Mortgage Rates Today, Friday, June 12: A Little Lower

Mortgage rates edged lower to start the week, but the decline is too small to alter the financial calculus for most home buyers or owners considering a refinance.

The average interest rate on a 30-year, fixed-rate mortgage ticked down to 6.34% APR on Monday, according to rates provided to NerdWallet by Zillow ^[2]. That is five basis points lower than the previous day and 12 basis points lower than a week ago ^[2]. A separate reading from Friday had placed the average at 6.39% APR ^[1]. A basis point is one one-hundredth of a percentage point ^[2].

Rates eased as the U.S. and Iran reached an agreement to reopen the Strait of Hormuz and extend their ceasefire, buoying markets ^[2]. The development does not officially end the war or resolve questions about Iran's nuclear program, but the news was enough to push borrowing costs slightly lower ^[2].

Despite the day-to-day dip, mortgage rates have been elevated over the last several months ^[1]. The Federal Open Market Committee meets Tuesday and Wednesday in what will be the first meeting for newly-appointed chair Kevin Warsh ^[2]. Markets are currently predicting overwhelming odds that the FOMC will vote to hold overnight borrowing rates steady ^[2].

The Federal Reserve does not set mortgage rates directly, but its policy stance exerts major influence on their direction ^[2]. Supporting a faltering labor market is the central bank's key rationale for cutting rates, while raising the federal funds rate is its main tool for slowing inflation ^[1]. May economic data, the freshest available, has shown inflation intensifying and a job market that is improving, removing any immediate prospect of a cut ^[2].

For homeowners, refinancing might make sense if today's rates are at least 0.5 to 0.75 of a percentage point lower than their current rate and they plan to stay in the home long enough to break even on closing costs ^[1]. With rates where they are now, a refi could be worth considering for those with a current rate around 6.84% or higher ^[2]. Borrowers who cannot secure a lower rate today can refinance later if conditions improve ^[1].