Mortgage interest rates saw a slight uptick today, but there’s no need to panic. Such rebounds are typical following a Federal Reserve announcement, as markets take time to process the news. Alongside yesterday’s rate cut, Fed Chair Jerome Powell held a press conference and released a Summary of Economic Projections, providing plenty of information for analysts to digest.
According to data from Zillow, the average interest rate on a 30-year fixed-rate mortgage has risen to 6.29% APR. This marks a 17 basis point increase from yesterday and a 9 basis point rise compared to last week. (Refer to our chart below for more details.) For context, a basis point is one one-hundredth of a percentage point.
In case you missed it,
the Fed finally cut rates
by 25 basis points. This was in line with market expectations, and mortgage rates had already begun to decline.
The key question now is whether this downward trend in mortgage rates will persist or be short-lived, similar to what occurred last September. The latest Summary of Economic Projections indicates that Fed governors are divided on the necessity of further rate cuts this year.
By opting to cut rates, the Federal Reserve has taken on the risk of inflation rising in an effort to support the labor market. If inflation remains steady or job data worsens, another half percentage point cut could be on the horizon by year-end. Conversely, if inflation accelerates significantly, the camp advocating for maintaining current rates may prevail.
Average mortgage rates, last 30 days
📉 When will mortgage rates drop?
Mortgage rates are
constantly changing,
influenced by various factors including inflation reports, job statistics, Fed meetings, and global events. Even minor fluctuations in the bond market can impact mortgage pricing.
Following the
Fed’s Sept. 17 rate cut
, attention is now on the upcoming Personal Consumption Expenditures Index (PCE) report due on Friday, Sept. 26. The Fed’s decision to cut rates aims to support the labor market rather than tightening monetary policy to combat inflation.
PCE is a key measure of inflation
, and its results could influence future rate cut decisions or prompt a return to a more restrictive policy stance.
The Fed had to weigh risks to both sides of its dual mandate — maximum employment and price stability — in its Sept. 17 decision.
🏡 Should I start shopping for a home?
There is no one-size-fits-all answer to when to start shopping for a home. The key factor is whether you can comfortably afford a mortgage at the current rates.
If you can, don’t stress about potentially missing out on lower rates later; refinancing is always an option down the line. Focus on getting
preapproved
, comparing lender offers, and determining what monthly payment fits your budget.
NerdWallet’s
affordability calculator
can help you estimate your potential monthly payment. If buying a new home isn’t feasible right now, consider strengthening your buyer profile by paying down existing debts and saving for a larger down payment. This approach not only enhances your cash flow for future mortgage payments but may also secure you a better interest rate when you’re ready to buy.
🔒 Should I lock my rate?
If you have a quote that meets your expectations, consider
locking your mortgage rate
, especially if your lender offers a float-down option. This allows you to benefit from a lower rate if the market improves during your lock period.
Locking in your rate protects you from potential increases while your loan is processed, providing peace of mind in a fluctuating market.
🤓
Nerdy Reminder:
Rates can fluctuate daily, and even hourly. If you’re satisfied with your current offer, it’s perfectly fine to commit.
🔁 Should I refinance?
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 6.79% or higher.
Additionally, think about your goals: Are you aiming to lower your monthly payment, shorten your loan term, or access home equity? For instance, you might be willing to accept a higher rate for a
cash-out refinance
if it results in lower overall costs compared to keeping your original mortgage and adding a HELOC or home equity loan.
If you’re considering a lower rate, utilize NerdWallet’s
refinance calculator
to estimate potential savings and determine how long it would take to break even on refinancing costs.
🧐 Why is the rate I saw online different from the quote I got?
The rate you see advertised is typically a
sample rate
, usually applicable to borrowers with excellent credit, a substantial down payment, and who are willing to pay for
mortgage points
. This may not reflect every buyer’s situation.
In addition to external market factors, your personalized quote is influenced by:
-
Location and property type
Even
two 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?
Possibly — but even personalized rate quotes
can change until you lock in your rate.
Lenders frequently adjust pricing multiple times a day in response to market fluctuations.
