Today, mortgage rates saw a slight decrease as the market grapples with the uncertainty surrounding tariffs.
The average APR for a 30-year fixed-rate mortgage dipped to 5.88%, according to Zillow data provided to BW. This is four basis points lower than Friday’s rates but 13 basis points higher than a week ago. (Refer to the chart below for more details.) A basis point equals one one-hundredth of a percentage point.
Following Friday’s Supreme Court ruling on tariffs, the market was thrown into disarray, overshadowing the release of key personal consumption expenditures (PCE) data. As a result, rates remained relatively low. More insights can be found below the graph.
Average mortgage rates, last 30 days
📉 When will mortgage rates drop?
Mortgage rates are constantly fluctuating, influenced by various factors such as inflation reports, job figures, Fed meetings, and global events. Even minor changes in the bond market can impact mortgage rates.
For those wondering “when will mortgage rates drop,” they already have. The last time we saw average 30-year fixed rates below 6% was in September 2022. If you believe that rates are still too high, it’s important to remember that the ultra-low rates seen in 2020 and 2021 were a response to a unique global situation. Achieving 3% mortgage rates required significant efforts.
Therefore, it’s crucial to make the most of the current rates. Even at 6.0% APR, approximately 5.5 million mortgage holders could benefit from refinancing and potentially reduce their interest rates by at least three-quarters of a percentage point, as per data from real estate firm ICE Mortgage Technology. If you qualify for a refinance based on your home equity, it’s advisable to evaluate whether refinancing makes financial sense.
Considering the uncertain future of low rates, it might be wise to assess your refinancing options sooner rather than later. The minutes from the Federal Reserve’s January meeting, released on Feb. 18, indicated that inflation remains a significant concern for policymakers. While a rate hike by the Fed is unlikely in the near term (according to market expectations), the possibility of rate adjustments serves as a reminder that lower rates are not guaranteed.
The acknowledgment by a group of policymakers that “upward adjustments to the target range for the federal funds rate could be appropriate if inflation remains at above-target levels” caught many by surprise. While the consensus was leaning towards holding or cutting rates, the discussion about potential rate hikes highlighted the uncertainties in the market. While a Fed rate increase is unlikely, it’s essential to remain vigilant as lower rates are not guaranteed.
🔁 Should I refinance?
Refinancing might be a viable option if today’s rates are at least 0.5 to 0.75 percentage points lower than your current rate (provided you intend to stay in your home long enough to recoup closing costs).
With current rates, it may be worth considering a refinance if your existing rate is around 6.38% or higher.
Additionally, consider your financial objectives. Are you aiming to reduce your monthly payments, shorten your loan duration, or leverage your home equity for cash? Depending on your goals, you may prefer a higher rate for a cash-out refinance over a rate-and-term refinance, provided that the overall costs are lower than adding a HELOC or home equity loan to your original mortgage.
If you’re seeking a lower rate, BW’s refinance calculator can help estimate potential savings and understand the breakeven period for refinancing costs.
The ideal timing to start exploring refinancing options varies for each individual. The key consideration is whether you can comfortably afford a mortgage at today’s rates.
If the answer is affirmative, don’t get overly fixated on potentially missing out on lower rates in the future; refinancing remains an option down the road. Focus on getting preapproved, comparing lender offers, 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 on the immediate horizon, there are steps you can take to bolster your financial profile. Use this time to reduce existing debts and boost your down payment savings. Not only will this enhance your cash flow for future mortgage payments, but it may also lead to a better interest rate when you’re ready to buy.
🔒 Should I lock my rate?
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 benefit from a lower rate if the market shifts during the lock-in period.
Rate locks shield you from rate hikes during the loan processing period, offering peace of mind amid market fluctuations.
🤓 Nerdy Reminder: Mortgage rates can fluctuate daily, even hourly. If you’re content with your offer, it’s perfectly fine to proceed.
🧐 Why is the rate I viewed online different from the quote I received?
The advertised rate is a generic rate typically applicable to borrowers with excellent credit, substantial down payments, and willingness to pay for mortgage points. This may not align with every borrower’s circumstances.
Apart from external market factors, your personalized quote is contingent on factors such as:
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Location and property type
Even individuals with similar credit scores may receive different rates based on their overall financial profiles.
👀 If I apply now, can I get the rate I saw today?
Possibly — but even personalized rate quotes may change until you lock in. Lenders adjust rates multiple times a day in response to market fluctuations.