Today’s Mortgage Rates & Trends – December 5, 2022: Rates move up

After plummeting more than a half percentage point Thursday, the 30-year mortgage average reclaimed about a tenth of a point to end the week. Rates are still, however, at their lowest point level in two and a half months.

Today’s National Mortgage Rate Averages

On Thursday, 30-year rates plunged more than 50 basis points to lower their average to 6.50%. But they reversed direction Friday to add back 11 points. Now at 6.61%, the flagship average is in its lowest range since mid-September, as well as sitting almost a full percentage point under October’s 20-year high average of 7.58%.

The 15-year average also rose Friday, but by a more modest seven basis points to land at 5.92%. That still leaves it 1.11% below its peak last month of 7.03%, which was its highest mark since 2007.

Jumbo 30-year rates meanwhile held steady for a second day Friday. Remaining at 5.90%, the Jumbo 30-year average is roughly a third of a percentage point below its 6.27% reading last month, which was the most expensive Jumbo 30-year mark in 12 years.

Refinancing rates moved somewhat similarly Friday vs. new purchase rates. The 30-year refi average climbed a bolder 18 basis points and the 15-year average ten points, while Jumbo 30-year refi rates remained flat for a second day. The cost to refinance with a fixed-rate loan is currently up to 56 basis points more expensive than new purchase rates.

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.