Today might be the day you’ve been waiting for if you’re looking for lower mortgage rates.
The average interest rate on a 30-year fixed-rate mortgage has dropped to 6.14% APR, as per rates provided to BW by Zillow. This is 14 basis points lower than Friday and five basis points lower than a week ago. (Check out the chart below for more details.) A basis point equals one one-hundredth of a percentage point.
While a significant drop is noticeable, it’s important to consider the overall direction of mortgage interest rates, not just the current situation. However, if you’re pleased with the current rates, it might be a good time to get serious about your home search or start evaluating refinancing options.
Average mortgage rates over the last 30 days
📉 When can we expect mortgage rates to drop?
Mortgage rates are constantly fluctuating, influenced by reactions to new inflation reports, job numbers, Fed meetings, global news, and more. Even minor changes in the bond market can impact mortgage pricing.
Typically, we look ahead for significant data releases. However, due to the government shutdown, anticipated information like the CPI report scheduled for Wednesday is on hold. The CPI is now expected to be published on Oct. 24, as furloughed employees return to prepare the report. We’ve also missed the jobs report that was supposed to be released on Oct. 3. These official numbers are crucial for future projections as they provide insights into the likely actions of the Federal Reserve; data plays a vital role in the Fed’s decision-making process.
Adding to the pressure, the Federal Reserve’s upcoming meeting at the end of this month is significant, especially after cutting rates in September. We’ll be closely monitoring the markets, as will the Fed.
🏡 Is it time to start house hunting?
There isn’t a one-size-fits-all answer as to when to start looking for a home — what’s important is whether you can comfortably afford a mortgage at today’s rates.
If the answer is yes, don’t fret too much about potentially missing out on lower rates in the future; you can always refinance later on. 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 potential monthly payment. If buying a new home isn’t on the horizon right now, there are still steps you can take to enhance your buyer profile. Use this time to reduce existing debts and build up your down payment savings. Not only will this increase your cash flow for future mortgage payments, but it can also help you secure a better interest rate when you’re ready to make a purchase.
🔒 Should I lock in my rate?
If you’re satisfied with the quote you’ve received, it may be wise to consider locking in your mortgage rate, especially if your lender offers a float-down option. A float-down allows you to take advantage of a better rate if the market drops during your lock period.
Rate locks protect you from rate increases while your loan is being processed, and with the market constantly changing, that peace of mind can be invaluable.
🤓 Nerdy Reminder: Rates can change daily, and even hourly. If you’re content with the deal you’ve secured, it’s perfectly fine to commit.
🔁 Should I consider refinancing?
Refinancing may be a good idea 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 recoup the closing costs).
With rates where they currently stand, it might be worth considering a refi if your current rate is around 6.64% 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 more inclined to accept a higher rate for a cash-out refinance than for a rate-and-term refinance, as long as the overall costs are lower than if you retained your original mortgage and added a HELOC or home equity loan.
If you’re aiming for a lower rate, utilize BW’s refinance calculator to estimate savings and grasp how long it would take to break even on the refinancing costs.
🧐 Why is the rate I saw online different from the quote I received?
The rate advertised online is a sample rate — typically for a borrower with excellent credit, making a substantial down payment, and paying for mortgage points. This may not align with every buyer’s circumstances.
Along with market factors beyond your control, your personalized quote is influenced by your:
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Location and property type
Even two individuals with similar credit scores might receive different rates based on their overall financial profiles.
👀 If I submit an application now, can I secure the rate I saw today?
Possibly — but even personalized rate quotes can change until you lock them in. Lenders adjust pricing multiple times a day in response to market fluctuations.