Mortgage Interest Rates Today, May 3, 2024 | Rates Inch Down but Remain Above 7% (2024)

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Average 30-year mortgage rates are down slightly today, but they're still over 7%, according to Zillow data. Rates have remained in a relatively tight range for several weeks now.

On Wednesday, the Federal Reserve wrapped up its latest meeting with the announcement that it will continue to keep the federal funds rate steady. In his press conference following the meeting, Fed Chair Jerome Powell said that policymakers may need to keep rates elevated for longer than expected to bring inflation down to their 2% target. This means that mortgage rates will likely remain near their current levels for at least a few more months.

Once inflation slows further, the Fed is expected to start lowering the federal funds rate, which would remove some of the upward pressure off of mortgage rates. It's possible central bankers could start cutting rates in September, but if inflation data continues to come in hotter than expected, that would likely be pushed back.

Experts do still believe that inflation will slow this year, which means borrowers may finally see mortgage rates go down later in 2024.

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30-Year Fixed Mortgage Rates

This week's average 30-year fixed mortgage rate was 7.22%, according to Freddie Mac. This is a five-basis-point increase from the previous week.

The 30-year fixed-rate mortgage is the most common type of home loan. With this type of mortgage, you'll pay back what you borrowed over 30 years, and your interest rate won't change for the life of the loan.

The lengthy 30-year term allows you to spread out your payments over a long period of time, meaning you can keep your monthly payments lower and more manageable. The trade-off is that you'll have a higher rate than you would with shorter terms or adjustable rates.

15-Year Fixed Mortgage Rates

Average 15-year mortgage rates inched up to 6.47% this week, according to Freddie Mac data. This is a three-point increase since the week before.

If you want the predictability that comes with a fixed rate but are looking to spend less on interest over the life of your loan, a 15-year fixed-rate mortgage might be a good fit for you. Because these terms are shorter and have lower rates than 30-year fixed-rate mortgages, you could potentially save tens of thousands of dollars in interest. However, you'll have a higher monthly payment than you would with a longer term.

How Do Fed Rate Hikes Affect Mortgages?

The Federal Reserve has increased the federal funds rate dramatically to try to slow economic growth and get inflation under control. So far, inflation has slowed significantly, but it's still a bit above the Fed's 2% target rate.

Mortgage rates aren't directly impacted by changes to the federal funds rate, but they often trend up or down ahead of Fed policy moves. This is because mortgage rates change based on investor demand for mortgage-backed securities, and this demand is often impacted by how investors expect Fed hikes to affect the broader economy.

The Fed has indicated that it's likely done hiking rates and that it could start cutting this year. This would allow mortgage rates to trend down later this year.

When Will Mortgage Rates Go Down?

Mortgage rates increased dramatically over the last two years, but they're expected to go down at some point this year.

In March 2024, the Consumer Price Index rose 3.5% year-over-year. Inflation has slowed significantly since it peaked last year, but it has to slow further before rates will begin to fall.

For homeowners looking toleverage their home's valueto cover a big purchase — such as a home renovation — ahome 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 ratesare relatively low compared to other loan options, including credit cards and personal loans.