Daily mortgage rates for May 21, 2024: Rates for popular 30-year, 15-year terms continue retreat

Mortgage rates show a double-digit retreat on popular 30-year and 15-year terms as of Tuesday, May 21, 2024. 

The current average interest rate for a 30-year fixed mortgage is 7.06% for purchase and 7.03% for refinance, down 15 basis points from 7.21% for purchase and 19 basis points from 7.22% for refinance last Tuesday. For homeowners looking to refinance to a 15-year term, the average rate is 6.55% — down 25 basis points from 6.80% over the past week. The average rate on a 30-year fixed jumbo mortgage is 7.27%.

Mortgage rates for Tuesday, May 21, 2024

• 30-year fixed rate — 7.06%

• 20-year fixed rate — 6.84%

• 15-year fixed rate — 6.50%

• 10-year fixed rate — 6.43%

• 5/1 adjustable rate mortgage — 6.82%

• 30-year fixed FHA rate — 6.87%

• 30-year fixed VA rate — 7.02%

• 30-year fixed jumbo rate — 7.27%

Mortgage rates for Tuesday, May 21, 2024

• 30-year fixed rate — 7.03%

• 20-year fixed rate — 6.84%

• 15-year fixed rate — 6.55%

• 10-year fixed rate — 6.43%

• 5/1 adjustable rate mortgage — 6.70%

• 30-year fixed FHA rate — 6.97%

• 30-year fixed VA rate — 7.87%

• 30-year fixed jumbo rate — 7.23%

Freddie Mac weekly mortgage report: Rates continue to decrease

Freddie Mac reports an average 7.02% for a 30-year fixed-rate mortgage, down 7 basis points from last week's average 7.09%, according to its weekly Prime Mortgage Market Survey of nationwide lenders published on May 16, 2024. The fixed rate for a 15-year mortgage is 6.28%, down 10 basis points from last week's average 6.38%. These figures are higher than a year ago, when rates averaged 6.39% for a 30-year term and 5.75% for a 15-year term.

Sam Khater, Freddie Mac's chief economist, says of the May 16 data, “Given the news that inflation eased slightly, the 10-year Treasury yield dipped, leading to lower mortgage rates. The decrease in rates, albeit small, may provide a bit more wiggle room in the budgets of prospective homebuyers.”

Freddie Mac updates its Prime Mortgage Market Survey data weekly on Thursday mornings.

Current mortgage rates for May 21, 2024

Mortgage rates are determined by many factors that include inflation rates, economic conditions, housing market trends and the Federal Reserve's target interest rate. Lenders also consider your personal credit score, the amount available for your down payment, the property you're interested in and other terms of the loan you're requesting, like 30-year or 15-year offers.

Because mortgage rates can fluctuate daily, it's best to lock in a rate when you're comfortable with the overall conditions of your mortgage or home loan.

Mortgage rates in the news

Mortgage lenders keep a close eye on the benchmark federal funds target interest rate set by the Federal Reserve, the U.S.'s central bank. Called the Fed rate, it's the benchmark that affects rates on deposit accounts, loans and other financial products. Typically, as the fed rate rises, so do APYs on savings products like CDs, high-yield savings accounts and money market accounts. Mortgage and home loan rates don't follow the Fed rate as closely, but they do reflect the same elements the Fed evaluates when making decisions on the benchmark — especially inflation — which means as the Fed rate increases, mortgage rates also tend to rise.

The Federal Reserve increased the target interest rate 11 times from March 2022 to July 2023 in an effort to combat the highest inflation in four decades coming out of the pandemic.

May 1, 2024: Fed holds benchmark rate unchanged for sixth time since July 2023

At the conclusion of its third rate-setting policy meeting of 2024 on May 1, 2024, the Federal Reserve left the federal funds target interest rate at a 23-year high of 5.25% to 5.50%, marking the sixth consecutive time the Fed's held the benchmark rate unchanged since July 2023.

In its post-meeting statement, the Federal Reserve maintained "there has been a lack of further progress toward the 2 percent inflation objective." The Federal Reserve is focused on a 2% inflation goal that's ideal for keeping employment high and prices low. Despite speculation in March of three rate cuts by the end of the year, the Fed cautioned in its May statement that its rate-setting committee "does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent."

What to expect at the Fed's June policy meeting

It's too early to predict what the Fed will decide at its next policy meeting on June 11 and June 12, 2024. According to the CME FedWatch Tool, which measures market expectations for Fed fund rate changes, there's a 96.4% chance that the Fed will keep rates where they are at its next meeting.

Inflation appears to be on a downward trend, falling from a peak of 9.1% in June 2022 to rates that have ranged from 3% and 4% since May 2023. The May 3 jobs report fell short of employment expectations, showing 175,000 positions added in April — significantly lower than the 315,000 positions added in March — signaling a slowing job market that could relieve inflation worries and set off long-awaited cuts to the Fed rate.

The Consumer Price Index released on May 15 revealed consumer prices rose by 3.4% year over year, down from 3.5% in March — a modest decrease, but a step in the right direction for this widely used indicator for inflation. Producer Price Index data released on May 14 showed a moderate 0.5% increase in wholesale prices — or the prices paid to producers of goods and services — in the 12 months through April. Yet while these newest inflation readings suggest progress, offering hope for a future cut to the Fed rate, it may not be enough for the Fed to lower rates in June.

Responding to inflation concerns, Federal Reserve Chair Jerome Powell said on May 15 that while he expects inflation to come down, "I think it’s more likely that we’ll be at a place where we hold the policy rate where it is.”

The Powell-led rate-setting panel will announce a rate decision at the conclusion of its meeting on June 12, at 2 p.m. ET.

NAR settlement offers ray of hope to summer homebuyers

While high mortgage rates could convince current homeowners to delay selling their properties, resulting in low housing inventory, a major change in the way Americans buy and sell homes may offer a ray of sunshine to summer homebuyers. On March 15, the National Association of Realtors announced it had agreed to a settlement that ends customary real estate broker commissions of up to 6% of a home’s purchase price starting in July. The settlement isn’t expected to affect mortgage rates, yet it paves the way for consumers to negotiate what they pay for an agent’s services, saving you money in the long run.

Dig deeper: When’s the next Federal Reserve meeting? The FOMC — and how it affects your finances

4 top factors that affect your mortgage rate

The difference of even half a percentage point on your interest rate can save you hundreds of dollars a month and thousands of dollars over the life of your mortgage, but the mortgage rate you're ultimately offered depends on the mortgage you're interested in, payments you're willing to pay up front and your overall financial health.

• Your credit score. Knowing your credit score can help you shop around for lenders you're likely to get approval through, as well as understand the type of mortgage for your lifestyle and income. The best mortgage rates go to borrowers with good to excellent credit — typically a FICO credit score of at least 670 — though even with fair credit, you may be able to find a mortgage offering decent rates.

• Your down payment. The more money you can put down toward your home, the better it benefits your interest rate. Paying at least 20% of your home's purchase price up front generally results in a lower interest rate — and you can avoid mortgage insurance, which increases your total cost.

• Your loan term. While the 30-year mortgage remains a popular way for Americans to purchase homes, you can find terms of 20 years, 15 years and 10 years. Shorter loan terms usually come with lower interest rates, though with higher monthly payments. Longer mortgage terms can result in smaller monthly payments, though you'll pay higher total interest over the life of your loan.

• Interest rate type. Mortgage rates come with two basic types of rates — fixed and variable. Fixed-rate mortgages offer a consistent interest rate over the life of your loan, whereas adjustable-rate mortgages (ARMs) often start with a lower fixed rate for an agreed-on time and then adjust to a variable rate based on market conditions for the remainder of your term. Choosing between these two rates depends on your financial goals and tolerance for risk.

Frequently asked questions about mortgage rates

What are mortgage lenders?

Lenders are financial institutions that loan money to homebuyers. A lender is different from a loan servicer, which typically handles the operational tasks of your loan, like processing payments, talking directly with borrowers and sending monthly statements.

What does it mean to refinance a mortgage?

Refinancing is a process of trading in your current mortgage to another lender for lower rates and better terms than your current loan. With a refinance, the new lender pays off your old mortgage and you then pay your monthly statements from the new lender.

What is an adjustable-rate mortgage?

An adjustable-rate mortgage — commonly called an ARM — is a type of home loan with a variable rate. Unlike a fixed-rate mortgage, which locks in an interest rate and predictable payments that apply over the full loan term, an ARM starts at an initial fixed rate for a period of three years or longer, after which it adjusts to a higher rate and then further adjusts periodically over the remaining life of the loan.

For a 5/1 adjustable-rate mortgage, the first number indicates the number of years at the fixed rate — or five years — and the second number indicates the rate at which the mortgage rate readjusts after — in this case, each year or annually.

Why are mortgage rates so high?

Mortgage rates are influenced by complicated factors like inflation, employment rates, the bond market and the overall economy. While the Federal Reserve doesn't set mortgage rates, this central bank of the U.S. sets benchmark rates that indirectly affect rates on financial products like mortgages, personal loans and deposit accounts.

March inflation data came in higher than expectations, which is among the main concerns driving mortgage rates higher in April.

Can I negotiate my mortgage rate?

It's not likely — lenders consider the market conditions and other financial factors when determining rates. You can, however, ask about how you can reduce costs in other ways when comparing mortgage lenders. For instance, many lenders offer lower rates in exchange for "mortgage points" — upfront fees you pay to your lender. A mortgage point could cost 1% of your mortgage amount, which means about $5,000 on a $500,000 home loan, with each point lowering your interest rate by about 0.25%, depending on your lender and loan.

Editor's note: Annual percentage yields shown are as of Tuesday, May 21, 2024, at 6:45 a.m. ET. APYs and promotional rates for some products can vary by region and are subject to change.

Sources

• Primary Mortgage Market Survey, Freddie Mac. Accessed May 9, 2024.

• Employment Situation Summary, U.S. Bureau of Labor and Statistics. Accessed May 10, 2024.

• U.S. Economic, Housing and Mortgage Market Outlook, Freddie Mac. Accessed May 16, 2024.

• Consumer Price Index Summary, U.S. Bureau of Labor and Statistics. Accessed May 16, 2024.

• Producer Price Index News Release summary, U.S. Bureau of Labor and Statistics. Accessed May 15, 2024.

• CME FedWatch Tool, CME Group. Accessed May 21, 2024.

• Mortgage Industry Insights, Bankrate. Accessed May 21, 2024.