Mortgage rates fell for the second consecutive week, despite the Federal Reserve's sharp rise in July. The 30-year average fixed interest rate fell from 5.30% on July 28 to 4.99% in August. It's the first time the 30-year average FRM fell below 5% since the beginning of April, 3 days ago. The average rate of a 30-year fixed-rate loan fell 0.31 percentage points, dropping to 4.99%, according to the Freddie Mac weekly survey.
Mortgage rates remained volatile due to the tug-of-war between inflationary pressures and a clear slowdown in economic growth. The high uncertainty surrounding inflation and other factors is likely to keep rates variable, especially as the Federal Reserve tries to navigate the current economic environment. Your mortgage rate can make a big difference in the amount of housing you can afford and the size of your monthly payments. When interest rates rise, reflecting changes in the economy and financial markets, so do mortgage rates and vice versa.
These rates are different from Freddie Mac rates, which represent a weekly average based on a survey of quoted rates offered to borrowers with strong credit, a 20% down payment, and discounts for points paid. Average commitment rates should be reported along with average charges and points to reflect the total initial cost of obtaining the mortgage. The best mortgage lender for you will be the one who can offer you the lowest rate and the terms you want. Average mortgage rates are usually about 1.8 percentage points higher than the 10-year promissory note yield.
You can experiment with a mortgage calculator to find out how much a lower rate or other changes could affect what you pay. The 30-year average fixed mortgage rate fell slightly in July after rising seven months in a row. In my July forecast, I predicted that mortgage rates would rise, driven by high inflation and the Federal Reserve's efforts to control it. Mortgage demand fell for the fourth consecutive week, according to data released Wednesday, even though interest rates have fallen from their recent highs.
Rising mortgage rates have had an even greater impact on the average price of new homes, which rose 7.4% in the 12 months ending June, according to the U. As inflation increases, the Fed reacts by applying a more aggressive monetary policy, which invariably leads to higher mortgage rates. While mortgage rates do not follow the rate of federal funds, they will respond to any comments from Fed President Jerome Powell after the meeting. Black Knight defines borrowers eligible for refinancing as having a minimum credit score of 720, 20% equity in their home, and the ability to reduce at least 0.75% of their interest rate by refinancing on a 30-year fixed mortgage.
Average rates for a 30-year fixed-rate mortgage have already risen to 5.81% at the end of June, but have since stabilized at 5.30% as of July 28, according to Freddie Mac.