Mortgage Rates Today, Tuesday, April 21: Higher Amid Uncertainty
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We’re seeing higher mortgage interest rates today as markets are right there with the rest of us trying to suss out what’s next in Iran. With both sides posturing ahead of possible negotiations, it’s hard to decide what a realistic best case scenario would be, let alone what’s most likely to happen.
The average interest rate on a 30-year, fixed-rate mortgage jumped to 6.18% APR, according to rates provided to NerdWallet by Zillow. This is 15 basis points higher than yesterday and nine 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.
Keep reading below the chart for more on why conflict in the Middle East has been driving mortgage rates recently.
Average mortgage rates, last 30 days
đ When will mortgage rates drop?
Mortgage rates track the bond market, specifically, the yield (basically, the interest rate) on 10-year Treasury notes. Here’s the super short version:
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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.
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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.
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Mortgage rates are determined by lenders adding a set amount â the “spread” â 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.
Inflation kinda ruins bonds’ safe harbor status because if money’s worth less, so are bonds’ returns â 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.
đ Should I refinance?
Refinancing might make sense if todayâs 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 6.68% or higher.
đĄ Should I start shopping for a home?
There is no universal ârightâ time to start shopping â what matters is whether you can comfortably afford a mortgage now at todayâs rates.
đ 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.
đ¤ Nerdy Reminder: Rates can change daily, and even hourly. If youâre happy with the deal you have, itâs okay to commit.
đ§ 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.
đ If I apply now, can I get the rate I saw today?
Maybe â but even personalized rate quotes can change until you lock. Thatâs because lenders adjust pricing multiple times a day in response to market changes.