Mortgage rates just fell to their lowest level in almost a year. Here are 3 questions to ask now.

Homebuyers sitting on the sidelines may want to reconsider their plans.

Mortgage interest rates declined again this week, following a fall to an 11-month low just last week. Now at an average of 6.35% for 30-year terms, rates are at their lowest level in nearly a year. Last September, for example, they briefly hovered around the 6% mark before rising in the months after. By January 2025, they were over 7%, according to historic FreddieMac data.

Now, however, following a slow but steady decline over the summer, rates could be low enough to justify action. Before getting started and to better time an application, it can help to understand the dynamics behind this shift as well as the ways to take advantage while it’s available. Below, we’ll break down three important questions worth asking (and answering) to better inform next steps.

Start by seeing how low your current mortgage rate offers are here.

3 mortgage interest rate questions to ask now

To better decide if now is the right time to act, buyers and owners considering a refinance should start by considering these three questions:

Why do mortgage interest rates keep falling?

Mortgage interest rates are largely declining thanks to two primary factors: An assumption that the Federal Reserve will reduce rates when the central bank meets again next week and a cooling 10-year Treasury yield. Combined, those two factors have driven rates toward the 6% mark and, potentially, can push them into the 5% range later this month.

Should you wait for rates to fall further?

This is always a hard question to answer and will largely depend on your interpretation of the rate climate. If you’re confident that rates will continue to cool and can afford to wait, then delaying action, even by a few weeks, could pay off in the form of lower mortgage rates. 

That said, there’s no guarantee here. And it’s worth remembering that after mortgage rates plunged to a two-year low in 2024, they soon rose right back to where they were. Delaying action in pursuit of an ideal, lower rate could, in turn, be risky. It may be worth shopping around now to see what’s available instead.

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Is now the time to refinance?

It may be. A lot depends on what interest rate your current mortgage is set to. If today’s mortgage refinance rates of 6% for a 15-year term and 6.72% for a 30-year mortgage are at least one percentage point lower than your current rate, it’s advisable to pursue. That said, there are some instances where even half a percentage point may justify a refi. 

Still, you’ll want to be strategic here. Mortgage refinancing does come with closing costs, and you’ll want to make sure that the expense is outweighed by the savings, even if it does take 12 to 18 months to break even.

The bottom line

A consistent drop in mortgage rates understandably entices both buyers and owners looking for a refinancing opportunity. By understanding the dynamics behind the decline and by closely considering the pros and cons of taking action now, both groups can better determine next steps. While evaluating your opportunities, however, it’s also smart to take an introspective look at your finances so that you’re truly prepared to make a move. And with rates here quickly evolving, that may be sooner than anticipated.