Mortgage rates fell again this week, with the average 30-year fixed loan dipping to 7.09%, according to Bankrate’s latest survey of large lenders. The 15-year rate fell to 6.46% and the 30-year jumbo to 7.16%.

Rates have bounced around this year as the timeline of the Federal Reserve’s rate cuts grows fuzzier.

The 30-year fixed mortgages in this week’s survey had an average total of 0.27 discount and origination points. Discount points are a way for you to reduce your mortgage rate, while origination points are fees a lender charges to create, review and process your loan.

Monthly mortgage payment at today’s rates: $2,189

The national median family income for 2023 was $96,300, according to the U.S. Department of Housing and Urban Development, and the median price of an existing home sold in April 2024 was $407,600, according to the National Association of Realtors (NAR). Based on a 20% down payment and a 7.09% mortgage rate, the monthly payment of $2,189 amounts to 27% of the typical family’s monthly income.

“Rates coming down from recent highs spurred some borrowers to act, with increases across both conventional and government refinance applications,” says Joel Kan, deputy chief economist at the Mortgage Bankers Association.

Before the recent retreat, home sales had been sluggish. The National Association of Realtors said Wednesday that home sales in April dipped to an annual pace of just 4.1 million units.

Will mortgage rates go down?

Mortgage rates are tied to inflation. In a bit of good news, inflation is cooling slightly. The U.S. Labor Department said on May 15 that the inflation rate had dipped to 3.4%. That heartened investors, but it’s unclear whether the Federal Reserve will cut rates any time soon. The central bank left rates unchanged in May — and the latest numbers show inflation is still well above the Fed’s target of 2%.

To be clear, mortgage rates are not set directly by the Fed, but by investor appetite, particularly for 10-year Treasury bonds, the leading indicator for fixed mortgage prices. That can lead to intense rate swings — they soar on news of Fed hikes, then plummet in anticipation of a cut.

Mortgage rates are also chained to inflation, a metric the Fed has been moving to control. While most Fed members still expect three rate cuts this year, one regional Fed president now is predicting just one rate cut in 2024.

Loan applications rose 1.9% this week, according to the Mortgage Bankers Association, while home prices remain elevated. While NAR reported an uptick in inventory in March, many markets still don’t have enough listings to meet demand

Methodology

The Bankrate.com national survey of large lenders is conducted weekly. To conduct the National Average survey, Bankrate obtains rate information from the 10 largest banks and thrifts in 10 large U.S. markets. In the Bankrate.com national survey, our Market Analysis team gathers rates and/or yields on banking deposits, loans and mortgages. We’ve conducted this survey in the same manner for more than 30 years, and because it’s consistently done the way it is, it gives an accurate national apples-to-apples comparison. Our rates differ from other national surveys, in particular Freddie Mac’s weekly published rates. Each week Freddie Mac surveys lenders on the rates and points based on first-lien prime conventional conforming home purchase mortgages with a loan-to-value of 80%. “Lenders surveyed each week are a mix of lender types — thrifts, credit unions, commercial banks and mortgage lending companies — is roughly proportional to the level of mortgage business that each type commands nationwide,” according to Freddie Mac.