With half of 2024 gone, it's time for our Mid-year review of HSH's 2024 Mortgage and Housing Market Outlook. Have a look and see how we're doing!

With half of 2024 gone, it's time for our Mid-year review of HSH's 2024 Mortgage and Housing Market Outlook. Have a look and see how we're doing!

Today's Mortgage Rates - 07/14/2024

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Mortgage Rates Ease, Inflation Settles

Mortgage rates declined this week, and encouraging inflation data may help them to slip further.

Freddie Mac reported today that the average offered interest rate for a conforming 30-year fixed-rate mortgage (FRM) decreased by just six basis points (0.06%) to 6.89%, taking back nearly all of last week's minor rise.

Average offered rates for 15-year fixed-rate mortgages also fell, decreasing by eight basis points (0.08%). Most commonly used by homeowners who are refinancing existing loans, the average rate for the most prevalent shorter-term mortgage now stands at 6.17%, just about where it was two weeks ago.

A 5/1 ARM might offer a homebuyer slightly lower-cost alternative to a long-term fixed-rate mortgage, but the difference in rate between 30-year FRMs and 5/1 ARMs has not been all that compelling of late. The Mortgage Bankers Association reported that the initial fixed interest rate on a hybrid 5/1 ARM was 6.22%, a sixteen basis point (0.16%) fall from the prior week's average rate. At 67 basis points, the narrow gap between rates for a 30-year FRM and those for a 5/1 ARM means that an ARM may be a less compelling choice for potential homebuyers at the moment.

Even when the call of an ARM is compelling, it's important to remember that ARMs are not a set-it-and-forget-it loan product. If you're interested in learning the advantages (and drawbacks) of ARMs, you should read HSH's comprehensive Guide to Adjustable Rate Mortgages.

The kind of economic data that would lend the Fed the "confidence" to start cutting short-term interest rates appears to be accumulating. After last Friday's moderate employment report for June, interest rates began easing a little bit, helping them to decline to current levels. However, today's benign inflation report should help improve the prospects for lower rates before long.

The June CPI saw an overall decline of 0.1% for prices, trimming the annual rate of inflation to a flat 3%, its lowest level in more than three years. Core CPI (a measure which excludes volatile food and energy costs) rose by just 0.1% last month, leaving the annual rate at 3.3%. The Fed prefers to follow a different inflation measure but many of the components that go into the core CPI are reflected there, suggesting that the core PCE measure for June should also move downward when it is released at the end of the month.

Softer economic conditions and cooler inflation likely only need to continue into next month to set the stage for a rate cut in September. We'll see how those prospects have improved after the next Fed meeting at the end of July. On a more immediate basis, the bond yields that most influence mortgages have all stepped downward today; as a result, somewhat less expensive mortgages are likely to be in the market 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
07/11 6.890% 6.170%
07/03 6.950% 6.250%
06/27 6.860% 6.160%
06/20 6.870% 6.130%
06/13 6.950% 6.170%
06/06 6.990% 6.290%
05/30 7.030% 6.360%
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%

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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