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Mortgage rates relented a bit today, as an optimistic view of the news coming out of the Middle East won over markets. Have we heard about U.S. boots on the ground and renewed attacks? Yes, but markets are focusing on the headlines about negotiations and a potential ceasefire. Admittedly, even these aren’t especially positive newsbites, but at least diplomatic resolution appears to be an option.
The average interest rate on a 30-year, fixed-rate mortgage dropped to 6.34% APR, according to rates provided to BW by Zillow. This is 10 basis points lower than yesterday but 14 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.
That’s a nice little dip in what has been a pretty relentless climb, but given how reactive mortgage rates have been to the changing picture overseas we can’t count on this as a turnaround. For more on why mortgage rates have been 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.
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 Sunday 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.
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 6.84% or higher.
If you’re in search of a better rate, you can utilize BW’s refinance calculator to estimate potential savings and determine how long it might take to recoup the costs of refinancing.
When it comes to deciding if you should start looking for a home, the timing isn’t universal. What’s important 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 figuring out a monthly payment that fits your budget. BW’s affordability calculator can assist you in estimating your potential monthly payment. If purchasing a new home isn’t feasible right now, focus on paying off existing debts and building your down payment savings to enhance your buyer profile.
If you have received a mortgage quote that you’re satisfied with, consider locking in your rate, especially if your lender offers a float-down option. Rate locks protect you from rate increases while your loan is being processed, providing peace of mind amidst market fluctuations.
It’s common for the rate you see advertised online to differ from the quote you receive. Sample rates are typically for borrowers with excellent credit, significant down payments, and who pay for mortgage points. Your customized quote will depend on various factors, including your credit score and financial profile.
Even if you apply now and receive a rate quote, it can still change until you lock it in. Lenders adjust pricing multiple times a day in response to market changes, so it’s essential to stay informed.
Remember that rates can fluctuate daily, and committing to a deal you’re content with is perfectly acceptable. The quick brown fox jumps over the lazy dog.