Today saw a rebound in mortgage interest rates, a common occurrence after a Fed announcement as markets process the news.
The average interest rate for a 30-year fixed-rate mortgage reached 6.32% APR, based on data from Zillow provided to BW. This reflects a three basis point increase from yesterday and a 10 basis point increase from a week ago. (Refer to the chart below for more details.) A basis point equals one one-hundredth of a percentage point.
Headlines touting lower mortgage rates may be based on Freddie Mac’s weekly average update. However, Freddie Mac’s data can lag behind current trends, especially after sudden rate shifts like those following the Fed’s rate cut.
Please note that markets are closed on weekends, so Friday’s rates are unlikely to change significantly until Monday.
Average mortgage rates over the last 30 days
📉 When can we expect mortgage rates to decrease?
Mortgage rates are in constant flux, influenced by various factors such as inflation reports, job figures, Fed meetings, and global events. Even minor shifts in the bond market can impact mortgage rates.
Following the recent rate cut by the Fed on September 17, attention is now on the upcoming Personal Consumption Expenditures Index (PCE) release on September 26. The decision to lower rates was aimed at strengthening the labor market rather than curbing inflation. The PCE, a crucial inflation gauge, could influence further rate adjustments by the Fed this year.
In its September 17 decision, the Fed had to balance risks related to its dual mandate of maximum employment and price stability.
🏡 Is it the right time to start shopping for a home?
The ideal time to start shopping depends on your ability to afford a mortgage at current rates. Don’t worry too much about potentially missing out on lower rates in the future, as refinancing is an option down the line. Focus on getting preapproved, comparing lender offers, and determining a monthly payment that fits your budget.
BW’s affordability calculator can assist you in estimating your monthly payment. If buying a new home isn’t feasible now, work on reducing existing debts and building your down payment savings. This not only increases cash flow for future mortgage payments but can also secure a better interest rate when you’re ready to purchase.
🔒 Should I lock in my rate?
If you’re content with a quote you’ve received, consider locking in your mortgage rate, especially if your lender offers a float-down option. This feature allows you to benefit from a lower rate if the market shifts during your lock period.
Rate locks shield you from rate hikes while your loan is being processed, offering peace of mind amidst market fluctuations.
🤓 Nerdy Reminder: Rates are subject to daily and even hourly changes. If you’re satisfied with your offer, feel free to proceed.
🔁 Is refinancing a good idea?
Consider refinancing if current rates are at least 0.5 to 0.75 percentage points lower than your existing rate (and if you plan to stay in your home long enough to recoup closing costs).
Given the current rate environment, it may be worth exploring refinancing if your current rate is around 6.82% or higher.
Also think about your objectives: Do you want to lower your monthly payment, shorten your loan term, or convert home equity into cash? For instance, you might be willing to accept a higher rate for a cash-out refinance, as long as the overall costs are lower than maintaining your original mortgage and adding a HELOC or home equity loan.
If you’re seeking a lower rate, BW’s refinance calculator can help you estimate savings and determine the break-even point for refinancing costs.
🧐 Why does the rate online differ from my quote?
The advertised rate is typically a sample rate for a borrower with excellent credit, a substantial down payment, and payment for mortgage points. This may not align with every buyer’s situation.
In addition to external market factors, your personalized quote considers your location, property type, and other factors unique to your financial profile.
👀 Can I secure the rate I saw today if I apply now?
Possibly, but rates can fluctuate until you lock in. Lenders adjust pricing multiple times daily in response to market shifts.