Compare Todays 30-year Fixed Mortgage Rates

U.S. News Expert Insights, Week Ending July 8

Mortgage Rates Rise as Iran Conflict Resumes

“National average mortgage rates increased this week, according to Zillow data provided to U.S. News. For purchase loans, the 30-year fixed rate increased to 6.669%, up from 6.573% the week prior. Interest rates for mortgage refinancing also increased, averaging 6.76% for the 30-year term and 5.78% for the 15-year repayment period.

“Mortgage rates were driven higher by the U.S.-Iran war, as both sides traded strikes over the July 4 holiday weekend. Renewed fighting in the Middle East has caused oil prices to rise, and rising oil prices can cause inflation to reverberate throughout the entire economy as items become more expensive to manufacture and transport. Mortgage interest rates track 10-year Treasury yields, and the bond market is highly sensitive to inflationary pressures.

“Until a more permanent resolution is reached between the U.S. and Iran, mortgage rates are likely to stay higher for longer. In an environment of elevated mortgage rates, consumers who are looking to buy a home or refinance their mortgage could get more favorable pricing by shopping around with multiple lenders. It’s also a good time to lock in a mortgage rate given all the upward pressure on bond yields.”

– Erika Giovanetti, U.S. News Consumer Lending Analyst

The best mortgage rate for you will be one that makes your monthly mortgage payment affordable. You can use the 28/36 rule to help determine affordability: Spend no more than 28% of your gross income on housing and no more than 36% of your gross income on all your debt.

Consider current mortgage rates when looking at how much house you can afford, taking the following steps to secure the lowest rate possible for your financial situation.

Mortgage rates depend, in part, on applicants’ credit score. In general, a borrower will need a score of at least 620 to qualify for a conventional mortgage, but a credit score in the mid-700s or higher will yield lower rates. On the other hand, borrowers with less-than-stellar credit will pay higher rates.

To qualify for the most competitive mortgage rates, Scott Lindner, national sales director for mortgage lending at TD Bank, encourages buyers to check in on their credit before they start shopping – ideally months in advance. “Building in additional time for this can also account for any reporting errors that may have been made on a credit report and allow borrowers to fix it before seeking a loan,” he says.

Once you’ve had an offer accepted on a property, you can begin formally applying for a mortgage and receiving loan estimates. You should apply with multiple mortgage lenders to compare offers. Look not only at the interest rate but also the annual percentage rate, which includes fees and other up-front costs, like discount points.

Lenders may let you or the home seller bring down your interest rate by paying an additional fee at closing. This is called buying mortgage points, also known as discount points. A point costs 1% of your mortgage, and every point you buy typically reduces your interest rate by about 0.25 percentage point – although the price matrix for points varies from one lender to the next.

Points make the most sense if you plan on staying in your home in the long term. “If you’re buying your forever home, you might want to consider paying points because you will pay far less interest over time,” Lindner says.

Mortgage rates are determined by factors that are within your control (like your credit score and the type of loan you choose) as well as those that are out of your control (like greater economic conditions and Federal Reserve monetary policy).

With rates above 6% for a 30-year fixed-rate mortgage, there’s no denying that financing a home is more expensive in 2024 than it was over the previous few years – average rates on 30-year fixed mortgages didn’t even crack 4% between June 2019 and March 2022.

However, those low rates had some unwelcome side effects for many homebuyers. The low-rate frenzy of 2020 and 2021 favored cash buyers and left those buying with mortgages out in the cold, says Scott Bridges, chief consumer direct lending production officer at Pennymac.

Buyers at that time often paid well over the home’s list price and waived important buyer protections like appraisal and inspection contingencies just to score the winning bid. But Bridges says that today’s higher rates put buyers back in a more competitive position when shopping for a home.

“A buyer today can be picky and not just accept any house,” he says. “They can negotiate on price, offer less than the listed price, and wait for their inspection, appraisal and financing contingencies to clear before signing on the dotted line.”

Looking forward, mortgage rates are expected to decline somewhat in 2025 – but buyers shouldn’t expect to see the record-low rates of the COVID-19 pandemic again anytime soon.

Borrowers refinance for several reasons, including getting a lower interest rate, switching to a shorter loan term or eliminating mortgage insurance.

Depending on your current mortgage rate, it may be worth refinancing if market rates drop by 1 percentage point or even 0.5 in order to get a lower monthly payment and save money while you repay the loan. Refinancing comes with closing costs – usually between 2% and 3% of the loan amount – so be sure to calculate your breakeven point, which is the amount of time after refinancing when your interest savings offset the up-front cost to refinance.

It’s also possible to tap your home’s equity with a cash-out mortgage refinance. Before opting for this type of refinance, however, consider your current mortgage interest rate. If refinancing means you have to trade in a low interest rate for a higher one, then you might be better off borrowing a home equity loan or line of credit instead.