Interest Rates Come Down for First Time in 4 Years
The Federal Reserve cut its benchmark interest rate by an unusually large half-point on September 18, marking a significant shift after more than two years of high rates. This change is expected to lead to lower mortgage costs, which is welcome news for homebuyers in 44 states who have seen interest rates continue to rise in the first half of this year.
The Brief
Mortgage rates increased in all but six states in the first half of 2024, according to a new analysis from WalletHub. The analysis found that a series of planned rate cuts by the Federal Reserve should, over time, lead to lower mortgage costs.
Mortgage Interest Rates Expected to Slowly Decrease
Mortgage interest rates are expected to slowly decrease as the Federal Reserve enacts a series of main interest rate cuts. However, it’s not coming soon enough for homebuyers in 44 states who saw interest rates continue to rise in the first half of this year.
According to the analysis, mortgage rates increased in all but six states from the first quarter to the second quarter of this year. However, it’s worth noting that data used for the analysis was reported before the Federal Reserve cut its main interest rate in September for the first time in more than four years. Rates have generally been declining since July in anticipation of the rate cut.
How Mortgage Rates are Influenced
Mortgage rates are influenced by several factors, including how the bond market reacts to the Federal Reserve’s interest rate policy decisions. Interest rates vary widely depending on what state you’re in.
Average Mortgage Rate Down
The average rate on a 30-year mortgage is down from 7.22% in May, its 2024 peak. Fed officials also signaled they expect further cuts this year and in 2025 and 2026, which should, over time, lead to lower borrowing costs on mortgages.
Home Mortgage Rates by State
Colorado had the largest increase in mortgage interest rates between the first and second quarters of this year at around 4.9%, but the average mortgage rate in Colorado increased only to 5.7% (ranked 29th for most expensive state for mortgages), the WalletHub analysis found.
Idaho, meanwhile, saw its mortgage rates decrease by 1.12%, the largest rate reduction of any state.
New Jersey had the nation’s highest average mortgage rate at 7.37%, while Hawaii showed the lowest average mortgage rate at 4.81%.
States Where Mortgage Interest Rates Increased in 2024
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States Where Mortgage Rates Went Down in 2024
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The Source
This story includes information from WalletHub and The Associated Press.
Conclusion
The recent cut in the Federal Reserve’s benchmark interest rate is expected to lead to lower mortgage costs, which is welcome news for homebuyers in 44 states who have seen interest rates continue to rise in the first half of this year. As interest rates are influenced by various factors, including the bond market and state-specific conditions, it’s essential for homebuyers to stay informed and adjust their mortgage strategies accordingly.
FAQs
Q: How did the Federal Reserve’s interest rate cut affect mortgage rates?
A: The cut in the Federal Reserve’s benchmark interest rate is expected to lead to lower mortgage costs.
Q: Which states saw the largest increase in mortgage interest rates in the first half of 2024?
A: Colorado had the largest increase at around 4.9%.
Q: Which states saw the largest decrease in mortgage interest rates in the first half of 2024?
A: Idaho saw the largest rate reduction at 1.12%.
Q: What is the average mortgage rate in the United States?
A: The average rate on a 30-year mortgage is down from 7.22% in May, its 2024 peak.
Q: Will interest rates continue to decrease?
A: Fed officials expect further cuts this year and in 2025 and 2026, which should, over time, lead to lower borrowing costs on mortgages.
