The rate on an average 30-year fixed rate mortgage (FRM) dropped to 6.89% in the week ending July 12, 2024. The average 15-year FRM rate also decreased slightly to 6.17%.  

Watch for FRM rates to work their way lower as the Fed demonstrates inflation (and job growth) is under control. Expect the FRM rate to dip through 2025 followed by a long-term upward trend, which, in 2013, introduced a half-cycle of some 30 years of rising rates for all types of borrowing. 

Primarily, property sellers suffer from higher FRM rates, since current asking prices are not supported by the amounts buyers can borrow to fund a purchase. Thus, an increase in the FRM rate forces sellers to drop prices or exit the market.

Buyers dependent on purchase-money mortgage funding either reduce their standard of living and acquire a home in a lower price tier, or, more likely as is taking place, simply wait out the drop in asking prices until pricing matches their reduced purchasing power.

As buyers increasingly sense the economic situation in 2024 does not create safe economic conditions for an over-priced purchase financed at a high interest rate, more buyers are heading for the sidelines. However, buyers (the patient ones and their agents), will soon discover their situation improving as for-sale inventories grow, forcing sellers to cut prices to unload property they no longer want. 

 

Fundamentally, the setting of FRM rates is tied to the treasury bond market, as are capitalization (cap) rates. The 30-year FRM rate moves in tandem with the 10-year Treasury Note rate. Historically, the risk premium spread between the 10-yr T-Note rate and the 30-yr FRM rate is 1.5%. The spread is far greater for cap rates. 

However, on July 5, 2024, the 10-yr T-Note rate is 4.20%. Thus, the spread between the 10-year T-Note and 30-year FRM rate is still high, at 2.69%, well above the historical risk premium spread of 1.5%. Today’s generous spread indicates lenders continue to pad their risk premiums in anticipation of future rate increases — and foreclosures due to defaults.

The average monthly rate on adjustable rate mortgages (ARMs) is on a downward trend, averaging 7.03% in June 2024. The interest rate on the ARM is higher than the 15-year FRM and higher than the 30-year FRM rate — with the limited savings not worth the significant dangers inherent in ARMs. Thus, a riskier ARM is useless to buyers seeking to increase their borrowing capacity.

This inversion in FRM and ARM rates has completely eliminated the appeal of ARMs except in mortgaged-financed high-tier housing and commercial property. Thus, the support for low- and mid-tier home prices ARMs provided before the inversion is now unavailable.

Updated Jul 5, 2024. Original copy released March 2012.

Click the link to go directly to a chart, or browse the charts by scrolling below.

1. 30-year fixed rate mortgage (FRM) rate, weekly — Chart update 07/12/24
2. 30-year FRM rate, monthly — Chart update 12/29/23
3. 15-year FRM rate — Chart update 07/12/24
4. 5/1 adjustable rate mortgage (ARM) rate, monthly — Chart update 07/12/24
5. 10-year Treasury note rate — Chart update 07/12/24
6. Combined FRM and 10-year Treasury note rates — Chart update 07/12/24
7. 91-day Treasury bill rate — Chart update 07/12/24
8. 3-month Treasury bill — Chart update 07/12/24
9. 6-month Treasury bill — Chart update 07/12/24
10. Treasury Securities average yield (CMT) — Chart update 07/12/24
11. 12-month Treasury average — Chart update 07/12/24
12. Secured Overnight Financing Rate (SOFR) — Chart update 07/12/24
13. Applicable federal rates — Chart update 07/12/24

https://www.traditionrolex.com/32


Chart update 07/12/24

Current
07/12/24
6.89%

Month ago
06/14/24
6.95%
Year ago
07/14/23
6.96%
The average 30-year FRM rate in California is provided by the St. Louis Federal Reserve Bank.
More information:

Chart update 12/29/23
Dec 2023
Average
6.82%
Nov 2023
Average
7.36%
Dec 2022
Average
6.36%
 

Chart update 07/12/24
Current
07/12/24
6.17%
Month ago
06/14/24
6.17%
Year ago
07/14/23
6.30%
The average 15-year FRM rate in California is provided by the St. Louis Federal Reserve Bank.
More information:
 

Chart update 07/12/24
Jun 2024
7.05%
May 2024
7.31%
Jun 2023
6.92%
The 5/1 average adjustable rate mortgage (ARM) rate shows the average rate for the first five years after origination. After the initial five-year period, the ARM rate is adjusted annually based on an index figure, such as a certain Treasury Bill rate (which reflects Federal Reserve rate movements) or the London Inter-Bank Offered Rate (LIBOR). Beginning January 2016, the average ARM rate in California is provided by Bankrate.com. Prior to January 2016, the average ARM rate is provided by Freddie Mac’s survey of the Western Region of the U.S.
Chart update 07/12/24
Current
07/12/24
4.20%
Month ago
06/14/24
4.23%
Year ago
07/14/23
3.80%
This rate is a leading indicator of the direction of future Freddie Mac rates. The 10-year rate historically runs closer to 4% during a stable money market. The rate is influenced by worldwide demand for the dollar and anticipated future domestic inflation.
 
 

Chart update 07/12/24
Avg 15-Year
Jun 2024
6.19%
Avg 30-Year
Jun 2024
6.92%
Avg 10-Year T-Note
Jun 2024
4.32%
The average 15- and 30-year conventional commitment rates are the rates at which a lender commits to lend mortgage money in the United States-West/California for the duration of the life of each respective mortgage as reported by Freddie Mac. The green line reflects the 10-Year Treasury Note Average, a leading indicator of the direction of future Freddie Mac rates. It is comprised of the level of worldwide demand for the dollar and anticipated future domestic inflation.
More information:
Chart update 07/12/24
Current
07/12/24
5.37%
Month Ago
06/14/24
5.40%
Year Ago
07/13/23
5.41%
This rate determines the minimum interest rate the seller must use in a delayed §1031 transaction and report when not receiving interest on §1031 monies held by a facilitator/accommodator. This rate also sets the amount of the ordinary income the facilitator/accommodator must report.
Chart update 07/12/24
Jun 2024
5.24%
May 2024
5.25%
Jun 2023
5.16%
The 3-Month Treasury Bill is the rate managed by the Federal Reserve through the Fed Funds Rate as the base price of borrowing money in the short-term. It is used in determining the yield spread, which predicts the likelihood of a recession one year forward. The posted rate is the monthly average for the listed month. Rates are released with a 1-2 month reporting delay.
Chart update 07/12/24
 Jun 2024
5.15%
May 2024
5.17%
Jun 2023
5.19%

The six-month T-Bill rate is one of several indices used by lenders to periodically adjust the adjustable rate mortgage (ARM) rate. The adjusted rate equals the indexed rate (at the time of adjustment or an average of several prior rates) plus the lender’s profit margin. The posted rate is the monthly average for the listed month. Rates are released with a 1-2 month reporting delay.

Chart update 07/12/24
Jun 2024
5.11%
May 2024
5.14%
Jun 2023
5.24%
This index is one of several indexes used by lenders as stated in their ARM note to periodically adjust the note’s interest rate. The ARM interest rate equals T-Bill yield, plus the lender’s profit margin. The index is an average of T-Bill yields with maturities adjusted to one year.
Chart update 07/12/24
Jun 2024
5.16%
May 2024
5.17%
Jun 2023
4.43%
This index is one of several indexes used by lenders as stated in their ARM note to periodically adjust the note’s interest rate. This figure is an average of the one-year T-Bill rates for the past 12 months. The ARM interest rate equals the 12-Month Treasury Average yield plus the lender’s profit margin. There is a one-two month lag in data reporting for the 12-Month Treasury Average.
Chart update 07/12/24
07/12/24
5.34%
06/14/24
5.31%
05/25/23
5.06%
This index is one of several indices used by lenders as stated in their ARM note to periodically adjust the note’s interest rate. It replaced the LIBOR in 2021, which was found to be manipulated in the years leading up to the 2008 recession and financial crisis. The ARM interest rate equals the SOFR rate plus the lender’s profit margin. The rate is based on overnight borrowing in the U.S. Treasury repo market. The SOFR is produced in a transparent manner and is based on observable transactions, rather than models, and, unlike the LIBOR, is not dependent on bank estimates.
Chart update 07/12/24
Short (3 years or less)
Jul 2024
3.77%
Medium (3 to 9 years)
Jul 2024
3.35%
Long (9+ years)
Jul 2024
3.44%
These rates determine minimum interest yield reportable on carryback financing. The AFR category is determined by the carryback due date. Rates are for monthly payments, reported for the coming month.