Mortgage Rates Stay Lower Ahead of Key Inflation Data. Today's Mortgage Rates, Aug. 12, 2024

The average interest rate for a standard 30-year fixed mortgage is 6.51% today, down -0.23% over the last week. The average rate for a 15-year fixed mortgage is 5.91%, which is a decrease of -0.28% from the same time last week. For a look at mortgage rate movement, see the chart below.

With inflation going down, the Federal Reserve is positioning itself to make its first interest rate cut later this year. The housing market won’t recover overnight, but mortgage rates are projected to move lower in the coming months.

As mortgage rates start to fall, be ready to take advantage. Experts recommend shopping around and comparing multiple offers to get the lowest rate. Enter your information here 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 are the different mortgage types?

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 6.51% 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 5.91%. 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 6.14% 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.

What’s behind today’s high mortgage rates?

Homebuyers are facing an upward battle with high mortgage rates, steep home prices and limited housing inventory. While mortgage rates have seen some modest improvements recently, they’re still more than double the average rates we saw in 2020 and 2021.

Mortgage rates respond to a range of factors, including the bond market, investor expectations, inflation and the Fed’s monetary policy decisions.

When inflation is high, the Fed increases short-term 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.

Will mortgage rates drop this year?

Most experts predict average mortgage rates will fall close to 6.5% in the coming months. It’s unlikely we’ll see rates below 6% until later in 2025.

A sustained decline in home loan rates will depend on several factors, including upcoming inflation and labor data. If economic growth continues to slow, investors and market watchers are convinced the Fed will cut interest rates.

“As history shows, once the cutting begins, it triggers a series of cuts over a long period of time,” said Greg Sher, managing director at NFM lending. “That first cut will allow those tied to housing or interested in buying to exhale.”

Most experts are betting on a September rate cut, though some believe the Fed may wait until the end of the year to make a move. Typically, the central bank refrains from making major policy decisions too close to the election, so a November cut is essentially off the table.

One thing is for sure: 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.

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.

What are some tips for finding the best 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.