Average offered rates for 15-year fixed-rate mortgages also eased, but only slightly. A four basis point decline (0.04%), left the average rate for the most common shorter-term mortgage at 6.24%, a seven-week low.

Relative to a long-term fixed-rate mortgage, the offered rate for the most popular ARM was equally attractive this week as it was last week. The Mortgage Bankers Association reported that the initial fixed rate for the first five years of a 5/1 hybrid ARM declined by eight basis points (0.08%) in their latest survey week, dropping back to an average rate to 6.48%. For a $300,000 loan, the 46 basis-point gap between the 30-year FRM and 5/1 Hybrid ARM creates a payment that is only about $92 per month lower, saving a borrower just over $6,900 in interest cost over the first five years of the loan. That's not a huge difference, but given today's interest rate and home price climate, even a small differential may have value for some homebuyers.

ARMs are not a set-it-and-forget-it loan product, though. If you're interested in learning the advantages (and drawbacks) of ARMs, you should read HSH's comprehensive Guide to Adjustable Rate Mortgages.

Interest rates have settled back over the last few weeks, primarily due to what appears to be an economy losing a bit of steam and at least one look at inflation that showed less of an increase in prices than was feared. GDP growth in the first quarter of 2024 was measurably lower than the pace it set in the last half of 2023, and slower growth can help attenuate price pressures over time. How much time it will take or how much effect there will be on inflation over that time isn't exactly clear.

What is somewhat more clear is concern by the Fed that the present level of policy may or may not be sufficient to drive inflation down to where they want it to be. The minutes of the April 30-May 1 Fed meeting this week revealed this concern, as they stated "Although monetary policy was seen as restrictive, many participants commented on their uncertainty about the degree of restrictiveness," and that at least some who attended the meeting showed "a willingness to tighten policy further should risks to inflation materialize."

Financial markets didn't exactly shrug this off, but they didn't pay it all that much heed, at least not as yet. Still, it does point out that there are limits as to how far mortgage rates can decline amid stubborn inflation, even if economic growth slows. At least for the moment, it looks as though much if not all of the decline in mortgage rates is behind us for now, and the Memorial Day holiday weekend should help keep them fairly level over the next few days.

Each week in HSH's MarketTrends newsletter, we track and discuss economic conditions that affect mortgage rates and their impact on housing markets and consumers. Read the most recent edition of MarketTrends or subscribe for email delivery.

Week 30-year-Fixed 15-year-Fixed
05/23 6.940% 6.240%
05/16 7.020% 6.280%
05/09 7.090% 6.380%
05/02 7.220% 6.470%
04/25 7.170% 6.440%
04/18 7.100% 6.390%
04/11 6.880% 6.160%
04/04 6.820% 6.060%
03/28 6.790% 6.110%
03/21 6.870% 6.210%
03/14 6.740% 6.160%
03/07 6.880% 6.220%

Mortgage Choices at a Glance

Loan type/terms Fixed 30 years Fixed 15 years/
20 Years
Hybrid ARM Traditional ARM Balloon Mortgage
Rate changes
  • Never; Fully fixed for entire term
  • Never; Fully fixed for entire term
  • Usually after fixed period of 3, 5, 7 or 10 years
  • After that, annual change typical
  • Fully variable
  • Typically changing at one-year intervals
  • Some have shorter change intervals
  • Never; Fully fixed for entire term
  • Low, stable payment
  • Usually easiest qualification
  • Stable payments
  • Builds equity faster
  • Lower total interest costs than 30-year term
  • Lower rates than fully fixed-rate mortgage
  • Can sometimes borrow larger loan amount for same income
  • Can have lowest interest rates
  • Qualification may not depend upon today's interest rate
  • Often has lower interest rate/monthly payment over balloon period than fixed rate
  • Similar to hybrid ARM
  • Can have highest total interest cost over time
  • User may "buy" more rate stability than actually needed, increasing cost
  • Requires higher income to qualify
  • Less affordable monthly payment
  • Funds commited to payment cannot be used elsewhere
  • Stable payment for a number of years, then unpredictable
  • Rates can jump by as much as 6 percentage points at first adjustment
  • Payments fluctuate at each rate change
  • Unpredictable, rates can change as much as 2 percentage points at each adjustment
  • Loan fully due and payable when balloon period ends
  • Must be paid off or refinanced in unknown market conditions
Alternative strategy
  • Consider Hybrid ARM with appropriate fixed period
  • Consider 30-year term and prepaying loan to preserve cash-flow flexibility
  • Consider Fixed rate mortgage or longest possible fixed period, if loan hold period not known
  • Consider Hybrid ARM to ameliorate rate and payment risks for a given period
  • Consider Hybrid ARM to ensure continued loan availability
These may be useful for...
  • Purchasing a home
  • First-time homebuyers
  • Refinancing to improve cash flow/lower payment
  • Refinancing to lower total interest cost
  • Retiring mortgage more quickly
  • Building or rebuilding equity more quickly
  • Purchasing or refinancing when time horizon is seven years or shorter, and where borrower can handle increase in monthly payments
  • Purchasing or refinancing when interest rates are near top of cycle, and are likely to fall, or sale or refinance is anticipated within three years
  • Purchasing or refinancing when time horizon is three years or longer and home will be sold prior to end of balloon period
Consider if
  • Buying or refinancing a home and planning on owning for longer than 10 years
  • Buying second home
  • Refinancing to build equity
  • Paying off mortgage before life event (retirement, etc)
  • Buying a home and expect to move before fixed period ends, or know income will rise to offset payment risk, even in worst-case scenario
  • Buying or refinancing when income can handle frequent payment changes and worst-case scenario for rates over a four-year period
  • Buying a home and expect to move before balloon period ends, or have resources to pay off mortgage if refinance not available
When shopping, ask about
  • "Full cost" vs. "No cost" refinances, prepaying loan to shorten term if desired
  • If 20-year term makes payment too high, whether 25-year term is available
  • Interest rate caps, for first and subsequent adjustments, worst-case scenario
  • A history of the Index the loan is keyed off, margin and caps
  • Whether or not there is any built-in refinancing option when the balloon period ends
Useful tools & resources

Latest Mortgage Rate Analysis

HSH's longer-range outlook for mortgage rates, where we review our last forecast,discuss current market influences and provide our expectations for mortgage rates over the next nine weeks.

Mortgage Calculators

Mortgage rates and more

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