Mortgage Rates Dip Below 7% for the First Time in Over a Month

After weeks of mortgage rate increases, there is finally some good news for potential homebuyers. The 30-year and 15-year rates have inched down three weeks in a row, offering a glimmer of hope for those looking to secure a mortgage. However, rates are still relatively high, with 30-year rates hovering just below 7%.

The Federal Reserve plays a crucial role in determining mortgage rates, and experts suggest that rates will remain high until inflation slows and the Fed lowers the federal funds rate. At its recent meeting on May 1, the Fed announced that it would keep the federal funds rate unchanged, disappointing those who were hoping for a rate cut. Now, experts predict that a rate cut may not happen until later this year, likely in September or later.

For those eager to buy a house, waiting for rates to drop significantly may not be the best strategy. While national averages are showing a slight decrease, it could be months before any significant changes are seen. The current national average 30-year fixed mortgage rate is 6.94%, down from last week’s 7.02%. The average 15-year fixed mortgage rate has also decreased to 6.24% from 6.28% the previous week.

When deciding between a 30-year and a 15-year mortgage, it’s essential to consider your short-term and long-term financial goals. While a 15-year mortgage typically comes with a lower interest rate, resulting in less interest paid over the life of the loan, it also means higher monthly payments.

To secure a low mortgage rate, experts recommend focusing on improving your credit score, saving for a higher down payment, and reducing your debt-to-income ratio. Choosing the right mortgage lender is also crucial, so be sure to compare not just interest rates but also the mortgage annual percentage rate (APR), which factors in interest rates, discount points, and fees.

Overall, while the recent decrease in mortgage rates is a positive development, potential homebuyers should carefully consider their financial situation and goals before making any decisions. Waiting for rates to drop significantly may not be the best approach, so focusing on personal finances and choosing the right lender could help secure a favorable mortgage rate.