Today, mortgage interest rates continue to trend lower, following the overall downward movement seen throughout September.
The average interest rate for a 30-year fixed-rate mortgage has dropped to 6.48% APR, as reported by Zillow to BW. This rate is two basis points lower than yesterday but six basis points higher than a week ago. (Refer to the chart below for more detailed information.) A basis point represents one one-hundredth of a percentage point.
The focus is currently on the Federal Reserve, with the central bankers convening this week. It is highly anticipated that there will be a 25-basis-point cut to the federal funds rate (the short-term borrowing rate set by the Fed). As has been the trend, mortgage rates seem to be adjusting early in response to these potential changes.
Average mortgage rates over the past 30 days
📉 When can we expect mortgage rates to decrease?
Mortgage rates are subject to constant fluctuations, heavily influenced by reactions to new inflation reports, job figures, Fed meetings, global events, and more. Even minor shifts in the bond market can impact mortgage rates.
This week, attention is on the September 16-17 meeting of the Federal Reserve’s monetary policy committee. The expected reduction in the overnight lending rate by the Fed is geared towards supporting job creation, indicating a greater concern for the job market over inflation. If inflation were the primary concern, the federal funds rate would likely remain unchanged.
🏡 Is it time to begin house hunting?
There isn’t a universal “perfect” time to start the process; what’s crucial is determining if you can comfortably afford a mortgage at the current rates.
If the answer is yes, don’t stress too much about potentially missing out on lower rates in the future; refinancing is always an option down the road. Focus on getting preapproved, comparing offers from different lenders, and understanding what monthly payment aligns with your budget.
BW’s affordability calculator can assist in estimating your potential monthly payment. If purchasing a new home isn’t feasible at the moment, there are steps you can take to enhance your buyer profile. Use this time to reduce existing debts and build up your down payment savings. Not only will this increase your cash flow for future mortgage payments, but it can also lead to a better interest rate when you’re prepared to buy.
🔒 Is it wise to lock in my rate?
If you’re content with the quote you’ve received, it’s worth considering locking in your mortgage rate, particularly if your lender offers a float-down option. This feature allows you to take advantage of a better rate if the market experiences a decline during your lock-in period.
Rate locks shield you from potential increases while your loan is in process, and given the constant market fluctuations, that peace of mind can be invaluable.
🤓 Nerdy Reminder: Rates are subject to daily, and even hourly, changes. If you’re satisfied with the offer you’ve received, feel confident in committing to it.
🔁 Is refinancing the right move?
Consider refinancing if today’s rates are at least 0.5 to 0.75 percentage points lower than your current rate (and if you plan to remain in your home long enough to recoup the closing costs).
Given the current rate environment, you might want to contemplate a refinance if your existing rate is 6.98% or higher.
Additionally, consider your objectives: Do you aim to reduce your monthly payment, shorten your loan term, or convert home equity into cash? For instance, you might prioritize a higher rate for a cash-out refinance over a rate-and-term refinance, as long as the overall costs are lower than retaining your original mortgage and obtaining a HELOC or home equity loan.
If you’re seeking a lower rate, utilize BW’s refinance calculator to gauge potential savings and comprehend the time required to offset the refinancing costs.
🧐 Why does the rate I viewed online differ from the quote I received?
The advertised rate is typically a standard rate — often for a borrower with excellent credit, making a substantial down payment, and paying for mortgage points. This may not align with every buyer’s specific circumstances.
In addition to external market factors beyond your control, your personalized quote is influenced by factors such as:
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Location and type of property
Even individuals with similar credit scores may receive different rates based on their overall financial profiles.
👀 If I apply now, can I secure the rate I viewed today?
It’s possible — but even customized rate quotes can change until you lock in. Lenders adjust pricing multiple times daily in response to market fluctuations.