Mortgage Rates Today, Thursday, October 8: Slightly Higher

Mortgage rates are a little bit higher this morning, as the bond market mulls the Federal Reserve’s next actions.

The average interest rate on a 30-year, fixed-rate mortgage rose to 7.47% APR, according to rates provided to NerdWallet by Zillow. This is four basis points higher than yesterday and six 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.

Though the odds of a Fed rate hike later this month are only a hair higher as I’m writing this, they could tip a bit further. Yesterday, the Fed released minutes from its September meeting indicating that the central bankers expect an additional rate hike this year. Today, Fed governor Christopher Waller concluded some public remarks by noting that “if the economic data continue to come in as expected,” he anticipates the need for multiple rate hikes, timing TBD.

Even though the Federal Reserve doesn’t set mortgage rates, its actions influence them. Changes to the federal funds rate (the short-term rate the Fed actually adjusts) filter through the entire economy. As I foreshadowed above, lately the Fed’s been getting especially big reactions out of the bond market — and the bond market’s a key driver for mortgage rates.

For more on how that works, keep reading below the graph.

📈 What influences mortgage rates?

The bond market’s been in selloff mode for a while, and that’s pushing up yields. A bond’s yield is essentially the interest rate on the bond. Unlike stocks, which have varying returns, when you buy a bond you already know what it’s going to earn — that’s called the coupon rate, and it’s set when the bond is issued.

But bonds aren’t always bought straight from the issuer. When investors buy and sell bonds, the bonds aren’t sold at face value. Like any investment, the supply and demand on any given day determine the price.

That also determines the bond’s yield. The coupon rate is a percentage of the bond’s value at issuance. But the return an investor would actually get is going to vary depending on what they pay for that bond. The yield is what an investor would earn at the coupon rate divided by the bond’s current price. When bond prices are higher, yields go down; when bond prices drop, yields go up. (Picturing it as a fraction can help this make sense; the denominator changes but the numerator does not.)

🔁 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 could start considering a refi if your current rate is around 7.97% or higher — but there just aren’t too many people for whom that’s true.

🏡 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.

🔒 Should I lock my rate?

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.

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

In addition to market factors outside of your control, your customized quote depends on your:

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.

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