Today might be the day you’ve been waiting for if you’re looking for lower mortgage rates.
According to rates provided by Zillow to BW, the average interest rate on a 30-year, fixed-rate mortgage has dropped to 6.02% APR. This is 11 basis points lower than yesterday and 16 basis points lower than a week ago. Keep in mind that a basis point is one one-hundredth of a percentage point. (Check out the chart below for more details.)
While a significant drop in rates is attention-grabbing, it’s important to consider the overall direction of mortgage interest rates rather than just the current day. However, if you’re pleased with what you see, it might be a good time to focus on your home search or start evaluating your refinancing options.
Average mortgage rates over the last 30 days
📉 When can we expect mortgage rates to drop?
Mortgage rates are constantly in flux due to various factors like reactions to new inflation reports, job numbers, Fed meetings, global news, and more. Even small changes in the bond market can impact mortgage pricing.
We typically look ahead to significant data releases, but due to the government shutdown, anticipated information like the CPI report has been delayed. The CPI is now expected to be released on Oct. 24. These reports are crucial for future projections as they offer insights into the Federal Reserve’s potential actions.
With the Federal Reserve’s upcoming meeting at the end of the month and their recent rate cut in September, we’ll be closely monitoring market trends, as will the Fed.
🏡 Is it time to start looking for a home?
There’s no one-size-fits-all answer to when you should start shopping for a home. What’s important is whether you can comfortably afford a mortgage at today’s rates.
If the answer is yes, don’t get too caught up in the possibility of lower rates in the future. You can always refinance later on. Focus on getting preapproved, comparing offers from lenders, and determining a monthly payment that aligns with your budget.
Use BW’s affordability calculator to estimate your potential monthly payment. If buying a new home isn’t feasible right now, take the time to reduce existing debts and increase your down payment savings. This not only improves your cash flow for future mortgage payments but can also lead to a better interest rate when you’re ready to purchase.
🔒 Should I lock in my rate?
If you’re satisfied with a quote you’ve received, it may be wise to consider locking in your mortgage rate, especially if your lender offers a float-down option. A float-down allows you to take advantage of a better rate if the market decreases during your lock period.
Rate locks safeguard you from rate increases while your loan is being processed. Given the ever-changing nature of the market, this peace of mind can be invaluable.
🤓 Nerdy Reminder: Rates can fluctuate daily, and even hourly. If you’re content with your current offer, it’s perfectly fine to commit.
🔁 Is refinancing the right choice?
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, provided you plan to stay in your home long enough to recoup closing costs.
Considering the current rates, it might be worth exploring a refinance if your existing rate is around 6.52% or higher.
Also, think about your objectives: Do you want to lower your monthly payment, shorten your loan term, or leverage your home equity for cash? For instance, you might be more inclined to accept a higher rate for a cash-out refinance if the overall costs are lower than retaining your original mortgage and adding a HELOC or home equity loan.
If you’re seeking a lower rate, utilize BW’s refinance calculator to estimate savings and determine the breakeven point for refinancing costs.
🧐 Why does the online rate differ from my quote?
The rate advertised online is typically a sample rate for a borrower with excellent credit, a substantial down payment, and payment for mortgage points. This may not align with every buyer’s situation.
In addition to external market factors, your customized quote takes into account your location, property type, and other individual financial details. Even 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, but even personalized rate quotes can fluctuate until you lock in. Lenders adjust pricing multiple times a day in response to market shifts.