Today’s Mortgage Rates & Trends – December 14, 2022: Rates drop

Rates on 30-year mortgages gave up almost a quarter percentage point Tuesday, dropping the flagship average below 6.5% and to its lowest level since September 15.

Today’s National Mortgage Rate Averages

After bobbing around for more than a week in a range slightly above 6.5%, the 30-year mortgage average took a dive Tuesday. Sinking 24 basis points, the average is now at 6.42%, a level not seen in three months. It also drops the average 1.16% below October’s 20-year high of 7.58%.

The 15-year average also declined Tuesday, by 19 basis points. Landing at 5.73%, the current average is 1.30% under its peak last month of 7.03%, which was its highest mark since 2007.

After holding steady for two days, Jumbo 30-year rates dipped an eighth of a percentage point Tuesday to rest at 5.64%. Though not as far under its fall peak as the 30-year and 15-year averages, Jumbo 30-year rates are reading two-thirds of a percentage point cheaper than their 12-year high of 6.27% notched in mid-October.

Tuesday’s refinancing rates for 30-year and 15-year loans sank even more dramatically, with each refi average losing about 30 basis points, while the Jumbo 30-year refi average dipped a lesser eighth of a point. The cost to refinance for 30 years is currently 34 basis points more expensive than a new purchase 30-year loan.

After a historical rate plunge in August 2021, mortgage rates skyrocketed in the first half of this year. 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 this fall dramatically outdid the summer high, with late October’s 30-year average 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 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 last November, 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 takes place December 13-14.

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.