Archive photo, 2008: Ildar Sagdejev / CC BY-SA 4.0, cropped
The average U.S. 30-year fixed mortgage rate fell to 7.24% this week, giving prospective homebuyers a modest break on borrowing costs while leaving rates well above their level a year ago.
Freddie Mac’s October 29 survey showed the 30-year rate down from 7.32% the previous week. The average 15-year fixed rate fell to 6.60% from 6.68%.
What the drop means for a monthly payment
For a buyer borrowing $300,000 over 30 years, the difference between 7.32% and 7.24% would reduce the monthly principal-and-interest payment from about $2,061 to $2,044, a saving of roughly $16 a month using unrounded payments.
That is an illustration calculated by JBizNews, not a loan quote. It assumes a fully amortizing fixed-rate loan with equal monthly payments, and excludes property taxes, homeowners insurance, mortgage insurance, fees and points. A borrower’s actual rate and payment can differ.
The weekly decline does not reverse the increase over the past year. Freddie Mac’s comparable 30-year average was 6.17% a year ago. On the same hypothetical $300,000 loan, that rate would produce a principal-and-interest payment of about $1,832, roughly $213 less than at this week’s average.
Existing mortgage payers do not get an automatic cut
A decline in the market average does not reset the interest rate on an existing fixed-rate mortgage. Borrowers considering a new loan or refinancing need to compare their own terms and costs, rather than assume the survey average is the rate they will receive.
The Consumer Financial Protection Bureau notes that a homeowner’s total monthly payment can change when property taxes or insurance premiums paid through escrow change, even apart from changes associated with an adjustable-rate loan or other loan features.
The 15-year average also remained above its year-earlier level of 5.41%.
Freddie Mac’s weekly survey uses mortgage application data submitted by lenders. The October 29 figures average rates offered from the prior Thursday through Wednesday, rather than represent a rate available to every buyer on release day. Its survey criteria include conventional, single-family purchase loans within conforming loan limits.
JBizNews Desk | Washington
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