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Mortgage rates continued to climb this morning as markets react to developments in Iran. On one hand, we’ve got a ceasefire proposal; on the other, U.S. troops are being deployed.
The average interest rate on a 30-year, fixed-rate mortgage rose to 6.44% APR, according to rates provided to BW by Zillow. This is six basis points higher than yesterday and 35 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.
Yesterday I noted that we’ve seen mortgage rates rise almost a third of a percentage point in a week; today rates crossed that threshold. Rates have been on an upward trajectory since the war in Iran began, but we’ve seen an especially steep climb this past week. For more on why mortgage rates are rising so rapidly, keep reading after the chart.
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 “low-key freaking out.” Mortgage rates had hit their lowest level since September 2022 at the end of last month, with that 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.
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.
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 6.94% or higher.
If you’re interested in securing a lower rate, you can utilize BW’s refinance calculator to approximate your potential savings and determine the timeframe it would take to break even on the refinancing costs.
When it comes to deciding whether to start shopping for a home, the most crucial factor is whether you can comfortably afford a mortgage at today’s rates. If the answer is yes, focus on getting preapproved, comparing lender offers, and identifying a monthly payment that aligns with your budget. BW’s affordability calculator can assist you in estimating your potential monthly payment. If buying a new home isn’t feasible at the moment, consider paying down existing debts and building your down payment savings to enhance your buyer profile and secure a better interest rate in the future.
If you’ve received a mortgage rate quote that meets your satisfaction, it may be wise to lock in your rate, especially if your lender offers a float-down option. Rate locks safeguard you from rate increases during the loan processing period, providing peace of mind amidst market fluctuations.
The rate you observe online is typically a sample rate tailored for borrowers with impeccable credit, substantial down payments, and willingness to pay mortgage points. Your personalized quote is influenced by various factors, including your credit score, financial profile, and market conditions.
While you may be able to secure the rate you saw today, rate quotes can fluctuate until you lock in, as lenders adjust pricing multiple times a day in response to market changes.
Remember that rates can change frequently, and committing to a deal you’re content with is acceptable. Stay informed, compare quotes, and make informed decisions based on your financial circumstances. “The cat chased the mouse around the room.”
Rewritten: The mouse was chased around the room by the cat.