Mortgage Interest Rates Today, April 17, 2024 | Rates Surpass 7%
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Strong economic data is keeping cost of borrowing to purchase a home stubbornly high. Average 30-year mortgage interest rates are hovering around 7%, according to Zillow data.
Last week, mortgage rates climbed to levels not seen since November 2023 after the latest Consumer Price Index report showed that inflation was hotter than expected in March. Rates climbed again this week after the release of data showing that the pace of retail sales growth also increased more than expected. Both reports dashed hopes that the Federal Reserve may soon start reducing the federal funds rate.
While the Fed doesn't set mortgage rates, changes in the federal funds rate do influence mortgage lenders' decisions on how much interest to charge on loans. Prior to last week's CPI report, forecasters had generally expected the Fed to start cutting rates as early as June. That timeline is now less clear, with some even predicting no rate cut at all in 2024.
As the spring homebuying season ramps up, high rates will keep many would-be buyers out of the market and shrink affordability for those who remain.
If you're hoping to buy a house this year, you may need to rethink your budget. Lowering your price range a little bit can alleviate the impact of high rates.
For example, the monthly payment on a $250,000 loan with a 7% interest rate is $1,663. But by borrowing just $20,000 less, you lower that payment by more than $130 per month.
Today's mortgage rates
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Use our free mortgage calculator to see how today's interest rates will affect your monthly payments:
By clicking on "More details," you'll also see how much you'll pay over the entire length of your mortgage, including how much goes toward the principal vs. interest.
Mortgage Rate Projection for 2024
Mortgage rates started ticking up from historic lows in the second half of 2021 and increased dramatically in 2022 and throughout most of 2023.
Many forecasts expect rates to fall this year now that inflation has been coming down. But recently, data has been somewhat sticky, so we may need to wait a bit longer for rates to go down. In the last 12 months, the Consumer Price Index rose by 3.5%. This is a significant slowdown compared when it peaked at 9.1% in 2022, but a slight uptick from the previous month's reading. We'll likely need to see more slowing before rates can drop substantially.
For homeowners looking to leverage their home's value to cover a big purchase — such as a home renovation — a home equity line of credit (HELOC) may be a good option while we wait for mortgage rates to ease. Check out some of our best HELOC lenders to start your search for the right loan for you.
A HELOC is a line of credit that lets you borrow against the equity in your home. It works similarly to a credit card in that you borrow what you need rather than getting the full amount you're borrowing in a lump sum. It also lets you tap into the money you have in your home without replacing your entire mortgage, like you'd do with a cash-out refinance.
Current HELOC rates are relatively low compared to other loan options, including credit cards and personal loans.
When Will House Prices Come Down?
We aren't likely to see home prices drop this year. In fact, they'll probably rise.
Fannie Mae researchers expect prices to increase 3.20% in 2024 and 0.30% in 2025, while the Mortgage Bankers Association expects a 4.10% increase in 2024 and a 3.30% increase in 2024.
Sky high mortgage rates have pushed many hopeful buyers out of the market, slowing homebuying demand and putting downward pressure on home prices. But rates have since eased, removing some of that pressure. The current supply of homes is also historically low, which will likely push prices up.
What Happens to House Prices in a Recession?
House prices usually drop during a recession, but not always. When it does happen, it's generally because fewer people can afford to purchase homes, and the low demand forces sellers to lower their prices.
How Much Mortgage Can I Afford?
A mortgage calculator can help you determine how much house you can afford. Play around with different home prices and down payment amounts to see how much your monthly payment could be, and think about how that fits in with your overall budget.
Typically, experts recommend spending no more than 28% of your gross monthly income on housing expenses. This means your entire monthly mortgage payment, including taxes and insurance, shouldn't exceed 28% of your pre-tax monthly income.
The lower your rate, the more you'll be able to borrow, so shop around and get preapproved with multiple mortgage lenders to see who can offer you the best rate. But remember not to borrow more than what your budget can comfortably handle.