mortgage rates moved sharply higher on Thursday, October 29, with the average annual percentage rate for a 30-year fixed mortgage reaching 7.32%. The figure was 22 basis points above the previous day’s average and 24 basis points higher than a week earlier. One basis point equals one-hundredth of a percentage point.

The increase came a day after the Federal Reserve announced that it would leave the federal funds rate unchanged. Although the Fed does not set mortgage rates directly, its decisions influence borrowing costs. Mortgage pricing also responds to inflation data, employment figures, bond-market movements and global news.

Markets had already expected the Fed to hold rates steady, limiting the decision’s immediate effect on mortgage pricing. At his post-meeting press conference, Fed Chair Kevin Warsh said September’s rate increase was beginning to help reduce inflation toward the Fed’s 2% goal, while noting that policymakers had not reached firm conclusions and price stability had not yet been achieved.

The latest Personal Consumption Expenditures price index, the Fed’s preferred inflation measure, showed prices rose 3.6% year over year in September, compared with 3.4% in August. The data was released after the Fed’s meeting and therefore was not available for policymakers to consider in that decision.

The next Fed meeting is scheduled for December 8-9. Further rate movements before then could be influenced by upcoming economic data, including the October jobs report due Friday, November 6. Strong or improving employment could add support to the case for another federal funds rate increase, as it would indicate that the labor market might withstand higher borrowing costs.

For homeowners, refinancing may be worth considering when current rates are roughly 0.5 to 0.75 percentage points below the existing mortgage rate, provided the borrower expects to remain in the home long enough to recover closing costs. Based on the current average, the article suggests that borrowers with rates around 7.82% or higher could begin evaluating a refinance, although relatively few homeowners may meet that threshold.

Borrowers shopping for a home should focus on whether they can afford today’s monthly payment rather than trying to predict future rate movements. Comparing lender offers, seeking preapproval and reviewing the effect of different loan amounts can help establish a manageable budget.

Those who already have an acceptable mortgage quote may consider locking the rate, particularly if the lender offers a float-down option that allows the borrower to benefit from a lower rate during the lock period. Rates can change daily or even hourly, and personalized quotes may differ from advertised rates because lenders account for factors including credit score, debt-to-income ratio, employment history, down payment, loan type, location, property type and loan amount.

Sources: NerdWallet.