Mortgage Rates Today, Tuesday, October 21: Noticeably Lower

If you’ve been waiting for lower mortgage rates, today just might be your day.

The average interest rate on a 30-year, fixed-rate mortgage has dropped to 6.04% APR, according to rates provided to NerdWallet by Zillow. This marks a decrease of 10 basis points from yesterday and nine basis points from a week ago. (See our chart below for more specifics.) A basis point is one one-hundredth of a percentage point.

While a significant drop is certainly eye-catching, it’s essential to consider the overall trend of mortgage interest rates rather than focusing solely on today’s figures. If you’re pleased with the current rates, it may be time to get serious about your home search or start evaluating your refinancing options.

Mortgage rates are
constantly changing,
as a significant part of

how rates are set

depends on reactions to new inflation reports, job numbers, Fed meetings, global news… you name it. Even minor fluctuations in the bond market can influence mortgage pricing.

This week, the Nerds are closely monitoring any information regarding the economy. The

government shutdown

has delayed crucial data about employment and inflation. The September jobs report has already been missed. On Friday, the

consumer price index report

is set to be released — nine days late. Both reports are crucial for the

Federal Reserve

‘s decision-making process. Additionally, the National Association of Realtors will release the report on existing home sales for September on Thursday. While this report may not significantly impact financial markets, it provides insights into the housing market’s health.

As if that weren’t enough pressure, the Federal Reserve is meeting next week, and the central bankers are at a critical juncture, having just

cut rates in September

. For now, we will keep a close watch on the markets — as will the Fed.

There is no universal “right” time to start shopping — what matters is whether you can comfortably afford a mortgage at today’s rates.

If the answer is yes, don’t worry too much about potentially missing out on lower rates later; refinancing is always an option down the road. Focus on getting

preapproved

, comparing lender offers, and understanding what monthly payment fits your budget.

NerdWallet’s

affordability calculator

can assist you in estimating your potential monthly payment. If purchasing a new home isn’t feasible right now, consider strengthening your buyer profile. Use this time to pay down existing debts and build your down payment savings. This will not only improve your cash flow for a future mortgage payment but also enhance your chances of securing a better interest rate when you’re ready to buy.

If you already have a quote you’re satisfied with, consider

locking your mortgage rate

, especially if your lender offers a float-down option. This allows you to take advantage of a better rate if the market drops during your lock period.

Rate locks protect you from increases while your loan is processed, and with the market constantly fluctuating, that peace of mind can be invaluable.

Refinancing could be beneficial if today’s rates are at least 0.5 to 0.75 percentage points lower than your current rate, and if you plan to stay in your home long enough to recoup closing costs.

With current rates, you might want to consider refinancing if your existing rate is around 6.54% or higher.

Also, think about your goals: Are you looking to lower your monthly payment, shorten your loan term, or convert home equity into cash? For instance, you might be more comfortable with a higher rate for a

cash-out refinance

than you would for a rate-and-term refinance, provided the overall costs are lower than keeping your original mortgage and adding a HELOC or home equity loan.