Today’s Mortgage Rates & Trends – April 6, 2023: Rates Sink

Mortgage rates saw a major decline almost across the board Wednesday, with 11 of the 13 major averages registering double-digit drops. The flagship 30-year average gave up enough to hit its cheapest level in more than two months.

Today’s National Mortgage Rate Averages

After more than a week of mostly minor fluctuations, the 30-year mortgage average sank by a bold 16 basis points Wednesday, lowering to 6.47%. It’s the first time since February 3 that the average has dipped below 6.5%. Rates are now more than a full percentage point cheaper than October’s 20-year high average of 7.58%, while sitting not far above February’s five-month low of 6.11%.

Rates on 15-year loans saw a similar drop Wednesday, subtracting 17 basis points to rest at 5.73%. Like 30-year rates, the 15-year reading is at its lowest level since February 3, and is closer to the five-month low of 5.23% seen in February than to the 15-year high of 7.03% recorded in October.

After marching in place for four days, jumbo 30-year rates finally showed some movement. Declining an eighth of a point to 5.64%, it’s the lowest jumbo 30-year average in more than two weeks, and is now almost two-thirds of a percentage point under October’s 12-year-high average of 6.27%.

Wednesday’s refinancing rates moved similarly to new purchase rates, with the 30-year refi average shedding 12 basis points, the 15-year refi average losing 19 points, and jumbo 30-year refi rates dipping 13 points. The cost to refinance for 30 years is currently 39 basis points more expensive than 30-year new purchase rates.

After a historical rate plunge in August 2021, mortgage rates skyrocketed in the first half of 2022. Indeed, the 30-year average’s mid-June peak of 6.38% was almost 3.5 percentage points above its summer 2021 trough of 2.89%. But the surge last September and October dramatically outdid the summer high, with the 30-year average ultimately reaching 1.2 percentage points higher than the June peak.

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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 term, and size, in addition to individual lenders’ varying risk management strategies.

What Causes Mortgage Rates to Rise or Fall?

Mortgage rates are determined by a complex interaction of macroeconomic and industry factors, such as the level and direction of the bond market, including 10-year Treasury yields; the Federal Reserve’s current monetary policy, especially as it relates to funding government-backed mortgages; and 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.

Macroeconomic factors had 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 (and not the more publicized federal funds rate) is a major influencer on mortgage rates.

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

The Fed’s rate and policy committee, called the Federal Open Market Committee (FOMC), meets every six to eight weeks. Their next scheduled meeting will conclude on May 3, 2023.

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.