Mortgage Rates Today, Tuesday, September 15: A Little Lower, But …

Our daily average fell below 7% this morning, but make no mistake: Mortgage rates remain definitively higher. One look at the week-over-week difference is enough to tell you that.

The average interest rate on a 30-year, fixed-rate mortgage dropped to 6.97% APR, according to rates provided to NerdWallet by Zillow. This is 12 basis points lower than yesterday but 23 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 may be seeing this low because of intraday shifts in the bond market yesterday. Bond yields — including the yield on the 10-year Treasury, which mortgage rates track — change constantly. Many mortgage lenders, on the other hand, update their rates once or twice a day. That means when there’s a lot moving the markets, you’ll see more variation between lenders’ offered rates.

Two big takeaways here. One, just because our average is showing a sub-7% APR today does not mean rates are falling. Besides, it’s just barely under seven.

Two, when there’s more variation in mortgage lenders’ offered rates, comparing multiple lenders is even more critical. You’re the same borrower providing the same information, but Lender A might offer you a substantially lower rate than Lender B — and Lender C might be able to beat them both.

What sent mortgage rates so high this week? Keep reading below the chart for the details.

On Thursday, the Producer Price Index, which measures the costs of wholesale goods and services, came in pretty much as predicted. But the components driving those overall numbers pointed to potential trouble ahead, with rising costs for fuel and energy pushing other prices higher.

The numbers in Friday’s Consumer Price Index, measuring (you guessed it!) the prices you and I pay for goods and services, were almost precisely aligned with predictions. Except for one, the month-over-month core CPI. “Core” means everything but food and fuel, which are especially volatile. Removing those allows for a clearer look at how inflation’s trending.

Month-over-month core CPI was a tenth of a percentage point above predictions. Those 10 basis points were enough to decisively swing markets’ assessments of this week’s Fed meeting’s outcome. Last week, the odds of a 25-basis-point rate hike were just under 60%. This morning, they’re topping 92%, according to CME FedWatch.

Warsh has made it extremely clear that he doesn’t want the Fed’s decisions to hang on any individual bit of data. But markets definitely seem to think Friday’s CPI is the crucial piece of evidence that will firmly make the case for a quarter percentage point rate hike.

The Fed doesn’t set mortgage rates, but its changes to the federal funds rate essentially set the trend for borrowing costs. When it looks like the Federal Reserve is going to make a change, mortgage lenders tend to bake that into their rates. By the time the Fed’s decision is actually announced, mortgage rates have already moved.

Given how relatively last minute the consensus has developed around a rate hike, mortgage lenders are playing catch up. Even though mortgage rates have been rising since the Fed’s July meeting, it had been pretty gradual.

The one bit of good news is that if the Fed does indeed announce a rate hike tomorrow, it probably won’t push mortgage rates any higher. But of course, the bad news is that’s because they’re already higher.

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 7.44% or higher.

There is no universal “right” time to start shopping — what matters is whether you can comfortably afford a mortgage now at today’s rates.

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.

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.

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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