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Mortgage rates moved significantly higher today as the war in Iran continues to drive up fuel prices and roil the markets.
The average interest rate on a 30-year, fixed-rate mortgage jumped to 6.36% APR, according to rates provided to BW by Zillow. This is 16 basis points higher than Friday and 23 basis points higher than a week ago. (See our chart below for more specifics.) A basis point is one one-hundredth of a percentage point.
I was last handling BW’s daily rates coverage a month ago, and wow, it was a different story that last week of February. For more on why mortgage rates are rising so rapidly, keep reading below the graph.
Average mortgage rates, last 30 days
📉 When will mortgage rates drop?
Mortgage rates, on the other hand, are right there with the markets (and, let’s be honest, plenty of Americans). By “right there” I mean “lowkey freaking out.” Mortgage rates had hit their lowest level since September 2022 at the end of last month, with that key leftmost integer finally back at five. The war in Iran promptly reversed the downward movement we’d been seeing. Could an exit from the conflict cause mortgage rates to flip right back? It could, but we aren’t going to count on that.
Not to go all Carrie Bradshaw, but… and just like that, the U.S. was at war, mortgage rates jumped, and the highest gas price I spotted while running errands yesterday was $4.68 a gallon (I’m in Connecticut, if you think that sounds especially high or low compared to where you are).
The point is, just because mortgage rates are moving one way or the other doesn’t mean you can ever, and I mean EVER, count on them to keep going that way. We can only work with the information that’s available now.
If you’re looking to make a home purchase, the best way to deal with that uncertainty is to shop multiple mortgage lenders. Comparing mortgage lenders is always a good move, but when rates are moving rapidly — up or down — it’s even more vital. When mortgage rates are in flux, some lenders will adjust their rates more quickly than others. That can mean seeing bigger differences from one lender to the next than you’d usually see. (And yes, of course, this would be the same you providing the same financial info — each lender sees this stuff differently.)
Freddie Mac estimates that home buyers who compare quotes from two mortgage lenders could save as much as $600 annually, and comparing four or more lenders doubles that. Wherever mortgage rates are, don’t spend more on interest than you have to! Take that extra time to shop around.
Refinancing might make sense if today’s rates are at least 0.5 to 0.75 of a percentage point lower than your current rate (and if you plan to stay in your home long enough to break even on closing costs).
With rates where they are right now, you could start considering a refi if your current rate is around 6.86% or higher.
🏡 Should I start shopping for a home?
There is no universal “right” time to start shopping — what matters is whether you can comfortably afford a mortgage now at today’s rates.
If purchasing a new home is not currently feasible, there are still steps you can take to enhance your buyer profile. Use this time to reduce existing debts and increase your down payment savings. This will not only increase your available cash flow for a future mortgage payment but also improve your chances of securing a better interest rate when you are prepared to buy.
If you are satisfied with a mortgage rate quote you have received, it may be wise to consider locking in that rate, especially if your lender offers a float-down option. A float-down feature allows you to take advantage of a lower rate if the market changes during your lock period. Rate locks provide protection against rate increases while your loan is being processed, offering peace of mind amidst the market fluctuations.
It is important to note that advertised rates are typically sample rates for borrowers with excellent credit, significant down payments, and who are paying for mortgage points. Your personalized quote will vary based on factors such as credit score, financial profile, and other individual circumstances. Even individuals with similar credit scores may receive different rates due to their overall financial situation.
While applying for a mortgage, keep in mind that personalized rate quotes can change until you officially lock in your rate. Lenders adjust pricing multiple times a day in response to market changes, so it is crucial to stay informed and act decisively when you are satisfied with the terms offered.
Remember, rates can fluctuate daily and even hourly, so if you are happy with a deal, it is advisable to commit to it. By taking proactive steps to strengthen your financial position and staying informed about market trends, you can enhance your home buying prospects and secure a competitive mortgage rate when the time is right. given sentence using different words:
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The feline pursued the rodent throughout the residence.