Mortgage Rates Now Higher Than Before Fed Cut. Today's Mortgage Rates, Oct. 9, 2024

Mortgage rates began falling late this summer as worrying economic indicators (rising unemployment) led investors to believe the Federal Reserve would begin cutting rates. Leading up to the Fed’s Sept. 18 rate cut, mortgage rates had reached their lowest point in roughly two years. However, since then, rates have been slowly inching higher in response to positive news on inflation and more recently, the labor market.

Check out our weekly mortgage forecast for a more in-depth look at what’s next for Fed rate cuts, labor data and inflation.

The average interest rate for a standard 30-year fixed mortgage is 6.46% today, up 0.26% over the last week. The average rate for a 15-year fixed mortgage is 5.78%, which is an increase of 0.30% compared to a week ago.

The US added 254,000 jobs in September and unemployment declined to 4.1% from 4.2%, according to the Bureau of Labor Statistics. With yields on the 10-year Treasury moving up, there’s likely to be upward pressure on mortgage rates.

If the labor market showed ongoing signs of weakening, it could drive the Fed to make further aggressive rate cuts. But experts now say the central bank is likely to take a more cautious approach: smaller 0.25% rate reductions at a slower pace.

The path down for mortgage rates is going to be bumpy and long, particularly if we continue to get positive or even mixed economic data in the coming months.

Mortgage rates are finally headed down this fall. You can take advantage by comparing loan offers from multiple lenders to get the lowest rate. Start by entering your information below to get a custom quote from one of CNET’s partner 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 should I know about mortgage rates today?

Over the last few years, the Fed increased its benchmark interest rate multiple times to combat inflation, and mortgage rates soared in response, reaching past 8% late last year. Mortgage rates are not only influenced by the central bank’s monetary policy. They fluctuate daily in response to a range of economic factors, including the bond market, investor expectations, inflation and labor data.

Many homebuyers expected lower mortgage rates at the start of the year, but home loan borrowing remained stubbornly high. In August, rates finally saw significant drops and continued on a downward trend with the market’s anticipation of an upcoming interest rate cut. The average rate on a 30-year fixed mortgage is now around 6.2%, its lowest level since early 2023.

Now that the Fed has officially pivoted to rate cuts, mortgage rates are expected to continue easing. However, experts stress that it will be a gradual process. The Fed won’t reduce interest rates all at once, or very quickly, unless there are signs of a pending economic crisis.

In his remarks following the Sept. 18 policy meeting, Fed Chair Jerome Powell said, “As we normalize rates, you’ll see the housing market normalize.” However, he also admitted that the other problems plaguing the housing market -- high home prices and low inventory -- aren’t fixable by the central bank.

For a look at mortgage rate movement over the past four years, see the chart below.

How low will mortgage rates go this year?

Mortgage rates have already fallen roughly 1% from their 2024 peak. After the first 0.5% rate reduction in September, the Fed is projecting cutting rates by another half a percent this year, with additional cuts in 2025.

“Mortgage rates have been trending down since late July 2024, and that will likely continue if the Fed cuts rates through the remainder of this year,” said Matt Vernon, head of consumer lending at Bank of America.

Based on current forecasts, we could see average 30-year fixed mortgage rates drop to 6% by the end of the year. But there’s always room for volatility in the mortgage market. If future inflation data or labor market reports show the economy softening too much, the Fed may be forced to make larger and/or more frequent rate cuts. That could cause a bigger dip in mortgage rates.

Still, many prospective buyers priced out of the market will continue waiting until home loan rates drop another few percentage points. Experts also warn that a return to the 2-3% mortgage rates from just a few years ago is unlikely.

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

The average interest rate for a standard 30-year fixed mortgage is 6.46% 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 5.78%. 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 adjustable-rate mortgage has an average rate of 5.96% 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.