Mortgage rates experienced a sharp uptick following reports that Iran is suspending negotiations. Even though discussions may persist in some capacity, the impact on rates is already evident. As the situation in Iran continues to evolve hour by hour, mortgage rates have moved in tandem with hopes for a peaceful resolution.
The average rate for a 30‑year fixed‑rate mortgage rose to 6.42% APR this morning, according to data supplied to NerdWallet by Zillow. This represents a 10‑basis‑point increase from yesterday and a 4‑basis‑point rise over the past week. (See the chart below for detailed figures.) A basis point equals one‑hundredth of a percentage point.
For observers tracking mortgage rates closely, such a sudden daily jump can be disheartening. However, examining the 30‑day chart below — particularly its y‑axis — reveals that rates have fluctuated within a relatively narrow band overall.
For a deeper analysis of how the Iran conflict is shaping mortgage rates and an overview of current domestic economic developments, continue reading below the chart.
Average mortgage rates, last 30 days
From the Nerds: Kate on Rates
What influences mortgage rates?
Mortgage rates are continuously changing, reflecting reactions to new inflation data, employment reports, Federal Reserve meetings, and global developments. Even modest shifts in the bond market can affect mortgage pricing.
The war in Iran, particularly its impact on U.S. bond markets, has become a key driver of mortgage rates. Rather than the specifics of the conflict abroad, it is the resulting effects on inflation that matter most. Disruptions to oil production and shipping have strained supply chains and pushed prices higher.
Last week’s Personal Consumption Expenditures (PCE) price index indicated that April inflation climbed to its highest level since May 2023. While rising prices affect everyone, some headlines highlighted concerns for Federal Reserve Chair Kevin Warsh.
However, rapid inflation typically requires the Federal Reserve to raise rates, not cut them. Higher borrowing costs are used to curb spending and dampen inflation. The Fed’s target is a 2% PCE; April’s reading was 3.8%.
This week brings extensive coverage of the Fed’s secondary focus — employment. Sustainable inflation alongside a robust labor market are viewed by central bankers as essential for a stable U.S. economy.
There are three reports incoming, each a bit different:
- Should I start shopping for a home?
There is no universal ‘right’ time to begin home shopping; the key factor is whether you can comfortably afford a mortgage at today’s rates.
If the answer is affirmative, avoid fixating on potential future rate declines; you can refinance later. Instead, focus on obtaining preapproval, comparing lender offers, and determining a monthly payment that fits your budget.
NerdWallet’s affordability calculator can assist in estimating your potential monthly payment. Even if purchasing a home is not feasible immediately, strengthening your buyer profile by reducing existing debt and accumulating a larger down payment can improve your future borrowing power and secure a better rate.
Should I lock my rate?
If you have a quote you’re satisfied with, consider locking your mortgage rate, especially if your lender provides a float‑down option. A float‑down enables you to benefit from a lower rate if market conditions improve during the lock period.
Rate locks shield you from rising rates during loan processing, and in a market that constantly fluctuates, this protection can provide valuable peace of mind.
Nerdy Reminder: Rates fluctuate daily, sometimes hourly. If you are comfortable with the offered terms, proceeding with a commitment is acceptable.
Why is the rate I saw online different from the quote I got?
The advertised rate is typically a sample rate, reflecting borrowers with excellent credit, substantial down payments, and mortgage‑point purchases; it may not reflect every applicant’s situation. Additionally, your personalized quote is influenced by factors beyond market conditions, such as your credit history, debt‑to‑income ratio, and loan‑to‑value ratio. Even two borrowers with comparable credit scores can receive different offers based on their broader financial profiles.
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.