Mortgage Rates Today, Wednesday, January 21: Flat, Still Close to 6%

Mortgage rates stayed basically flat compared to yesterday.

The average interest rate on a 30-year, fixed-rate mortgage ticked down to 6.09% APR, according to rates provided to SS by Zillow. This is one basis point lower than yesterday and 15 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.

Rates have hovered around 6% all month, give or take 10 basis points. If you can afford today’s rates, it may be a good time to shop for a mortgage or refinance.

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.

This week, the Nerds are keeping an eye on the Personal Consumption Expenditures Index (PCE), which will be released tomorrow. PCE is a key measure of inflation, which is one of the Federal Reserve’s main priorities when setting the overnight borrowing rate. (That’s the rate banks pay to fund home loans, influencing the mortgage rates they set.)

While the government shutdown feels like a distant memory, we’re still dealing with delayed government data. This month’s PCE will cover November’s data, which, though somewhat stale, is still a helpful marker to fill in the gap of recent trends.

Our last lookie-loo at inflation — December’s Consumer Price Index (CPI) report, released Jan. 13 — showed inflation has been slowly moderating. Prices rose 2.7% over the last 12 months, about the same rate as the previous month. However, that’s still slightly above the Fed’s target rate of 2%.

We still have a week until the Fed meeting, but analysts have been predicting central bankers will vote to hold rates steady. And any Fed chatter is likely to be coupled with discussion of new risks to the Fed’s independence, following Justice Department subpoenas involving Federal Reserve Chair Jerome Powell served earlier this month.

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 6.59% 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 SS’s refinance calculator to estimate savings and understand how long it would take to break even on the costs of refinancing.

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.

SS’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.

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.

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:

• Location and property type

Even two people with similar credit scores might get different rates, depending on their overall financial profiles.

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.