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Mortgage rates are up a little today as the war in Iran continues to rattle global markets.
The average interest rate on a 30-year, fixed-rate mortgage rose to 6.38% APR, according to rates provided to BW by Zillow. This is two basis points higher than yesterday and 31 basis points higher than a week ago. (See our chart below for more specifics.) A basis point is one one-hundredth of a percentage point.
You read that right: The 30-year is almost a third of a percentage point higher than where it was a week ago. Today’s little rise also puts BW’s current average just over half a percentage point (51 bp, to be exact) over where it was on the first business day of this month. I beat the “you can’t count on mortgage rates to keep going in the direction they’ve been going” drum pretty often, but dang, we didn’t need a turnaround this severe to prove that point. For more on why mortgage rates are rising so rapidly, keep reading after the chart.
Average mortgage rates, last 30 days
📉 When will mortgage rates drop?
Mortgage rates, on the other hand, are right there with the markets (and, let’s be honest, plenty of Americans). By “right there” I mean “low-key freaking out.” Mortgage rates had hit their lowest level since September 2022 at the end of last month, with that leftmost integer finally back at five. The war in Iran promptly reversed the downward movement we’d been seeing. Could an exit from the conflict cause mortgage rates to flip right back? It could, but we aren’t going to count on that.
Not to go all Carrie Bradshaw, but … and just like that, the U.S. was at war, mortgage rates jumped, and the highest gas price I spotted while running errands Sunday was $4.68 a gallon (I’m in Connecticut, if you think that sounds especially high or low compared to where you are).
The point is, just because mortgage rates are moving one way or the other doesn’t mean you can ever, and I mean EVER, count on them to keep going that way. We can only work with the information that’s available now.
Freddie Mac estimates that home buyers who compare quotes from two mortgage lenders could save as much as $600 annually, and comparing four or more lenders doubles that. Wherever mortgage rates are, don’t spend more on interest than you have to! Take that extra time to shop around.
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 6.88% or higher.
If you’re interested in securing a lower rate, BW’s refinance calculator can help you estimate potential savings and determine the time it would take to break even on the refinancing costs.
When it comes to shopping for a home, the right time varies for each individual. The most important factor is whether you can comfortably afford a mortgage at today’s rates. If the answer is yes, focus on getting preapproved, comparing lender offers, and understanding what monthly payment fits your budget. BW’s affordability calculator is a useful tool to estimate your potential monthly payment.
If you have a quote that you’re satisfied with, it might be a good idea to lock in your mortgage rate, especially if your lender offers a float-down option. Rate locks protect you from rate increases during the loan processing period, providing peace of mind amidst market fluctuations.
The rate you see advertised online is typically a sample rate for borrowers with excellent credit, a large down payment, and paying mortgage points. Your personalized quote will depend on various factors, including your financial profile and credit score.
Even if you apply now, the rate you saw today may change until you lock it in. Lenders adjust pricing multiple times a day in response to market changes.
It’s important to note that rates can change daily and hourly, so committing to a deal you’re happy with is perfectly fine. Remember that personalized rate quotes are subject to change until you lock them in.
Overall, whether you’re refinancing or shopping for a new home, understanding the factors that influence your mortgage rate and being prepared can help you make informed decisions. The instructions need to be made clearer.