Mortgage Rates Today: August 2, 2024—Rates Move Down

The current mortgage rate on a 30-year fixed mortgage fell by 0.22 percentage point in the last week to 7.09%.

Meanwhile, the APR on a 15-year fixed mortgage dropped 0.20 percentage point during the same period to 6.28%.

For existing homeowners, compare your current mortgage rates with today’s refinance rates.

Current Mortgage Rates for August 2, 2024

30-Year Mortgage Rates

Today, the average rate on a 30-year mortgage is 7.09%, compared to last week when it was 7.31%.

The annual percentage rate (APR) on a 30-year, fixed-rate mortgage is 7.11%. The APR was 7.11% last week. APR is the all-in cost of your loan.

With today’s interest rate of 7.09%, a 30-year fixed mortgage of $100,000 costs approximately $671 per month in principal and interest (taxes and fees not included), the Forbes Advisor mortgage calculator shows. Borrowers will pay about $141,737 in total interest over the life of the loan.

15-Year Mortgage Rates

Today’s 15-year mortgage (fixed-rate) is 6.28%, down 0.20 percentage point from the previous week. The same time last week, the 15-year, fixed-rate mortgage was at 6.48%.

The APR on a 15-year fixed is 6.31%. It was the same last week.

A 15-year, fixed-rate mortgage with today’s interest rate of 6.28% will cost $859 per month in principal and interest on a $100,000 mortgage (not including taxes and insurance). In this scenario, borrowers would pay approximately $54,640 in total interest.

Jumbo Mortgage Rates

The average interest rate on the 30-year fixed-rate jumbo mortgage is 7.10%. Last week, the average rate was 7.30%.

Borrowers with a 30-year fixed-rate jumbo mortgage with today’s interest rate of 7.10% will pay $672 per month in principal and interest per $100,000. That means that on a $750,000 loan, the monthly principal and interest payment would be around $5,042 and you’d pay around $1.07 million in total interest over the life of the loan.

What’s an APR, and Why Is It Important?

The annual percentage rate (APR) represents a loan’s interest rate and fees, expressed as an annual cost over the life of the loan. It’s essentially the all-in cost of the loan.

The APR is a helpful number because it shows you the total cost of a mortgage if you keep it the entire term.

How Are Mortgage Rates Determined?

Mortgage interest rates are determined by several factors, including some that borrowers can’t control:

• Federal Reserve. The Fed rate hikes and decreases adjust the federal funds rate, which helps determine the benchmark interest rate that banks lend money at. As a result, mortgage rates tend to move in the same direction with the Fed’s rate decision.
• Bond market. Mortgages are also loosely connected to long-term bond yields as investors look for income-producing assets—specifically, the 10-year U.S. Treasury Bond. Home loan rates tend to increase as bond prices decrease, and vice versa.
• Economic health. Rates can increase during a strong economy when consumer demand is higher and unemployment levels are lower. Anticipate lower rates as the economy weakens and there is less demand for mortgages.
• Inflation. Banks and lenders may increase rates during inflationary periods to slow the rate of inflation. Additionally, inflation makes goods and services more expensive, reducing the dollar’s purchasing power.

While the above factors set the base interest rate for new mortgages, there are several areas that borrowers can focus on to get a lower rate:

• Credit score. Applicants with a credit score of 670 or above tend to have an easier time qualifying for a better interest rate. Typically, most lenders require a minimum score of 620 to qualify for a conventional mortgage.
• Debt-to-income (DTI) ratio. Lenders may issue mortgages to borrowers with a DTI of 50% or less. However, applying with a DTI below 43% is recommended.
• Loan-to-value (LTV) ratio. Conventional home loans charge private mortgage insurance when your LTV exceeds 80% of the appraisal value, meaning you need to put at least 20% down to avoid higher rates. Additionally, FHA mortgage insurance premiums expire after the first 11 years when you put at least 10% down.
• Loan term. Longer-term loans such as a 30-year or 20-year mortgage tend to charge higher rates than a 15-year loan term. However, your monthly payment can be more affordable over a longer term.
• Residence type. Interest rates for a primary residence can be lower than a second home or an investment property. This is because the lender of your primary mortgage receives compensation first in the event of foreclosure.

What Is the Best Type of Mortgage Loan?

Many home buyers are eligible for several mortgage loan types. Each program can have its own advantages:

• Conventional mortgage. A conventional home loan is ideal for borrowers with good or excellent credit to qualify for competitive rates. Additionally, making a minimum 20% down payment helps you waive private mortgage insurance premiums.
• FHA loan. An FHA home loan is best when applying with imperfect credit or a low down payment. You can put as little as 3.5% down with a credit score above 580. A minimum 10% down payment is necessary for credit scores ranging from 500 to 579.
• VA loan. Borrowers with a qualifying military background may prefer a VA loan for its flexibility. A down payment may not be required. While you pay a one-time funding fee, there are no ongoing mortgage insurance premiums or service fees.
• USDA loan. Applicants in eligible rural areas can buy or build a home with no down payment, although an upfront and annual guarantee fee applies. Additionally, income requirements apply and this program requires a moderate income or lower.
• Jumbo loan. Homebuyers in a high-cost-of-living area will need to apply for a jumbo loan when the loan amount exceeds the Federal Housing Finance Agency’s conforming loan limits. The limit in most municipalities is $726,200 in 2023.

Frequently Asked Questions (FAQs)

What is a good mortgage rate?

How to get a lower mortgage interest rate?

How long can you lock in a mortgage rate?