Mortgage Rates Today, Friday, October 9: Easing Down

Mortgage rates pulled back a bit this morning as inflation concerns subsided (for now, at least). Yesterday President Trump said the U.S. would not attack Iran before the midterm elections. That announcement got bond yields to chill out, likely in hopes that a few weeks of peace could drop oil prices.

The average interest rate on a 30-year, fixed-rate mortgage dropped to 7.37% APR, according to rates provided to NerdWallet by Zillow. This is 10 basis points lower than yesterday but 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.

For more on why inflation’s such a big deal for mortgage rates, keep reading below the graph.

P.S.: While the economy never sleeps, markets are closed on the weekends. The rates you see Friday are unlikely to change much (if at all) until Monday.

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.

Inflation has played a key role in driving up mortgage rates over the course of the Iran war. The conflict directly affects a key shipping route and oil production, and that indirectly affects the prices of all sorts of goods.

That kind of inflationary environment isn’t great for bond yields, and the interest rates on 30-year fixed rate mortgages are benchmarked to the yield on the 10-year Treasury note. So where bond yields go, mortgage rates go, too. (For more, here’s a much deeper dive on the bond market as it pertains to mortgage rates.)

Persistent inflation also spells trouble for the Federal Reserve. Price stability is half of the Fed’s dual mandate (maximum employment is the other half), and inflation has been running above the central bankers’ 2% target since 2021. With the conflict in Iran making already-bad inflation worse, the Fed shifted into rate hiking mode last month.

Raising the federal funds rate, which is the short-term borrowing rate the bankers set, is the Fed’s main tool for fighting inflation. Even though the Fed doesn’t set mortgage rates, changes to the funds rate ripple out through the entire economy. So a rate hike from the Federal Reserve  — or even markets having relatively certainty that a hike is coming — can put upward pressure on mortgage rates.

Recently, it’s looked less and less likely that the Fed will touch the funds rate at its meeting later this month. We’ll get another clue this coming week when September’s Consumer Price Index (CPI) is released on Wednesday. This will be our first look at inflation data for September, and it’s going to get plenty of attention.

August’s Personal Consumption Expenditures Price Index (PCE), a different measure of inflation which was released Sept. 30, came in below expectations. If September CPI also shows slowing, that bolsters the case that the Fed should stay in wait-and-see mode. On the other hand, if CPI comes in hot, that could counterbalance August’s PCE. That month debuted some methodology changes that were likely to depress the stats, so there’s already an alternative explanation for why those numbers came in low.

Even if the Fed takes a break from hiking the funds rate, expect mortgage rates to stay anchored above 7% for now. It would take a bigger shift, like a conclusive end to the Iran war, for rates to decisively drop.

That means if you’re home shopping now, build your budget around today’s mortgage rates — and treat any dip as a welcome bonus, not a guarantee. And if you’ve been hoping to refinance … well, patience is a virtue. 😬

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 7.87% or higher — but there just aren’t too many people for whom that’s true.

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 NerdWallet’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.

NerdWallet’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.