Today might finally be the day you’ve been waiting for if you’re hoping for lower mortgage rates.
The average interest rate on a 30-year fixed-rate mortgage has dropped to 6.32% APR, as reported by Zillow to BW. This is 10 basis points lower than yesterday and 27 basis points lower than a week ago. (Check out our chart below for more details.) A basis point represents one one-hundredth of a percentage point.
While a significant drop is certainly attention-grabbing, it’s essential to consider the overall trend of mortgage interest rates rather than just the current fluctuations. However, if you’re pleased with the current rates, it might be a good time to start your home search or explore refinancing options.
Average mortgage rates over the last 30 days
📉 When can we expect mortgage rates to decrease?
Mortgage rates are constantly in flux, influenced by various factors such as new inflation reports, job numbers, Federal Reserve meetings, global news, and more. Even minor shifts in the bond market can impact mortgage pricing.
This week, the Nerds are keeping an eye on upcoming inflation data scheduled for release on September 11. The disappointing jobs report from last week has raised expectations for a Fed rate cut next week. However, if the inflation numbers on Thursday indicate a spike, the Federal Reserve will need to decide whether prioritizing rate cuts to support the job market or raising rates to combat inflation is more crucial at the moment.
🏡 Is it time to start house hunting?
There isn’t a universal “perfect” time to begin your home search — what truly matters is whether you can comfortably afford a mortgage at the current rates.
If the answer is yes, don’t get too caught up on the possibility of 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 aligns with your budget.
BW’s affordability calculator can assist you in estimating your potential monthly payment. If buying a new home isn’t feasible right now, there are still steps you can take to enhance your buyer profile. Use this time to pay off existing debts and increase your down payment savings. Not only will this free up more funds 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’ve received a quote that satisfies you, you may want to consider locking in your mortgage rate, particularly if your lender offers a float-down option. A float-down feature allows you to take advantage of a better rate if the market experiences a drop during your lock period.
Rate locks shield you from rate hikes while your loan is in the processing stage, and given the market’s constant fluctuations, that peace of mind can be invaluable.
🤓 Nerdy Reminder: Rates can fluctuate daily, even hourly. If you’re content with the deal you’ve been offered, it’s perfectly fine to commit.
🔁 Is refinancing a good option?
Refinancing could be a smart move 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).
Given the current rate environment, it might be worth considering a refinance if your existing rate is around 6.82% or higher.
Also, factor in your objectives: Are you looking to reduce your monthly payments, shorten your loan term, or convert home equity into cash? For instance, you might be 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 retained your original mortgage and added a HELOC or home equity loan.
If you’re seeking a lower rate, BW’s refinance calculator can help you estimate potential savings and determine how long it would take to break even on refinancing costs.
🧐 Why does the rate I saw online differ from the quote I received?
The advertised rate you see is typically a sample rate 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 circumstances.
Apart from market factors beyond your control, your personalized quote is influenced by factors such as your location, property type, and overall financial profile. Even individuals with similar credit scores can receive different rates based on their financial profiles.
👀 Can I secure the rate I saw today if I apply now?
It’s possible, but even personalized rate quotes can fluctuate until you lock in. Lenders adjust pricing multiple times a day in response to market changes, so the rate you saw earlier may not be guaranteed until you’ve completed the locking process.