Today’s Mortgage Rates September 20, 2024: 30-Year Rates Drop
Today's Mortgage Rates September 20, 2024: 30-Year Rates Drop
Tim Maxwell Tim Maxwell Mortgage ExpertTim Maxwell is a freelance personal finance writer with over two decades of media experience. His work has been published in Bankrate, CBS News, Experian and other outlets. Tim is passionate about financial literacy and empowering people to take control of their finances. When he's not writing or geeking out over his budget, he enjoys creating memories with his family in the Sierra Nevada mountains.
Read Tim Maxwell's full bio Claire Dickey Claire Dickey Senior EditorClaire is a senior editor at Newsweek focused on credit cards, loans and banking. Her top priority is providing unbiased, in-depth personal finance content to ensure readers are well-equipped with knowledge when making financial decisions.
Prior to Newsweek, Claire spent five years at Bankrate as a lead credit cards editor. You can find her jogging through Austin, TX, or playing tourist in her free time.
Read Claire Dickey's full bio Updated September 20, 2024 at 6:00 amThe current average mortgage rate on a 30-year fixed-rate mortgage, the most popular home loan, is 6.16%, a 16 basis point decrease from the previous week. Borrowers looking for a shorter payoff horizon with 15-year fixed mortgages face an average rate of 5.38%, a decrease of 19 basis points from a week ago. For buyers looking for guaranteed government loans for their dream homes, 30-year fixed FHA mortgages average 6.08%, compared to 6.05% the week prior.
The benchmark 30-year fixed mortgage now stands at 6.16% after declining 16 basis points since last week. The current rates mark a sizable drop since hitting 7.80% in early October 2023, according to Bankrate data.
The Fed's recent forecast of 2024 rate cuts could give homebuyers hope for more affordable homes as the market continues to thaw.
Currently, the average rate on 15-year fixed mortgages is 5.38%, after a decrease of 19 basis points compared to the previous week.
Federal Housing Administration (FHA) mortgages are backed by the federal government and insured by the FHA. According to Bankrate's latest survey of U.S. mortgage lenders, the average 30-year fixed FHA mortgage rate is 7.09%. This figure is an average, so you may find lower APRs by shopping and comparing reputable FHA mortgage lenders.
The most common adjustable-rate mortgage (ARM) is the 5/1 ARM. The "5" refers to the initial five-year period when the interest rate doesn't change. Following this period, the "1" indicates how often your interest rate will adjust—in this case, once every year.
ARMs tend to have lower interest rates than conventional loans, but not always. As of February 12, 2024, rates for 5/1 ARMs are averaging 7.27% nationwide, according to Bankrate's latest mortgage servicer survey data. That's a bit higher than the average rate for 30-year fixed-rate mortgages.
Most homeowners finance their homes with a home loan. Fortunately, you have several mortgage options to choose from, including the following:
- Conventional loans: Conventional mortgages are the most common type of home loan. Unlike FHA and VA loans, they aren't guaranteed or insured by a government agency. As such, they don't come with benefits such as reduced payments and more lenient credit requirements. You may qualify for a conventional loan with a down payment as low as 3%, but most lenders require 5%. You can avoid paying private mortgage insurance with a down payment of at least 20%.
- FHA loan: An FHA loan is a mortgage insured by the Federal Housing Administration, but you must apply through an FHA-approved lender. FHA loans have more lenient lending criteria, allowing for lower credit scores and down payments as low as 3.5%. The government insures these loans to mitigate the lender's risk, and you usually must pay mortgage insurance for the loan term (or 11 years with a down payment of 10% or more on FHA loans originated after June 3, 2013).
- Jumbo loan: A jumbo mortgage is a home loan that exceeds the borrowing limits of a conventional conforming loan. The 2024 baseline limit set by the Federal Housing Finance Agency (FHFA) ranges from $766,550 to $1,149,825, depending on the property's location. Due to the large size of these loans, lenders generally have stricter lending requirements, including higher credit scores, larger down payments and higher interest rates.
- VA loan: VA loans are Department of Veterans Affairs mortgages designed to help service members, veterans and their families purchase homes. The VA accomplishes this by allowing 0% down payments, lower interest rates and less expensive closing costs, among other features. Like FHA loans, you must apply through an authorized lender, and the VA insures the loan.
- USDA loan: USDA loans are issued through the U.S. Department of Agriculture to make homeownership more accessible for rural, low-income residents. Like VA loans, these mortgages don't require a down payment and come with lower mortgage rates and insurance.
Mortgage rates can change multiple times a day, sometimes even hourly. These changes can affect the interest rate you pay on your home loan. Several factors can influence these rate moves:
Changes in the broader economy can influence mortgage rates, which affects the rate you pay on a home loan. Your lender determines your specific rate based on your financial profile. They'll often look at your:
As with any loan, it's wise to shop and compare mortgage rates to find the best loan. Here's how to do it:
Improve your odds of landing a lower interest rate by improving your credit score before applying. Additionally, making a larger down payment, purchasing mortgage points and choosing a shorter loan term could help you snag a lower mortgage rate. Check Newsweek Vault for the vital mortgage rate details and strategies needed to secure a home loan with the best available terms.
Vault's Viewpoint: Mortgage Rate Trends for 2024After an aggressive cycle of interest rate hikes by the Federal Reserve from March 2022 through July 2023, mortgage rates have cooled a bit. Homebuyers in 2024 have seen rates range from 6.62% in the first week of 2024 to a high of 7.22% in May, settling at 6.99% at the start of June.
The Economic and Housing Research Group predicts economic growth to slow in 2024 and 2025 but does not expect a recession. The group also forecasts one rate hike from the Federal Reserve later in the year. "As a result, we expect mortgage rates to remain elevated through most of 2024," says Freddie Mac Chief Economist Sam Khater. "[W]e anticipate housing demand to remain high due to favorable demographics, particularly in the starter home segment."
But rates are unlikely to return to their 2020 and 2021 lows of around 3% to 3.5%, a mark even the most optimistic economist doesn't foresee hitting in 2024.
It's worth noting, the Fed doesn't set mortgage rates, and the federal funds rate doesn't directly impact rates. Rather, mortgage rate trends often precede policy moves by the central bank. More accurately, mortgage rates reflect investor demand for mortgage-backed securities (MBS). These investments, in turn, are influenced by what investors think the Federal Reserve's rate decisions will do to the overall economy.
Frequently Asked QuestionsWhat's the Difference Between Interest Rate and APR?
Interest rates and annual percentage rates (APR) are related but have different meanings. A loan's interest rate represents the cost of borrowing money, represented as a percentage of the loan principal. By contrast, the APR provides a more complete picture of your total borrowing costs, as it includes both the interest rate and any additional fees.
Are Mortgage Rates Dropping?
Mortgage rates are determined by a combination of market forces and the loan's risk factor. For the former, there's not much you can do about economic factors like inflation, job growth and the overall economy.
As for the latter, lenders set your mortgage rate based on several factors you can control. For example, you may qualify for a lower credit score with a high credit score; the higher, the better. Additionally, by putting down a larger down payment, you can lower your loan-to-value ratio (LTV)—the percentage of your mortgage amount compared with the home's price or value. A lower LTV presents less risk to the lender, which could lead to a lower mortgage rate.
When Will Mortgage Rates Go Up?
Mortgage rates escalated in 2022 and 2023 during the Federal Reserve's aggressive rate hike cycle to curb inflation. With inflation cooling, the Fed has hinted at rate cuts in 2024. While the Fed doesn't set home loan rates, the mortgage finance market does tend to fluctuate with the Fed's benchmark rate.
Bankrate displays two sets of rate averages that are produced from two surveys conducted by Bankrate: one daily ("overnight averages") and the other weekly ("Bankrate Monitor averages").
The rates on this page represent Bankrate's overnight averages. For these averages, APRs and rates are based on no existing relationship or automatic payments.
Newsweek writer Kim Porter contributed to this post.
Editorial Note: Opinions expressed here are author's alone, not those of any bank, credit card issuer, hotel, airline or other entity. This content has not been reviewed, approved or otherwise endorsed by any of the entities included within the post. We may earn a commission from partner links on Newsweek, but commissions do not affect our editors' opinions or evaluations. Tim Maxwell Mortgage ExpertTim Maxwell is a freelance personal finance writer with over two decades of media experience. His work has been published in Bankrate, CBS News, Experian and other outlets. Tim is passionate about financial literacy and empowering people to take control of their finances. When he's not writing or geeking out over his budget, he enjoys creating memories with his family in the Sierra Nevada mountains.
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