Mortgage Rates Steady as of September 24, 2024: Key Insights for Borrowers

As of September 24, 2024, mortgage rates remain relatively stable, with the average rate for a 30-year fixed-rate mortgage recorded at 6.65%. This figure reflects a slight increase of 0.04 percentage points from the previous week, according to data from Curinos.

For borrowers seeking to minimize interest expenses, a 15-year fixed mortgage may be an attractive alternative, typically offering lower rates than a 30-year fixed mortgage. Currently, the average APR for a 15-year fixed mortgage stands at 5.74%. However, it’s important to note that while the term is shorter, monthly payments will be higher due to the accelerated repayment schedule.

If you're considering refinancing your existing mortgage, it's advisable to review the current average refinance rates.

This week, the average rate for a 30-year mortgage is 6.65%, compared to 6.61% last week. The annual percentage rate (APR) for a 30-year fixed-rate mortgage is 6.67%, up from 6.62% the previous week. The APR represents the total cost of the loan, including interest and any associated fees.

With the current interest rate of 6.65%, a 30-year fixed mortgage of $100,000 would result in monthly payments of approximately $642 for principal and interest (excluding taxes and fees). Over the life of the loan, borrowers can expect to pay about $131,179 in total interest.

Meanwhile, the 15-year mortgage rate is currently at 5.71%, which is slightly higher than yesterday's rate and up from 5.69% last week. The APR for a 15-year fixed mortgage is also 5.74%, compared to 5.69% last week. At this rate, a 15-year fixed-rate mortgage would cost around $828 per month for every $100,000 borrowed, with total interest payments amounting to approximately $49,117 over the loan's duration.

In the jumbo mortgage sector, the average interest rate for a 30-year fixed-rate jumbo mortgage has increased by 0.08 percentage points to 6.76%. Borrowers opting for a 30-year fixed-rate jumbo mortgage at this rate would pay about $649 per month in principal and interest for each $100,000 borrowed. For a jumbo mortgage of $750,000, the monthly payment would be approximately $4,867.

Understanding APR is crucial for borrowers as it encompasses both the interest rate and any finance charges, providing a clearer picture of the total cost of credit over the loan's lifespan. Typically, the APR will be higher than the interest rate, but exceptions do exist.

Several factors influence mortgage interest rates, many of which are beyond borrowers' control:

• Federal Reserve Actions: Changes in the Fed's interest rates can directly affect mortgage rates, as they influence the benchmark rates at which banks lend.
• Bond Market Trends: Mortgage rates are also linked to long-term bond yields, particularly the 10-year U.S. Treasury Bond, with rates rising as bond prices fall.
• Economic Conditions: A robust economy often leads to higher rates due to increased consumer demand, whereas weaker economic conditions may result in lower rates.
• Inflation: During inflationary periods, lenders may raise rates to mitigate inflation effects, impacting the overall cost of borrowing.

While these factors set the baseline for mortgage rates, borrowers can take steps to secure lower rates:

• Credit Score: A score of 670 or above can facilitate better interest rates, with most lenders requiring a minimum score of 620 for conventional mortgages.
• Debt-to-Income (DTI) Ratio: A DTI of 50% or lower is generally acceptable, but a DTI below 43% is preferable.
• Loan-to-Value (LTV) Ratio: To avoid private mortgage insurance, borrowers should aim for an LTV of 80% or less, which typically requires a down payment of at least 20%.
• Loan Term: Shorter loan terms, like 15 years, usually offer lower rates compared to longer terms.
• Type of Residence: Rates for primary residences are often lower than for second homes or investment properties due to the lender's risk profile.

Conventional loans are typically offered by private lenders and require good to excellent credit along with a minimum down payment of 20% for the best rates. First-time homebuyers may find options with down payments as low as 3%.

For those with limited credit, government-backed loans can be advantageous, with FHA loans requiring as little as 3.5% down for borrowers with a credit score of 580 or higher. USDA loans are available for eligible rural residents without a down payment, while VA loans offer favorable terms for qualifying military personnel, often requiring no down payment and no annual fees.