Interest rates for refinancing decrease consecutively for the fourth day in succession.
Lighter, Chatty Take on Mortgage Rates: September Dip, but Still High
Hey there! Have you been keeping an eye on the 30-year refinance rates? Well, after a rollercoaster month, they've dipped once again. Taking a 4 basis points dive on Monday, that 7.01% average is now lower than it was on April 11 when rates peaked at 7.31% – their highest since July 2024. But, let's be real, with rates as low as 6.71% back in early March, today's numbers are still on the high side.
Fun fact: The 30-year refi average is also a full percentage point above the two-year low of 6.01% set back in September.
And it's not just the 30-year we're talking about. Other refi loan types also saw a drop. The 15-year average dropped by 6 basis points, and the 20-year ticked down by 2 points. But, in a somewhat surprise move, Jumbo 30-year refi rates added 5 points after a dramatic decline the previous business day. Don't worry, we'll dive more into the reasons behind these fluctuations later.
⚠️ Pro Tip: The rates we're talking about here won't match the cherry-picked teaser rates you see online. Teaser rates are the best of the best, often based on a hypothetical borrower with top-tier credit and smaller-than-typical loans. Your actual rate will depend on a variety of factors, including your credit score, income, and more, so always shop around and compare regularly.
What causes these rates to rise and fall? You ask, we answer! Keep reading to learn more about the economic, financial, and personal factors impacting mortgage rates.
Warnya 'bout the Economics and Finances:
Mortgage rates are influenced by things like economic conditions, inflation, the Fed's policies, Treasury yields, and MBS demand. Strong economic growth, for example, can lead to higher rates, while an economic slowdown can result in lower ones. Rising inflation often pushes rates up because lenders seek higher returns to offset the loss in purchasing power.
The Fed's actions, such as raising or lowering interest rates, can significantly impact mortgage rates. Expectations about future Fed moves also come into play. The 10-year Treasury yield is a major benchmark for mortgage rates, and increased demand for MBS can lead to lower rates.
Personal Factors Matter Too:
Your credit score, down payment size, loan-to-value ratio, and debt-to-income ratio all play a role in determining your mortgage rate. A higher credit score generally equals better (lower) rates because it indicates lower risk for the lender. A larger down payment reduces the lender's risk, leading to better rates as well.
Other Factors Include:
The type of mortgage loan you choose (fixed-rate, adjustable-rate, FHA, VA, etc.), market trends, and government policies can all impact your mortgage rate.
Stay tuned for our in-depth analysis on what caused these latest fluctuations in refinance rates, and remember, the most important thing is shop around to find the best deal for you! 🏠🔏💰
References:
- Federal Reserve
- Zillow
- CNN Business
- NerdWallet
- Bankrate
- Investopedia
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- The 30-year refinance average is lower than it was on April 11, yet it still falls short of the two-year low, signifying that personal-finance enthusiasts might want to stay diligent in their rate comparisons.
- Despite the recent drop in 30-year refinance rates, many borrowers might still find it challenging to secure a rate as low as the 6.71% recorded in early March, highlighting the significance of maintaining an excellent credit score for better rates.
- While Jumbo 30-year refinance rates saw a surprising increase after a decline, smaller refi loan types such as the 15-year and 20-year still experienced reductions, pointing to the importance of considering multiple loan types when refinancing.
- To get a more accurate idea of the rates they might qualify for, borrowers should not only pay attention to the national average but also utilize APIs from finance platforms like Zillow, NerdWallet, Bankrate, and Investopedia to assess their personal situation.
