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We’re seeing lower mortgage interest rates this morning as the Iran ceasefire struggles to stand on shaky Bambi legs. Will it find its footing? Time will tell, though where rates go may be less about what’s actually going on overseas and more about how the markets feel about current events.
The average interest rate on a 30-year, fixed-rate mortgage ticked down to 6.17% APR, according to rates provided to BW by Zillow. This is seven basis points lower than yesterday and nine basis points lower than a week ago. (See our chart below for more specifics.) A basis point is one one-hundredth of a percentage point.
This morning we got March inflation numbers that came in as markets anticipated, but markets were expecting them to be pretty rough. Keep reading below the chart for details.
P.S.: While the economy never sleeps, markets are closed on the weekends, as are we. The rates you see Friday are unlikely to change much (if at all) until Monday.
Average mortgage rates, last 30 days
📉 When will mortgage rates drop?
Even though the Fed does not set mortgage rates, its actions ripple out through the economy. We often see mortgage rates head higher or lower on expectations of action from the Federal Reserve. If it doesn’t look like the central bankers will be in a rate-cutting mood — and for this month’s meeting, it most certainly does not — we shouldn’t expect downward pressure on mortgage rates.
While we might remember February as a stretch of halcyon pre-war days with lower-priced gas, PCE reflected inflation levels that were already high. So-called core PCE, which strips out prices for food and fuel (since face it, those tend to be unstable), came in as predicted at 3% year-over-year. And this is all pre-Iran War.
The Federal Reserve can sometimes feel like the “This is fine” dog, having a nice cup of coffee while the room around them burns. But it’s not that they’re insensitive or clueless. Trying to keep the U.S. economy healthy is a huge task, so yeah, the Fed makes decisions with a level of caution and judiciousness that can feel excruciatingly slow. This frequently involves the kind of watchful calculation we’re seeing now from central bankers with respect to inflation.
To sum up this whole wonky explanation and answer the question: Mortgage rates are more likely to drop due to improvements in the situation in Iran, though if things get worse, we’ll see rates rise again.
The upcoming meeting of The Fed on April 28-29 is not expected to have a significant impact, as recent data on employment and inflation has been positive overall.
If you are considering refinancing, it may be a good idea if current rates are at least 0.5 to 0.75 percentage points lower than your current rate, especially if you plan to stay in your home long enough to recoup closing costs. With rates where they currently stand, it might be worth looking into a refinance if your current rate is around 6.67% or higher.
When deciding whether to refinance, consider your goals. Are you looking to lower your monthly payment, shorten your loan term, or access home equity? Think about whether a cash-out refinance or rate-and-term refinance aligns better with your financial objectives.
If you are aiming for a lower rate, BW’s refinance calculator can help you estimate potential savings and determine how long it would take to break even on refinancing costs.
As for shopping for a new home, the right time is when you can comfortably afford a mortgage at current rates. Don’t worry too much about potentially missing out on lower rates in the future; focus on getting preapproved, comparing lender offers, and understanding what monthly payment fits your budget.
If you have a mortgage rate quote that you are satisfied with, consider locking it in to protect against potential rate increases during the processing of your loan. Rate locks offer peace of mind in a fluctuating market.
Remember that advertised rates are sample rates and may not reflect your unique financial situation. Your personalized rate quote will depend on factors like credit score, down payment, and loan terms.
Rates can change frequently, so even personalized rate quotes can fluctuate until you lock in a rate. Keep in mind that lenders adjust pricing multiple times a day in response to market changes.
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