Mortgage Rates Today, Wednesday, January 28: A Sudden Drop

The Federal Reserve is expected to hold the funds rate steady at the conclusion of its meeting this afternoon. So why have mortgage rates abruptly taken a dive? Well for one, it’s not all about the Fed. But for two, it’s not obvious why rates are lower today.

The average interest rate on a 30-year, fixed-rate mortgage dropped to 5.94% APR, according to rates provided to NerdWallet by Zillow. This is 19 basis points lower than yesterday and 15 basis points lower than a week ago. (See our chart below for more specifics.) A basis point is one one-hundredth of a percentage point.

“They just are” isn’t a particularly satisfying explanation for why we’re seeing lower average rates today, but hey, we’ll take the lower rates. The caveat is that without a clear driver, this dip is likely to be short-lived, especially since we could get some serious tea at Fed Chair Jerome Powell’s press conference this afternoon — more on that below the graph.

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.

Today all eyes are on the Federal Reserve meeting, though not for the Fed’s decision. Markets have decided it’s a foregone conclusion that the Fed will vote to hold the federal funds rates steady — we’ll know for sure after 2 P.M. ET.

While the Fed’s actual decision is pretty much a given, the potential for drama at Chair Jerome Powell’s post-announcement press conference has Fed-watchers on the edges of their seats.

Fed press conferences are generally staid affairs. After opening remarks, reporters ask the chair questions, and Powell generally deflects anything that’s even mildly political. After Powell’s Jan. 11 video rebuke of a threatened criminal indictment, however, there’s a feeling that the gloves may be off — or at least that the Fed may be showing a little wrist. Powell firmly asserted that the investigation was a result of the central bankers setting interest rates “based on our best assessment of what will serve the public, rather than following the preferences of the President.”

Adding to the intrigue, there’s the potential announcement of a new Federal Reserve chair, and what that could mean for the Fed’s independence. Last Tuesday, Treasury Secretary Scott Bessent claimed that the president could reveal his pick for the next chair of the Federal Reserve sometime this week. If that’s announced, analysts will immediately begin trying to predict how the new chair might steer the Federal Open Market Committee after Powell’s term ends in May.

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 today, you could consider a refi if your current rate is around 6.44% 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.

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.

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.

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.