Mortgage Rates Jump Back Up

 

Mortgage Rates Jump Back Up, with 15-Year Average Hitting New High. 

After Friday registering their biggest one-day drop in six months, 30-year mortgage rates started the week jumping back up—and again nearing the 8% mark. Movement was notably up for almost every other loan type as well, including an increase in 15-year rates that establishes a new historic high. 

The latest 30-year fixed-rate average is 7.98%. Because rates vary widely across lenders, it's always smart to shop around for your best mortgage option and compare rates regularly, no matter what type of loan you're shopping for. 

Today's Mortgage Rate Averages: New Purchase

Rates on 30-year new purchase mortgages bolted 17 basis points higher Monday, raising the average to 7.98%. The jump continues a dramatic pattern of the last few days, in which Thursday saw the flagship average rise to 8.10%, its highest average in 23 years. That was followed the next day by a plunge of 29 basis points, the average's largest single-day decline since March. 

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Freddie Mac released its latest weekly mortgage average Thursday and revealed that 30-year rates had hit a 23-year high. The Freddie Mac average is currently 7.31%, eight basis points higher than August's historic peak of 7.23%. 

Freddie Mac. “The 30-Year Fixed-Rate Mortgage Reaches its Highest Level in Over Twenty Years.”

Freddie Mac’s averages differ from the averages we publish here due to Freddie Mac calculating a weekly average that blends five previous days of rates, and which may include loans priced with discount points. In contrast, Investopedia’s averages indicate daily rate movement and only include zero-point loans. 

Rates on 15-year loans also rose Monday, pushing the average 13 basis points higher to 7.35%. That takes the 15-year average to its highest level since 2001. The previous high-water mark was 7.33%.

Jumbo 30-year rates also rose about an eighth of a point Monday, adding back the same 12 basis points they gave up Friday to return the average to 7.27%. Though daily jumbo averages are not available before 2009, it's estimated the current peak is the most expensive level for jumbo 30-year loans in at least 20 years.

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The only new purchase averages that didn't show a significant rise Monday were the 5/6 ARM and jumbo 5/6 ARM averages, both of which held relatively steady. 

Today's Mortgage Rate Averages: Refinancing

Monday's refinancing rates climbed roughly in line with the new purchase rates increases, though the 5/6 ARM refi average sank a notable 17 basis points. The 30-year refi average spiked 18 basis points, nudging the spread between 30-year refi and new purchase rates to 37 basis points. The 15-year refi average meanwhile added 13 basis points and the jumbo 30-year refi average, 12 points.

The day's biggest refi increases were for 20-year and 10/6 ARM loans, both of whose refi averages jumped 21 basis points higher. 

Lowest Mortgage Rates by State

The lowest mortgage rates available vary depending on the state where originations occur. Mortgage rates can be influenced by state-level variations in credit score, average mortgage loan type, and size, in addition to individual lenders' varying risk management strategies.

The states with the lowest 30-year new purchase averages Friday were Vermont, Delaware, Mississippi, North Dakota, Wisconsin, and Wyoming, while the states with the highest averages were Texas, Nevada, Arizona, Georgia, and Minnesota. 

What Causes Mortgage Rates to Rise or Fall?

Mortgage rates are determined by a complex interaction of macroeconomic and industry factors, such as:

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The level and direction of the bond market, especially 10-year Treasury yields

The Federal Reserve's current monetary policy, especially as it relates to bond buying and funding government-backed mortgages

Competition between mortgage lenders and across loan types

Because fluctuations can be caused by any number of these at once, it's generally difficult to attribute the change to any one factor.

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Macroeconomic factors kept the mortgage market relatively low for much of 2021. In particular, the Federal Reserve had been buying billions of dollars of bonds in response to the pandemic's economic pressures. This bond-buying policy is a major influencer of mortgage rates.

But starting in Nov. 2021, the Fed began tapering its bond purchases downward, making sizable reductions each month until reaching net-zero in March 2022. 

Since that time, the Fed has been aggressively raising the federal funds rate to fight decades-high inflation. While the fed funds rate can influence mortgage rates, it does not directly do so. In fact, the fed funds rate and mortgage rates can move in opposite directions. 

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However, given the historic speed and magnitude of the Fed's 2022 and 2023 rate increases—raising the benchmark rate a cumulative 5.25% over the last 18 months—even the indirect influence of the fed funds rate has resulted in an upward impact on mortgage rates over the last two years.

The Fed has two more rate-setting meetings scheduled in 2023, concluding Nov. 1 and Dec. 13. Though it's too soon to reliably predict the central bank's next move, Fed Chair Jerome Powell has made it clear that another rate increase is certainly possible at either meeting. 

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Methodology

The national averages cited above were calculated based on the lowest rate offered by more than 200 of the country's top lenders, assuming a loan-to-value ratio (LTV) of 80% and an applicant with a FICO credit score in the 700–760 range. The resulting rates are representative of what customers should expect to see when receiving actual quotes from lenders based on their qualifications, which may vary from advertised teaser rates.

For our map of the best state rates, the lowest rate currently offered by a surveyed lender in that state is listed, assuming the same parameters of an 80% LTV and a credit score between 700–760.