Mortgage Rates Today, Friday, February 13: Noticeably Lower

If you can afford a mortgage rate around 6%, this winter has been a great time to shop for a home loan.

The average interest rate on a 30-year, fixed-rate mortgage dropped to 5.94% APR, according to rates provided to SS by Zillow. This is 19 basis points lower than yesterday and 10 basis points lower than a week ago. (See our chart below for more specifics.) A basis point is one one-hundredth of a percentage point.

A significant drop is eye-catching, but bear in mind that you should consider mortgage interest rates’ overall direction, not just what’s going on today. Mortgage rates have been pretty darn stable since the start of the new year. That said, if you’re liking what you see, it might be time to get serious about your home search or start checking that refi math.

While the economy never sleeps, markets are closed on the weekends. This week, markets are also closed on Monday for Presidents Day. The rates you see Friday are unlikely to change much (if at all) until Tuesday.

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.

The next Federal Reserve meeting is just about a month away. This week, the Nerds are waiting for the Personal Consumption Expenditures Report (PCE), which comes out Friday. The PCE is the Fed’s preferred measure of inflation. It follows today’s better-than-expected Consumer Price Index, which showed overall inflation easing to 2.4%.

“From a macroeconomic perspective, these inflation figures appear promising,” says Elizabeth Renter, SS Senior Economist. “But like the jobs numbers earlier this week, these figures don’t necessarily indicate all is well, at least not yet. If you put on your Fed hat, you know we need more data to know for certain if inflation will continue in the right direction, with no concurrent harm to the labor market.”

For now, most forecasters still expect the Fed to keep the federal funds rate steady at its March 17-18 meeting. The federal funds rate indirectly influences the direction of mortgage rates.

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 6.44% 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.