Mortgage rates are currently at historically low levels, prompting speculation about their sustainability. But rest assured, we’re here to provide you with insights into the current situation.
The average interest rate for a 30-year fixed-rate mortgage has dropped to 5.88% APR, based on data from Zillow provided to BW. This represents a decrease of 13 basis points from yesterday and seven basis points from a week ago. (Refer to our chart below for more detailed information.) A basis point is equivalent to one one-hundredth of a percentage point.
The upcoming Federal Reserve meeting, scheduled for next week, is generating a sense of uncertainty in the markets. Typically, by this point before a meeting, market expectations regarding the Fed’s decision on the federal funds rate are well-established. However, the current situation is marked by increased ambiguity, as explained further below the graph.
This uncertainty has led to varying opinions among mortgage lenders, adding to the complexity of the situation. It’s important to note that the average rate provided is for a well-qualified borrower, but individual rates may vary based on personal circumstances. Inputting your specific information will give you a more accurate estimate of the rate you may qualify for.
Average mortgage rates over the last 30 days
📉 When can we expect mortgage rates to decrease?
Mortgage rates are subject to frequent fluctuations, as they are influenced by various factors such as inflation reports, employment data, Fed meetings, and global events. Even minor changes in the bond market can impact mortgage rates significantly.
Due to the recent government shutdown disrupting data collection by federal agencies, central bankers are operating with limited information compared to usual. This lack of clarity has resulted in diverging views among Fed governors, with some advocating for rate cuts and others urging caution in public statements.
All eyes are now on the upcoming release of inflation data for September by the Department of Commerce on Friday, Dec. 5. Despite the data being somewhat outdated, it could play a crucial role in the Fed’s decision at the next meeting. A strong inflation report might deter the Fed from cutting rates, whereas a more favorable report could pave the way for a rate cut. Clarity on the Fed’s future actions is likely to stabilize market expectations and provide a clearer direction for mortgage rates.
If you’re considering refinancing, it may be a good idea if today’s rates are at least 0.5 to 0.75 percentage points lower than your current rate (and if you plan to stay in your home long enough to recoup closing costs).
Given the current rate environment, refinancing could be worthwhile if your existing rate is around 6.38% or higher.
Consider your objectives: Are you looking to reduce your monthly payments, shorten your loan duration, or leverage your home equity for cash? Depending on your goals, you may be willing to accept a higher rate for a cash-out refinance, provided that the overall costs are lower than obtaining a HELOC or home equity loan in addition to your original mortgage.
For those seeking a lower rate, BW’s refinance calculator can help estimate potential savings and determine the break-even point for refinancing costs.
There isn’t a definitive “right” time to start house hunting; the key factor is whether you can comfortably afford a mortgage at current rates. If the answer is yes, don’t overly fixate on potential future rate changes; remember that refinancing is an option down the road. Focus on getting preapproved, comparing offers from different lenders, and determining a monthly payment that 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, focus on reducing existing debts and building savings for a down payment. This not only increases cash flow for future mortgage payments but can also help secure a better interest rate when you’re prepared to buy.
If you’ve received a rate quote that meets your expectations, it’s advisable to consider locking in your mortgage rate, especially if your lender offers a float-down option. A float-down feature allows you to take advantage of lower rates if the market shifts during your rate lock period.
Rate locks shield you from rate increases while your loan is being processed, providing peace of mind amid the market’s constant fluctuations.
🤓 Nerdy Reminder: Mortgage rates can fluctuate daily, even hourly. If you’re satisfied with the terms offered, it’s perfectly acceptable to proceed with the agreement.
🧐 Why did the rate I viewed online differ from the quote I received?
The advertised rate is typically a standard rate, intended for borrowers with excellent credit, substantial down payments, and payment of mortgage points. This may not align with every individual’s financial situation.
In addition to external market factors, your personalized quote is influenced by factors like:
-
Location and type of property
Even individuals with similar credit scores might receive different rates based on their overall financial profiles.
👀 If I submit an application now, can I secure the rate I saw earlier?
It’s possible, but even personalized rate quotes remain subject to change until locked in. Lenders adjust their pricing multiple times daily in response to market fluctuations.