Mortgage rates as of June 17, 2024

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So far in June, 30-year mortgage rates have averaged about 6.59%, down 17 basis points from the previous month’s average, according to data from Zillow. As inflation slows and the possibility of a Federal Reserve rate cut looms, mortgage rates could continue to trend lower this year.

Last week, the Bureau of Labor Statistics reported that the Consumer Price Index for May was lower than expected. This is good news for mortgage rates, but more data showing a sustained decline in inflation will be needed for rates to fall further.

Mortgage rates are expected to fall as inflation slows and the Fed is able to start lowering the federal funds rate. But they’re not likely to fall significantly this year. If you’re waiting for interest rates to fall so you can buy a home, you might do better by waiting until 2025.

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Mortgage interest rates forecast for 2024

Mortgage rates rose significantly for much of 2023 but began trending downward again at the end of the year, and as the economy continues to normalize this year, rates should fall further.

Over the past 12 months, the Consumer Price Index has risen 3.3%, a significant slowdown compared to the 9.1% peak it reached in 2022. As inflation slows and the Federal Reserve is able to begin cutting the federal funds rate, mortgage rates are also expected to trend lower.

For homeowners looking to use the value of their home to fund a major purchase, like a home renovation, a home equity line of credit (HELOC) may be a good option while you wait for mortgage rates to drop. Start looking at some of the best HELOC lenders to find the loan that’s right for you.

A HELOC is a line of credit that allows you to borrow against the equity in your home. It’s similar to a credit card in that you only borrow what you need, rather than a lump sum. It also allows you to tap into the money you have left in your home without having to pay off your entire mortgage like a cash-out refinance would.

Current HELOC interest rates are relatively low compared to other loan options such as credit cards and personal loans.

When will home prices fall?

With supply so limited, home prices are unlikely to fall anytime soon. In fact, they’re likely to rise this year as mortgage rates fall.

Fannie Mae researchers expect prices to rise 4.8% in 2024, while the Mortgage Bankers Association expects prices to rise 4.3% in 2024.

Falling mortgage rates are bringing more buyers into the market, putting upward pressure on prices, but prices are currently not expected to rise as much as they have in recent years.

The pros and cons of fixed and adjustable rate mortgages

Fixed-rate mortgages keep your interest rate constant for the life of the loan, while adjustable-rate mortgages keep your interest rate constant for the first few years and then allow it to increase or decrease periodically thereafter.

So, should you choose between a fixed rate mortgage or an adjustable rate mortgage?

ARMs usually start at a lower interest rate than fixed-rate mortgages, but your ARM interest rate may increase after the initial introductory period. If you plan to move or refinance before your interest rate adjusts, an ARM could be a good deal. Keep in mind, however, that changes in your circumstances may prevent you from doing these things. So it’s a good idea to consider whether your budget can accommodate the increased monthly payments.

Fixed-rate mortgages are a good option for borrowers looking for stability, as their monthly principal and interest payments will remain the same for the life of the loan (although if taxes or insurance rates rise, your mortgage payments may increase).

But in exchange for this stability, you’ll pay higher interest rates. This may seem like a bad deal now, but if interest rates rise further in the future, you may be glad you locked in your rate. And if rates fall, you may be able to refinance and get a lower rate.

How do adjustable rate mortgages work?

An adjustable rate mortgage starts with an introductory period during which your interest rate is fixed for a set period of time, and once that period ends, your interest rate begins to adjust periodically, usually once a year or every six months.

How much your interest rate will change depends on the index used by the ARM and the margin the lender sets. Lenders choose the index their ARM uses, and this interest rate can go up or down depending on current market conditions.

The margin is the amount of interest a lender charges on top of the index. Compare multiple lenders to see which one offers the lowest margin.

ARMs also have limitations on how much you can change and how much you can change – for example, an ARM may be limited to increasing or decreasing by 2% with each adjustment, with a maximum rate of 8%.