Check out the 15-month low in mortgage rates and discover how much you could save on monthly payments.

In 2024, after months of high mortgage rates, a recent decrease has made monthly home payments more affordable.

According to the latest Freddie Mac data, 30-year mortgage rates dropped to a 15-month low of 6.35% last week, down from a high of 7.79% in October 2023.

The connection between mortgage rates and declining 10-year Treasury yields is such that yields tend to decrease during economic downturns or periods of uncertainty.

The decline in the economy is expected to occur due to slowing inflation, a cooling labor market, and the anticipated end of interest rate hikes by the Federal Reserve, which is predicted to announce its first rate cut since March 2020 in September.

The drop in mortgage payments can save you hundreds of dollars in monthly costs

The monthly mortgage costs for a 30-year loan on a U.S. median home price of $412,300 with a 20% down payment vary based on different interest rates.

• 6.35% (current): $2,052
• 7.22% (May 2024): $2,243
• 7.79% (October 2023): $2,372

In comparison to the highest monthly mortgage costs recorded in 2023, there has been a decrease of $320. On the other hand, compared to May 2024, the difference is $191.

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Although a decreasing 30-year mortgage rate can provide financial relief to homebuyers, it may not significantly impact the affordability of a home, as mortgages are only one aspect of homeownership costs, which also include insurance and repairs.

It's wise to maintain a cash reserve equivalent to 1% to 3% of your home's purchase price to cover unforeseen expenses.

See if you can afford a home based on current rates

To determine if a home fits within your budget, utilize CNBC Make It's mortgage calculator to estimate monthly mortgage payments based on the current 30-year interest rate.

The calculator does not factor in additional expenses like insurance, property taxes, and private mortgage insurance, which are usually necessary for mortgages with less than a 20% down payment.

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