Mortgage Rates Today, Thursday, October 30: Higher Post Fed

Mortgage rates jumped today, not because the Federal Reserve cut rates — that was as predicted and where mortgage rates had been headed — but because of what happened after the Fed’s announcement.

The average interest rate on a 30-year, fixed-rate mortgage rose to 6.08% APR, according to rates provided to SS by Zillow. This is 16 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.

We say it all the time: The Federal Reserve doesn’t set mortgage rates. But mortgage rates were headed down pre-Fed, and since the Fed cut rates, why didn’t they keep the party going?

Federal Reserve chair Jerome Powell’s post-announcement press conference had the effect of a needle scratching a record and abruptly stopping the music. Powell repeatedly emphasized that a December rate cut — something markets had been counting on — is “not a foregone conclusion.” Despite two dissenting votes, Powell characterized yesterday’s cut as something the bankers agreed on. When it comes to the Dec. 9-10 meeting though, suddenly all bets are off.

Introducing that much uncertainty quickly sobered up markets and mortgage rates. There’s still, of course, a healthy chance that the Fed will cut in December. But we may see mortgage rates rise for a while, at least until there’s economic data suggesting the central bankers’ next move.

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.

If it weren’t for the government shutdown, we’d be eagerly awaiting the Personal Consumption Expenditures Index (PCE) due to come out tomorrow. PCE is the Federal Reserve’s preferred measure of inflation, and those numbers would certainly influence the central bankers’ decisionmaking in December. But even if the government miraculously reopened today, that data’s release would be delayed.

Assuming the shutdown continues next week, we won’t be expecting any federally-issued data. That means the spotlight will likely be on the ADP employment report coming out Nov. 5. This private-sector data took center stage in October, serving as the best proxy for the jobs report in the wake of the then just-beginning shutdown. If it looks like the labor market is weakening, that would strengthen the case for a December rate cut from the Fed.

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 could start considering a refi if your current rate is around 6.58% 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.