Mortgage Rates Edge Up Slightly in Latest Update

Mortgage rates moved higher, though only by a small amount.

The average rate on a 30-year fixed mortgage increased to 7.14% APR, according to Zillow data provided to NerdWallet. That is four basis points above the previous day and six basis points higher than a week earlier. A basis point equals one-hundredth of a percentage point.

The increase follows the Federal Reserve’s decision to leave the federal funds rate unchanged. While the Fed does not set mortgage rates directly, its policy decisions can influence them. Mortgage rates jumped last month when markets began anticipating a possible increase in the federal funds rate.

With the next Fed meeting still ahead, any changes in the near term are more likely to be driven by other forces, including upcoming employment data.

Average mortgage rates over the past 30 days

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🤓 Kate on Rates

📈 What moves mortgage rates?

Mortgage rates change constantly because they respond to new inflation readings, labor market reports, Fed meetings, world events and other market developments. Even small shifts in the bond market can alter mortgage pricing.

Markets had already expected the Fed to keep the federal funds rate steady, so that decision was not a major factor for lenders as they priced loans.

In the post-meeting news conference, Fed Chair Kevin Warsh said the September rate increase was “starting to work some” toward the central bank’s 2% inflation goal, though officials did not yet have firm conclusions. He also said monetary policy had not fully restored price stability, but was “working on it.”

That suggests another rate hike could be possible at the December meeting if inflation continues to rise.

The September personal consumption expenditures index, the Fed’s preferred inflation measure, declined, but the report arrived too late to affect the latest policy decision.

Inflation came in at 3.6% year over year, up from 3.4% in the prior month.

Because the September rate increase happened partway through the month, the next inflation report will provide a clearer view of its impact. The next PCE release is scheduled for late November.

Attention will also turn to the next jobs report. If employment remains steady or improves, that could strengthen the case for another rate increase, since it would suggest the labor market can withstand tighter policy.

The Fed has a dual mandate: keeping inflation under control while supporting maximum employment. If officials can reduce inflation without causing major harm to hiring, they may be more willing to act.

» Learn more: How the Fed affects mortgage rates

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🔁 Should I refinance?

Refinancing can make sense if current rates are at least 0.5 to 0.75 percentage points below your existing rate, and if you plan to stay in the home long enough to recover closing costs.

At current levels, a refinance may be worth considering if your existing mortgage rate is around 7.64% or higher, though relatively few borrowers fall into that range.

Your goals also matter. You may be refinancing to reduce your monthly payment, shorten the term of the loan, or tap home equity for cash. In some cases, a cash-out refinance may be preferable to keeping the original mortgage and adding a home equity line of credit or home equity loan, as long as the overall costs are lower.

If you are looking for a better rate, use NerdWallet’s refinance calculator to estimate potential savings and see how long it could take to break even.

🏡 Should I start shopping for a home?

There is no single best time to begin house hunting. The key question is whether you can comfortably afford a mortgage at current rates.

If you can, don’t worry too much about possibly missing lower rates later. You can always refinance in the future. Focus instead on getting preapproved, comparing offers from lenders and determining a monthly payment that fits your budget.

NerdWallet’s affordability calculator can help estimate a monthly payment. If buying a home is not realistic right now, there are still steps you can take to strengthen your future application. Paying down debt and building savings for a down payment can improve cash flow and may help you qualify for a better rate later.

» Is now a good time to buy? See NerdWallet’s analysis

🔒 Should I lock my rate?

If you already have a quote you like, it may be wise to lock in your mortgage rate, especially if the lender offers a float-down option. That feature can let you benefit if rates fall during the lock period.

Rate locks shield you from increases while the loan is being processed, and that protection can be valuable in a volatile market.

🤓 Nerdy Reminder: Rates can change daily, and even hourly. If you’re happy with the offer, it can make sense to commit.

» Stay informed: Check out NerdWallet's mortgage news hub for all our latest coverage.

🧐 Why is the rate I saw online different from the quote I got?

The rate advertised online is usually a sample rate, often based on a borrower with excellent credit, a large down payment and mortgage points. It will not match every borrower’s situation.

In addition to market conditions beyond your control, your personalized quote depends on factors such as:

• Credit score

• Debt-to-income ratio

• Employment history

• Down payment

• Type of mortgage

• Location and property type

• Loan amount

Even borrowers with similar credit scores can receive different rates depending on their broader financial profile.

» Get the best rate for you: How to get the best mortgage rate

👀 If I apply now, can I get the rate I saw today?

Possibly, but even personalized quotes can change before you lock. Lenders may adjust pricing several times a day in response to market movements.

» Doing your research? Compare NerdWallet’s best mortgage lenders