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Mortgage interest rates have been up and down in recent days, as the outlook in Iran remains uncertain. But this volatility has stayed within a relatively finite range. Zoom out just a little and those daily changes flatten out into a picture of stability.
The average interest rate on a 30-year, fixed-rate mortgage ticked down to 6.14% APR, according to rates provided to NerdWallet by Zillow. This is four basis points lower than yesterday but 10 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.
Mortgage rates’ movements over March and April have been driven by what’s going on in Iran, and how that’s been affecting U.S. markets. For more, keep reading below the chart.
Average mortgage rates, last 30 days
📉 When will mortgage rates drop?
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.
There’s not much going on this week in terms of new economic data, plus the Fed governors are in their blackout period (when they don’t make public comments) before their meeting next week (April 28-29). None of that’s likely to matter much to mortgage rates since one, the Fed’s not going to touch the federal funds rate and two, mortgage rates have been influenced by day-to-day developments in the Iran war wayyy more than the overall economic outlook lately.
Mortgage rates track the bond market, specifically, the yield (basically, the interest rate) on 10-year Treasury notes. Here’s the super short version:
Lenders sell mortgages on the secondary market where the loans are pooled and packaged into mortgage-backed securities (MBS), which are investments that pay a fixed rate of return.
MBS attract similar investors to bonds like Treasuries, which also pay a fixed rate of return. Thanks to refinancing and home sales, 10 years is a safe overall lifespan estimate for mortgages, hence the benchmark to the 10Y T-note. Because mortgages are a little riskier, MBS will always have a slightly higher return than 10-year Treasuries.
Mortgage rates are determined by lenders adding a set amount — the “spread” — to the yield, or return on, a 10Y T-note. The spread covers the lenders’ costs as well as the risk premium investors will demand.
I know, I know, the short version wasn’t that short. But I tried. The main thing to know is that mortgage rates follow the yield on the 10YT.
When the Iran war hit, the bond market freaked out. Usually when things get weird, investors are all about bonds because their predictable payouts feel safer than stocks. We didn’t see that with Iran though, because the threat to oil prices (as well as the costs of everything else shipped through the Strait of Hormuz) made inflation seem inevitable.
Inflation kinda ruins bonds’ safe harbor status because if money’s worth less, so are bonds’ returns — that set payout doesn’t go as far. Less demand for bonds means their prices fall, and as bonds’ prices drop, their yields rise relative to those price tags. That’s essentially why we saw mortgage rates rise so quickly in March.
We’ve seen mortgage rates ebb somewhat in April as the outlook in Iran improved, though a lot rides on any given day’s headline news. That’s not too bad if you’re a homeowner looking to refinance, since you can bide your time and get your documents ready to go as soon as you see a mortgage rate you like.
But if you’re hoping to buy or sell a home this spring, this sense that rates could turn on a headline (or a social media post) is unsettling. You may need to think through how much uncertainty you can weather, and focus on what’s under your control, like your down payment savings or who you choose to be your real estate agent.
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 6.64% or higher.
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.
🏡 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.
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.
🤓 Nerdy Reminder: Rates can change daily, and even hourly. If you’re happy with the deal you have, it’s okay to commit.
🧐 Why is the rate I saw online different from the quote I got?
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:
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.
About the author
Kate Wood is a lending expert and certified financial health counselor (CHFC) who joined NerdWallet in 2019. With an educational background in sociology, Kate feels strongly about issues like inequality in homeownership and higher education, and relishes any opportunity to demystify government programs. Prior to NerdWallet, she wrote about home remodeling, decor and maintenance for This Old House.
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