Do mortgage rates change with the seasons?

Posted by  on Aug 16, 2012

Q: Is there a seasonal effect on interest rates - for example, do they tend to be higher or lower in the winter or summer? I'm trying to figure out what time of year the best mortgage rates might be available.

A: Interesting question - but given how low today's mortgage rates are, it may not pay to wait for the seasons to change before you buy or refinance.

To answer your question, ShopRate.com went to the Primary Mortgage Market Survey to look for data on 30-year conventional mortgage rates going back to the early 1970s. Interest rates have gone through rising and falling trends since then, but with more than 40 years' worth of data to look at, those long-term swings should have had a roughly equal effect across all times of year. This would leave seasonal factors as the main reason behind any differences for the long-term average in mortgage rates at different times of year.

Using the mid-season months of January, April, July, and October to represent winter, spring, summer, and fall, respectively, the following historical averages were calculated for each season:

Winter: 8.62 percent

Spring: 8.76 percent

8.73 percent

8.81 percent

Over the course of many years, it appears that mortgage rates have tended to peak in the fall and drop to their lowest levels in the winter. This makes sense when you consider that house-shopping activity tends to slow down in the coldest months.

Still, before you decide to wait for this winter to obtain your mortgage, consider these two caveats:

  1. The pattern of rates moving lower in the winter does not repeat itself like clockwork every year.

  2. Mortgage rates have already defied a number of historical norms in recent years.

If you get a mortgage quote that fits easily into your budget, you might regret waiting for rates to slide a little bit lower come the winter.

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