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It’s not a big enough dip to really make a difference, but mortgage interest rates are lower today.
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 five basis points lower than Friday and 21 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.
Mortgage rates have been somewhat more stable lately as markets have been showing some fatigue when it comes to reacting to news coming out of the Middle East. Early on in the conflict, it felt like every update was a market mover. Now, it takes Big News (yes, with caps) to really shake things up.
Average mortgage rates, last 30 days
📉 When will mortgage rates drop?
Mortgage rates are constantly changing, since a major part of how rates are set depends on reactions to new inflation reports, job numbers, Fed meetings, global news … you name it. For example, even tiny changes in the bond market can shift mortgage pricing.
This week, we’re continuing to keep a close watch on the headlines coming out of the Middle East, as the war in Iran — or more precisely, the U.S. bond markets’ reactions to the war in Iran — has been a key driver of mortgage rates since its inception. But there’s news coming in closer to home that could impact mortgage rates, too.
On Tuesday, the Bureau of Labor Statistics will release the latest Consumer Price Index (CPI). Inflation has been a hot topic lately, since the Iran war has been driving up costs on the home front. This CPI report will be our first look at just how bad inflation was in April. “I don’t anticipate a big spike like we saw last month, as oil prices didn’t jump as dramatically in April as they initially did in March,” Elizabeth Renter, BW senior economist, commented. “But inflation will remain uncomfortably high.”
Last week we got three substantial data drops that all showed a fairly stable labor market. If this week’s inflation numbers don’t look good, that sets the stage for a potentially contentious Federal Reserve meeting next month. Incoming chair Kevin Warsh could be confirmed as soon as this week, and he’s made no secret of his rationale for lowering interest rates. But cutting rates in an economy where inflation’s running hot and employment’s doing just fine will be a tough sell, especially with three Fed governors dissenting in April because of their inflation concerns.
If markets begin anticipating that the Fed could raise interest rates, that could put upward pressure on mortgage rates, too.
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 may want to start considering a refi if your current rate is around 6.67% or higher.
Also consider your goals: Are you trying to lower your monthly payment, shorten your loan term or turn home equity into cash? For example, you might be more comfortable with paying a higher rate for a cash-out refinance than you would for a rate-and-term refinance, so long as the overall costs are lower than if you kept your original mortgage and added a HELOC or home equity loan.
If you’re looking for a lower rate, use BW’s refinance calculator to estimate savings and understand how long it would take to break even on the costs of refinancing.
🏡 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 the answer is yes, don’t get too hung up on whether you could be missing out on lower rates later; you can refinance down the road. Focus on getting preapproved, comparing lender offers, and understanding what monthly payment works for your budget.
BW’s affordability calculator can help you estimate your potential monthly payment. If a new home isn’t in the cards right now, there are still things you can do to strengthen your buyer profile. Take this time to pay down existing debts and build your down payment savings. Not only will this free up more cash flow for a future mortgage payment, it can also get you a better interest rate when you’re ready to buy.
If you already have a quote you’re happy with, you should consider locking your mortgage rate, especially if your lender offers a float-down option. A float-down lets you take advantage of a better rate if the market drops during your lock period.
Rate locks protect you from increases while your loan is processed, and with the market forever bouncing around, that peace of mind can be worth it.
🤓 Nerdy Reminder: Rates can change daily, and even hourly.
If you are satisfied with the deal you have, feel free to make a commitment.
The rate you see advertised is a sample rate, typically for a borrower with perfect credit, a significant down payment, and paying for mortgage points. This may not align with every buyer’s situation. Your customized quote is influenced by market factors beyond your control and your individual financial profile. Even two people with similar credit scores may receive different rates based on their overall financial circumstances.
Possibly, but personalized rate quotes can fluctuate until you lock them in. Lenders adjust pricing multiple times a day in response to market fluctuations.
Taylor Getler is a home and mortgages writer for BW. Her work has been featured in outlets such as MarketWatch, Yahoo Finance, MSN, and Nasdaq. Taylor is passionate about financial literacy and assisting consumers in making informed decisions about their finances.
