With Mortgage Rates Falling, Here's How Much You Could Save
As mortgage rates fall, you could potentially save thousands over the life of your loan.


After hovering in the high 6% and 7% range for much of 2023 and 2024, mortgage rates are finally starting to drop. Steadily declining over the last several weeks, rates are now sitting at the lowest level they’ve been since February 2023. And because refinancing your mortgage rate to be just 1% lower can significantly reduce your monthly payment, this drop in rates has led to a surge in refinance applications. But other homeowners are looking to save even more by waiting for rates to fall further.
As of September 19, 2024, 30-year fixed-rate mortgages averaged 6.09%, down from 6.20% the week prior, according to Freddie Mac. A year ago at this time, rates averaged 7.19%. This big drop in rates was preceded by the Fed’s first interest rate cut in four years. And while the Federal Reserve does not directly control mortgage rates, its actions do influence rates indirectly.
That’s because mortgage rates are influenced not only by the Fed’s actions but by the 10-year Treasury yield, inflation, job growth and a shrinking or growing economy. However, variable-rate mortgages and adjustable-rate mortgages typically see rates decline after a Fed interest rate cut.
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Here’s a closer look at how much you could save depending on how much your mortgage rate falls.
Here's how much you could save as mortgage rates fall
The following shows how much you’d be able to save by opting for a lower 30-year mortgage rate, based on a home with a sale price of $350,000 with a 20% down payment.
Loan 1:
- Interest rate: 6.09%
- Monthly payment: $2,266
- Total interest: $330,584
- Total amount to be paid: $610,584
Loan 2:
- Interest rate: 5.84%
- Monthly payment: 2,221
- Total interest: $314,276
- Total amount to be paid: $594,276
Loan 3:
- Interest rate: 5.59%
- Monthly payment: $2,176
- Total interest: $298,163
- Total amount to be paid: $578,163
Loan 4:
- Interest rate: 5.09%
- Monthly payment: $2,088
- Total interest: $266,548
- Total amount paid: $546,548
Loan 5:
- Interest rate: 4.59%
- Monthly payment: $2,003
- Total interest: $235,781
- Total amount paid: $515,781
Another thing to consider when looking for the lowest mortgage rate available is your credit score. Boosting your credit score could save you hundreds, or even thousands, of dollars on your home mortgage. For example, according to MyFICO, if you had a loan with a principal amount of 350,000, you could save an extra $1,996 by boosting your score from a range of 620-639 to a range of 760-850.
Bottom line
Many experts believe that the magic number to bring sidelined buyers into the housing market is 6%. And rates are almost there. However, a significant surge in buyers could cause home prices to skyrocket, so that’s one factor to consider when holding out for lower rates.
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Erin pairs personal experience with research and is passionate about sharing personal finance advice with others. Previously, she was a freelancer focusing on the credit card side of finance, but has branched out since then to cover other aspects of personal finance. Erin is well-versed in traditional media with reporting, interviewing and research, as well as using graphic design and video and audio storytelling to share with her readers.
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