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Mortgage rates today, July 5, 2024: Rates trend downward

Laura Grace Tarpley
·Lead Editor and Content Strategist, Mortgages
5 min read

Most mortgage rates have declined today. According to Zillow data, the average 30-year fixed rate is down 10 basis points to 6.70%, and the 15-year fixed rate dropped eight basis points to 6.05%. The 5/1 ARM rate fell four basis points to 6.67%.

The Bureau of Labor Statistics releases the CPI report for June next week, which will reveal inflation trends. We may see mortgage rates creep down if inflation has slowed or incline if it picked up more quickly last month than economists predicted.

Learn more: Best mortgage lenders in June 2024

Here are the current mortgage rates, according to the latest Zillow data:

  • 30-year fixed: 6.70%

  • 20-year fixed: 6.25%

  • 15-year fixed: 6.05%

  • 5/1 ARM: 6.67%

  • 7/1 ARM: 6.69%

  • 30-year VA: 6.02%

  • 15-year VA: 5.53%

  • 5/1 VA ARM: 6.25%

Remember, these are the national averages and rounded to the nearest hundredth. All mortgage rates are down with the exception of the 5/1 VA ARM rate, which is up by only one basis point.

Learn more: 5 strategies to get the lowest mortgage rates

Yahoo Finance has a free mortgage payment calculator. Use the calculator to see how various mortgage rates and loan terms could affect your monthly payments.

Our calculator also considers homeowners insurance, property taxes, and other expenses that affect your monthly payment. This will give you a better idea of what you'd realistically pay in a month than if you just look at the mortgage principal and interest.

A mortgage interest rate is a fee for borrowing money from your lender, expressed as a percentage. You can choose from two types of rates: fixed or adjustable.

A fixed-rate mortgage locks in your rate for the entire life of your loan. For example, if you get a 30-year mortgage with a 6.5% interest rate, your rate will stay at 6.5% for the entire 30 years unless you refinance or sell.

An adjustable-rate mortgage locks in your rate for a predetermined amount of time and then changes it periodically. Let’s say you get a 7/1 ARM with an introductory rate of 6%. Your rate would be 6% for the first seven years, then the rate would increase or decrease once per year for the last 23 years of your term. Whether your rate goes up or down depends on several factors, such as the economy and housing market.

At the beginning of your mortgage term, most of your monthly payment goes toward interest. Your monthly payment toward mortgage principal and interest stays the same throughout the years — however, less and less of your payment goes toward interest, and more goes toward the mortgage principal or the amount you originally borrowed.

Learn more: Adjustable-rate vs. fixed-rate mortgages

A 30-year fixed-rate mortgage is a good choice if you want a lower mortgage payment and the predictability that comes with having a fixed rate. Just know that your rate will be higher than if you choose a shorter term and will result in paying significantly more in interest over the years.

You might like a 15-year fixed-rate mortgage if you want to pay off your home loan quickly and save money on interest. These shorter terms come with lower interest rates, and since you’re cutting your repayment time in half, you’ll save a lot in interest in the long run. But you’ll need to be sure you can comfortably afford the higher monthly payments that come with 15-year terms.

Read more: How to decide between a 15-year and 30-year fixed-rate mortgage

Typically, an adjustable-rate mortgage could be good if you plan to sell before the introductory rate period ends. Adjustable rates usually start lower than fixed rates, then your rate will change after a predetermined amount of time. However, 5/1 and 7/1 ARM rates are very similar to 30-year fixed rates right now. Before getting an ARM just for a lower rate, compare your rate options from term to term and lender to lender.

It can feel like we've been told interest rates will decrease for months now — so when will mortgage rates finally go down?

No one has a crystal ball, but in Fannie Mae’s June rate forecast, the government-sponsored enterprise said it expects 30-year fixed rates to end 2024 at 6.7%. Not exactly comforting.

When the Federal Reserve lowers the federal funds rate, mortgage rates typically go down in response. However, according to the CME FedWatch Tool, there’s roughly a 91% chance that the Fed will not lower its rate at its July meeting. If the central bank does in fact lower its rate once in 2024, that cut will come in its September, November, or December meeting. So we probably won’t see dramatic drops anytime soon.

If you’re ready to buy a house but holding out for rates to plummet first, it might not be worth the wait. Rates are dipping, housing prices are dropping in certain markets, and inventory tends to increase during the summer. This could be a good time to start house shopping.

Today, most mortgage rates have trended downward. The only term with a higher rate is the 5/1 VA ARM rate — which has increased by just 0.01%.

Mortgage rates probably won't go much lower in 2024. Economists currently expect 30-year fixed mortgage rates to end the year between 6.5% and 6.7%.

It's actually likely that mortgage rates will get lower in 2025, not higher. The Federal Reserve will probably slash the federal funds rate several times next year, which will help push mortgage rates down.