Mortgage Rates Hit 2-Year Low After Big Fed Cut. Today's Mortgage Rates, Sept. 19, 2024

The average 30-year fixed mortgage interest rate is 6.17% today, a decrease of -0.09% from seven days ago. The average rate for a 15-year fixed mortgage is 5.42%, which is a decrease of -0.11% from the same time last week. For a closer look at mortgage predictions this week, see here.

With inflation at its lowest level since spring 2021 and a weakening labor market, the Federal Reserve made its first interest rate cut in over four years on Sept. 18. This first cut of 0.5%, along with a series of more cuts going into next year, should help mortgage rates fall gradually. Prospective homebuyers are starting to emerge from the sidelines, but it will take more than lower mortgage rates to repair today’s housing market, which is also challenged by high home prices and low inventory.

Read more: CNET’s Homebuying Survey

Mortgage rates are at their lowest point in over a year. You can take advantage by comparing multiple offers to get the best deal on your home loan. Enter your information here to get a custom quote from one of CNET’s lenders.

About these rates: Like CNET, Bankrate is owned by Red Ventures. This tool features partner rates from lenders that you can use when comparing multiple mortgage rates.

What’s going on with mortgage rates right now?

Mortgage rates change daily in response to a range of economic factors, including the bond market, investor expectations, inflation and labor data, as well as the Fed’s monetary policy decisions.

When inflation is high, the Fed increases interest rates to slow the economy and ease pressures on prices. Higher interest rates make it more expensive for banks to borrow money, so banks raise the rates on consumer loans, like mortgages, to compensate.

Over the last few years, the Fed increased its short-term interest rate from near zero to a target range of 5.25% to 5.5%, and mortgage rates soared in response. But rates started to drop significantly at the start of August and have continued on a downward trend with the market’s anticipation of a September interest rate cut. The average rate on a 30-year fixed mortgage has fallen below 6.3% this month.

Still, a return to the 2-3% mortgage rates from 2020-21 is unlikely. For a look at mortgage rate movement over the past four years, see the chart below.

Mortgage predictions for 2024

Mortgage rates have already fallen quite a bit in 2024, due in large part to market volatility. Over the long term, experts predict a gradual decline in mortgage rates. Just how far rates will fall this year continues to depend on upcoming inflation and labor data.

After the Fed lowered rates interest rates by 0.5% at its September meeting, it projected another 0.5% reduction before the end of the year, which could mean two quarter-percent cuts at each of the remaining meetings in November and December.

“As history shows, once the cutting begins, it triggers a series of rate cuts over a long period of time,” said Greg Sher, managing director at NFM Lending.

Here’s a look at where some major housing authorities expect average mortgage rates to land.

Which mortgage term and type should I pick?

Each mortgage has a loan term, or payment schedule. The most common mortgage terms are 15 and 30 years, although 10-, 20- and 40-year mortgages also exist. With a fixed-rate mortgage, the interest rate is set for the duration of the loan, offering stability. With an adjustable-rate mortgage, the interest rate is only fixed for a certain amount of time (commonly five, seven or 10 years), after which the rate adjusts annually based on the market. Fixed-rate mortgages are a better option if you plan to live in a home in the long term, but adjustable-rate mortgages may offer lower interest rates upfront.

30-year fixed-rate mortgages

For a 30-year, fixed-rate mortgage, the average rate you’ll pay is 6.17% today. A 30-year fixed mortgage is the most common loan term. It will often have a higher interest rate than a 15-year mortgage, but you’ll have a lower monthly payment.

15-year fixed-rate mortgages

Today, the average rate for a 15-year, fixed mortgage is 5.42%. Though you’ll have a bigger monthly payment than a 30-year fixed mortgage, a 15-year loan usually comes with a lower interest rate, allowing you to pay less interest in the long run and pay off your mortgage sooner.

5/1 adjustable-rate mortgages

A 5/1 ARM has an average rate of 5.70% today. You’ll typically get a lower introductory interest rate with a 5/1 ARM in the first five years of the mortgage. But you could pay more after that period, depending on how the rate adjusts annually. If you plan to sell or refinance your house within five years, an ARM could be a good option.

Calculate your monthly mortgage payment

Getting a mortgage should always depend on your financial situation and long-term goals. The most important thing is to make a budget and try to stay within your means. CNET’s mortgage calculator below can help homebuyers prepare for monthly mortgage payments.

How can I get the lowest mortgage rates?

Though mortgage rates and home prices are high, the housing market won’t be unaffordable forever. It’s always a good time to save for a down payment and improve your credit score to help you secure a competitive mortgage rate when the time is right.

1. Save for a bigger down payment: Though a 20% down payment isn’t required, a larger upfront payment means taking out a smaller mortgage, which will help you save in interest.
2. Boost your credit score: You can qualify for a conventional mortgage with a 620 credit score, but a higher score of at least 740 will get you better rates.
3. Pay off debt: Experts recommend a debt-to-income ratio of 36% or less to help you qualify for the best rates. Not carrying other debt will put you in a better position to handle your monthly payments.
4. Research loans and assistance: Government-sponsored loans have more flexible borrowing requirements than conventional loans. Some government-sponsored or private programs can also help with your down payment and closing costs.
5. Shop around for lenders: Researching and comparing multiple loan offers from different lenders can help you secure the lowest mortgage rate for your situation.