For those in the market for a mortgage with a rate around 6%, this winter has presented a great opportunity to secure a home loan. However, if you were hoping for even lower rates, today may not be your lucky day.
The average interest rate on a 30-year fixed-rate mortgage has risen to 6.13% APR, as reported by Zillow to BW. This marks a 19 basis point increase from yesterday and a 14 basis point increase from last week. It’s important to note that a basis point is equivalent to one one-hundredth of a percentage point.
The recent spike in rates can be attributed to yesterday’s better-than-expected jobs report, which caused some turbulence in the bond market, prompting a correction to accommodate the new data.
It’s worth keeping in mind that mortgage rates are constantly fluctuating, and tracking them on a daily basis can reveal a lot of volatility. Looking at a broader trend over at least a month can provide a clearer picture. Mortgage rates have remained relatively stable since the beginning of the year, so today’s increase shouldn’t be cause for too much concern.
Average mortgage rates, last 30 days
📉 When will mortgage rates drop?
Mortgage rates are constantly changing, as they are influenced by various factors such as inflation reports, job numbers, Fed meetings, and global news. Even minor fluctuations in the bond market can impact mortgage rates.
This week is significant for monitoring economic indicators, with reports on inflation, employment, and home sales being released.
Yesterday, the Bureau of Labor Statistics released the delayed jobs report, showing a robust labor market with 130,000 jobs added in January and a slight improvement in the unemployment rate to 4.3%. A strong job market reduces the likelihood of the Fed cutting interest rates to stimulate hiring.
Today, the National Association of Realtors will unveil the existing home sales report for January, shedding light on sales volume, pricing, and inventory, all of which impact buyers’ home purchasing prospects.
Tomorrow, the Bureau of Labor Statistics will release the Consumer Price Index (CPI), a key measure of inflation. When inflation exceeds the Fed’s target rate of 2%, it becomes less likely for central bankers to reduce interest rates. However, the preferred inflation measure for the Fed is the Personal Consumption Expenditures Report (PCE), which is scheduled for release on February 20.
🔁 Should I refinance?
Considering refinancing could be beneficial if today’s rates are at least 0.5 to 0.75 percentage points lower than your current rate, provided you intend to stay in your home long enough to recoup closing costs.
Given the current rate environment, it may be wise to explore refinancing if your existing rate is 6.63% or higher.
When contemplating a refinance, consider your objectives: Do you aim to reduce your monthly payments, shorten your loan term, or leverage your home equity for cash? Depending on your goals, you might find a cash-out refinance more appealing than a rate-and-term refinance, as long as the overall costs are lower than retaining your original mortgage and adding a HELOC or home equity loan.
For those seeking lower rates, BW’s refinance calculator can help estimate savings and determine the break-even point for refinancing costs.
Ultimately, the right time to start the refinancing process depends on your ability to afford a mortgage at today’s rates. If you can comfortably manage a mortgage at current rates, don’t fixate too much on potentially missing out on lower rates in the future; refinancing remains an option down the road. Focus on obtaining preapproval, comparing lender offers, and establishing a monthly payment that aligns with your financial plan.
BW’s affordability calculator can assist in estimating your potential monthly payment. If purchasing a new home isn’t currently feasible, focus on reducing existing debts and building your down payment savings. This proactive approach not only enhances your financial profile for future mortgage applications but can also result in a more favorable interest rate when you’re ready to buy.
🔒 Should I lock my rate?
If you have received a rate quote that meets your satisfaction, 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 capitalize on a lower rate if the market shifts during your rate lock period.
Rate locks shield you from rate hikes while your loan is in progress, offering peace of mind amidst the market’s constant fluctuations.
🤓 Nerdy Reminder: Rates are subject to daily and even hourly changes. If you are content with your current offer, committing to it is perfectly acceptable.
🧐 Why is the rate I viewed online different from the quote I received?
The advertised rate is a general rate typically applicable to borrowers with excellent credit, substantial down payments, and who are willing to pay for mortgage points. This may not align with every borrower’s specific situation.
In addition to external market factors, your personalized quote is influenced by factors such as:
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Location and property type
Even individuals with similar credit scores may receive different rates based on their overall financial profiles.
👀 If I apply now, can I get the rate I saw today?
It’s possible, but even personalized rate quotes can fluctuate until locked in. Lenders adjust pricing multiple times a day in response to market shifts, so securing a rate lock is essential for rate protection.