A chance for homeowners to explore mortgage refinancing has emerged. If you’ve been anticipating a drop in mortgage rates to consider refinancing, today could be the day.
The average interest rate on a 30-year fixed-rate mortgage has decreased to 6.42% APR, based on data provided to BW by Zillow. This represents a 14 basis points reduction from Friday and a 24 basis points decrease from a week ago. (Refer to our chart below for more detailed information.) A basis point is equivalent to one one-hundredth of a percentage point.
While a significant drop is noteworthy, it is essential to consider the overall trend of mortgage interest rates, not just the current fluctuations. However, if you find the current rates appealing, it may be a good time to focus on your home search or start evaluating the potential savings with a refinance calculator.
Average mortgage rates over the last 30 days
📉 When can we expect mortgage rates to decrease?
Mortgage rates are subject to constant fluctuations, as they are influenced by responses to new inflation reports, job data, Federal Reserve meetings, global events, and other factors. Even minor changes in the bond market can impact mortgage rates.
This week, experts are anticipating new inflation data to be released on September 11. Following a disappointing jobs report last week, there is speculation about a potential rate cut by the Federal Reserve next week. However, if Thursday’s data shows higher-than-expected inflation, the Fed will have to decide between lowering rates to support the job market or raising rates to combat inflation.
🏡 Is it a good time to start house hunting?
There isn’t a one-size-fits-all answer to when you should start looking for a home — what’s crucial is whether you can comfortably afford a mortgage at today’s rates.
If the answer is yes, don’t stress too much about potentially missing out on lower rates in the future; you can always refinance later on. Focus on getting preapproved, comparing offers from different lenders, and determining a monthly payment that fits within your budget.
BW’s affordability calculator can help you estimate your potential monthly payment. If buying a new home isn’t feasible at the moment, there are steps you can take to strengthen your position as a buyer. Use this time to pay off existing debts and increase your down payment savings. Not only will this improve your cash flow for future mortgage payments, but it can also lead to a better interest rate when you’re ready to make a purchase.
🔒 Should I lock in my rate?
If you have received a quote that you’re satisfied with, it’s advisable to consider locking in your mortgage rate, especially if your lender offers a float-down option. A float-down feature allows you to take advantage of a lower rate if the market shifts during your lock-in period.
Rate locks shield you from rate increases while your loan is being processed, and given the constant fluctuations in the market, this peace of mind can be invaluable.
🤓 Nerdy Tip: Mortgage rates can fluctuate daily, and even hourly. If you’re content with the offer you have, it’s perfectly fine to commit to it.
🔁 Is refinancing the right move?
Refinancing could be a smart decision if today’s rates are at least 0.5 to 0.75 basis points lower than your current rate (and if you plan to remain in your home long enough to recoup the closing costs).
With the current rate environment, it may be worth considering refinancing if your existing rate is around 6.92% or higher.
Additionally, take into account your objectives: Are you looking to reduce your monthly payments, shorten your loan term, or leverage your home equity for cash? For instance, you might be more willing 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 were to retain your original mortgage and add a HELOC or home equity loan.
If you’re aiming for a lower rate, BW’s refinance calculator can help you estimate potential savings and understand the time it would take to recoup the refinancing costs.
🧐 Why is the rate I viewed online different from the quote I received?
The advertised rate you see 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 specific situation.
In addition to external market factors beyond your control, your personalized quote is influenced by factors such as:
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Location and type of property
Even two individuals with similar credit scores could receive different rates based on their overall financial profiles.
👀 Can I secure the rate I saw today if I apply now?
Possibly — however, even personalized rate quotes can change until you lock in. Lenders adjust pricing multiple times a day in response to market shifts.