Mortgage rates move daily, and whether they are down depends on what you compare them to

Mortgage rates are not down or up in any absolute sense—they are only down or up compared to a specific date or period. A rate of 6.5% today is "down" if it was 7% last month, but "up" if it was 6% last week. To know whether rates have actually dropped, you need to pick a timeframe that matters to your situation: the last week, the last month, the last year, or the rate you locked in on your own mortgage.

The most useful comparison for most people is the current rate versus the rate from one week ago or one month ago. That tells you whether the direction is moving in your favor right now. If you are shopping for a mortgage, you also want to know the rate environment when you started looking, so you can tell whether waiting has cost you or saved you money.

Mortgage rates are set by the bond market and the Federal Reserve's actions, not by individual lenders. All major lenders quote rates that are very close to each other on any given day. The difference between lenders is usually the fees they charge, not the rate itself.

Key Takeaways

  • Mortgage rates change daily based on bond market movement and Federal Reserve policy, so you need a specific date to compare against in order to know if rates are down.
  • Freddie Mac, Fannie Mae, and the Mortgage Bankers Association publish weekly rate surveys that show the 30-year fixed rate and other loan types going back months and years.
  • Your own lender's rate sheet shows you today's rate, but you should compare it to rates from the same day of the week one or two weeks ago to see real movement.
  • A rate drop of 0.25% to 0.5% is considered meaningful; smaller moves may not be worth refinancing or delaying a purchase decision.

Where to find current and historical mortgage rates

Freddie Mac Primary Mortgage Market Survey publishes rates every Thursday morning for the 30-year fixed, 15-year fixed, and 5/1 adjustable-rate mortgage. The survey has been running since 1971, so you can see rates going back decades. Go to freddiemac.com and look for "Primary Mortgage Market Survey" in the research section. The page shows this week's rate, last week's rate, and the rate from one year ago, so you can spot the direction immediately.

Fannie Mae publishes a similar weekly survey on their website. Both surveys measure rates for a borrower with a 20% down payment and good credit, so the rates assume a strong financial position. Your actual rate will be higher or lower depending on your credit score, down payment size, loan type, and the lender's fees.

Your own lender's rate sheet is the most direct source. Call or visit your bank, credit union, or mortgage broker and ask for today's rate on the loan type you want (30-year fixed, 15-year fixed, etc.). Write down the rate and the date. Then call back one week later and ask the same question. The difference tells you whether rates moved in your favor.

Mortgage news sites like Bankrate, LendingTree, and The Mortgage Reports update rates daily and show historical charts. These are useful for spotting trends, but remember that the rates shown are sample rates for a borrower with excellent credit and a large down payment. Your rate will differ.

How to interpret a rate drop

A drop of 0.25% (also written as 25 basis points) is noticeable but not dramatic. A drop of 0.5% or more is significant and usually worth paying attention to. A drop of 0.1% is real but small enough that other factors—your credit score, the lender's fees, your down payment—will matter more to your final payment.

If you are in the middle of shopping for a mortgage, a rate drop of 0.25% or more might be worth waiting a week or two to see if the trend continues. If rates have dropped 0.5% or more since you started shopping, it is worth getting new quotes from your lenders, because your monthly payment could drop by $100 or more on a $300,000 loan.

If you already have a mortgage and are considering refinancing, a rate drop of 0.5% or more is usually worth exploring. Refinancing costs money (typically $2,000 to $5,000 in closing costs), so a smaller drop may not save you enough to cover those costs before you sell or pay off the loan.

What causes mortgage rates to move

Mortgage rates follow the 10-year Treasury bond yield, which moves based on what investors expect inflation and economic growth to be. When inflation expectations rise, bond yields rise, and mortgage rates rise with them. When inflation expectations fall or the economy shows signs of weakness, bond yields fall, and mortgage rates fall.

The Federal Reserve also influences rates through its policy decisions. When the Fed raises its benchmark interest rate, mortgage rates tend to rise. When the Fed cuts rates or signals that cuts are coming, mortgage rates tend to fall. The Fed does not set mortgage rates directly, but its actions shape the bond market where mortgage rates are priced.

Economic data releases—jobs reports, inflation reports, consumer spending data—move rates because they change what investors expect the Fed to do next. A strong jobs report might push rates up because it suggests the economy is healthy and inflation may stay high. A weak jobs report might push rates down because it suggests the Fed may cut rates soon.

Comparing rates across different loan types

A 30-year fixed mortgage always carries a higher rate than a 15-year fixed mortgage, because the lender is taking on more risk over a longer period. On any given day, the difference is usually 0.3% to 0.6%. A 5/1 adjustable-rate mortgage (ARM) usually carries a lower starting rate than a 30-year fixed, because the rate is fixed for only five years and then adjusts. When you compare rates, make sure you are comparing the same loan type.

If rates have dropped, they have dropped across all loan types, but the drop may be larger for one type than another. A drop in long-term inflation expectations might push 30-year rates down more than 15-year rates, because the 30-year rate is more sensitive to long-term inflation. A change in Fed policy might affect all rates equally.

When a rate drop matters for your decision

If you are shopping for a mortgage right now, a rate drop of 0.25% or more is worth noting. Get new quotes from at least two lenders and compare the total cost, including fees. A lender with a slightly higher rate but lower fees might be cheaper overall than a lender with a lower rate but higher fees.

If you locked in a rate with a lender and rates have dropped since then, you may have the option to float down (lower your rate before closing) if your lender offers that. Not all lenders do, and some charge a fee for it. Ask your loan officer whether your loan has a float-down option and what the terms are.

If you are not shopping for a mortgage right now but are thinking about buying or refinancing in the next few months, tracking the weekly Freddie Mac survey gives you a sense of the direction rates are moving. If rates have dropped 0.5% or more in the last month, that is a signal that the environment is shifting in your favor. If rates have risen 0.5% or more, waiting may not help.

Frequently Asked Questions

How often do mortgage rates change?

Mortgage rates change daily, sometimes multiple times per day, based on bond market movement. Most lenders update their rate sheets once per day, usually in the morning. The most meaningful comparison is the rate from the same day of the week one or two weeks ago, since daily movement can be noisy.

If rates dropped, should I refinance my mortgage?

A rate drop of 0.5% or more is usually worth exploring, but you need to calculate whether the monthly savings will cover your refinancing costs before you sell or pay off the loan. If you plan to stay in the home for at least five more years, a 0.5% drop usually makes sense. If you might move or pay off the loan sooner, the math may not work.

Why is my lender's rate different from the rate I see online?

Online rates are usually sample rates for a borrower with excellent credit, a large down payment, and a straightforward loan. Your actual rate depends on your credit score, down payment size, loan type, property type, and the lender's fees. Call your lender and ask for a rate quote based on your specific situation.

Can I lock in a rate before closing?

Yes. When you lock in a rate, your lender guarantees that rate for a set period, usually 30 to 60 days. If rates drop after you lock, you are stuck with your locked rate. If rates rise, you keep your locked rate. Ask your lender about lock periods and any fees for locking in early.

What is the difference between APR and the interest rate?

The interest rate is the percentage you pay on the loan balance. The APR (annual percentage rate) includes the interest rate plus lender fees, spread over the life of the loan. When comparing rates between lenders, compare APRs, not just the interest rate, because the APR tells you the true cost.