Mortgage interest rates bounced back up a little today, but don’t fret. This type of rebound is normal following a Fed announcement, as markets digest all the news. In addition to yesterday’s rate cut, there was also a press conference from Fed Chair Jerome Powell and a Summary of Economic Predictions (the central bankers’ bets for the future), so there’s a lot to chew through.
The average interest rate on a 30-year, fixed-rate mortgage jumped to 6.29% APR, according to rates provided to NerdWallet by Zillow. This is 17 basis points higher than yesterday and nine 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.
ICYMI: Yesterday, the Fed finally cut rates, even if it was only 25 basis points. It’s what markets had predicted, and mortgage rates had already taken a plunge.
What remains to be seen is whether this downward momentum in mortgage rates will continue or if it’ll be short-lived, which is what happened last September. According to the latest Summary of Economic Projections, the Fed’s governors are split on whether more rate cuts are needed this year.
By cutting rates, the Federal Reserve took the risk of inflation heating up in order to show some love to the labor market. If inflation holds or jobs data gets even worse, the Fed looks likely to trim another half a percentage point by the end of the year. But if inflation speeds up enough to cause alarm, the rates-are-already-just-right camp could win out.
Average mortgage rates, last 30 days
📉 When will mortgage rates drop?
Mortgage rates are constantly changing, since a major part of how rates are set depends on reactions to new inflation reports, job numbers, Fed meetings, global news… you name it. For example, even tiny changes in the bond market can shift mortgage pricing.
On the heels of the Fed’s Sept. 17 rate cut, the nerds are looking ahead to the Personal Consumption Expenditures Index (aka PCE) coming out Friday, Sept. 26. The central bankers made the call to cut rates to bolster the labor market rather than holding (or even raising) rates to slow inflation. PCE is a key measure of inflation, so it’ll provide another data point that could make the argument for additional rate cuts this year or for the Fed to go back 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 universal “right” time to start shopping — what matters is whether you can comfortably afford a mortgage now at today’s rates.
If the answer is yes, don’t get too hung up on whether you could be missing out on lower rates later; you can refinance down the road. Focus on getting preapproved, comparing lender offers, and understanding what monthly payment works for your budget.
NerdWallet’s affordability calculator can help you estimate your potential monthly payment. If a new home isn’t in the cards right now, there are still things you can do to strengthen your buyer profile. Take this time to pay down existing debts and build your down payment savings. Not only will this free up more cash flow for a future mortgage payment, it can also get you a better interest rate when you’re ready to buy.
🔒 Should I lock my rate?
If you already have a quote you’re happy with, you should consider locking your mortgage rate, especially if your lender offers a float-down option. A float-down lets you 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 forever bouncing around, that peace of mind can be worth it.
🤓 Nerdy Reminder: Rates can change daily, and even hourly. If you’re happy with the deal you have, it’s okay to commit.
🔁 Should I refinance?
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 may want to start considering a refi if your current rate is around 6.79% or higher.
Also consider your goals: Are you trying to lower your monthly payment, shorten your loan term or turn home equity into cash? For example, you might be more comfortable with paying a higher rate for a cash-out refinance than you would for a rate-and-term refinance, so long as the overall costs are lower than if you kept your original mortgage and added a HELOC or home equity loan.
If you’re looking for a lower rate, use NerdWallet’s refinance calculator to estimate savings and understand how long it would take to break even on the costs of refinancing.
🧐 Why is the rate I saw online different from the quote I got?
The rate you see advertised is a sample rate — usually for a borrower with perfect credit, making a big down payment, and paying for mortgage points. That won’t match every buyer’s circumstances.
In addition to market factors outside of your control, your customized quote depends on your:
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Location and property type
Even two people with similar credit scores might get different rates, depending on their overall financial profiles.
👀 If I apply now, can I get the rate I saw today?
Maybe — but even personalized rate quotes can change until you lock. That’s because lenders adjust pricing multiple times a day in response to market changes.
