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We’re seeing higher 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 rose to 6.24% APR, according to rates provided to BW by Zillow. This is five basis points higher than yesterday but seven 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.
We also got some new inflation numbers this morning that showed that as bad as we think March was, February wasn’t so great, either. Keep reading below the chart for details.
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.
This morning we got the first of two major inflation reports coming out this week. We’ve got the Consumer Price Index (CPI) on tap for tomorrow, and today brought new numbers from the Personal Consumption Expenditures Price Index (PCE).
Well, they’re not that new. PCE may be the Fed’s preferred inflation measure, but since the Bureau of Economic Analysis is still playing catch-up from last fall’s government shutdown, today’s data is from February. Yep, the Before Times. The biggest yikes? Things were already not going well pre-Iran.
“Goods inflation quickened in February, driving overall price growth higher before the military conflict in Iran began,” says BW senior economist Elizabeth Renter. “While gas inflation is highly volatile, often bouncing between positive and negative, there’s little doubt we’ll continue to see it travel in the same direction — upwards — when we see March and April data.”
The Bureau of Labor Statistics is back on track and releasing the latest CPI numbers on time, so we don’t have to wait long for March inflation data. We’ll have the CPI in hand in less than 24 hours. Though CPI is less comprehensive than PCE, it’s what most people who aren’t Fed governors use to track inflation.
Any hopes for a spring rate cut from the Federal Reserve have already been extinguished. But if the CPI’s looking grim, forget spring — the odds of a Fed rate cut this year will dwindle.
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 could start considering a refi if your current rate is around 6.74% or higher.
If you’re interested in securing a lower rate, you can utilize BW’s refinance calculator to get an estimate of potential savings and determine how long it would take to recoup the costs of refinancing.
When it comes to deciding whether to start shopping for a home, the key factor is whether you can comfortably afford a mortgage at current rates. Don’t worry too much about potentially missing out on lower rates in the future, as you can always refinance later. Focus on getting preapproved, comparing lender offers, and figuring out a monthly payment that fits your budget.
If you’re considering buying a new home, BW’s affordability calculator can help you estimate your monthly payment. If purchasing a home isn’t feasible right now, take the time to reduce existing debts and build up your down payment savings. This will not only increase your cash flow for future mortgage payments but also improve your chances of securing a better interest rate when you’re ready to buy.
If you have received a mortgage rate quote that you’re satisfied with, it may be a good idea to lock in your rate, especially if your lender offers a float-down option. Rate locks protect you from potential increases while your loan is being processed, providing peace of mind in the ever-changing market.
It’s important to note that advertised rates are often sample rates for borrowers with excellent credit and specific financial circumstances. Your personalized rate quote will depend on factors such as your credit score, down payment, and financial profile.
While applying for a mortgage, keep in mind that rates can fluctuate until you lock in your rate. Lenders adjust pricing multiple times a day in response to market changes, so it’s essential to stay informed throughout the process.
About the author:
Kate Wood is a lending expert and certified financial health counselor (CHFC) who joined BW in 2019. With a background in sociology, Kate is passionate about issues like homeownership inequality and higher education. She enjoys demystifying government programs and previously wrote about home remodeling, decor, and maintenance for This Old House.