Today’s Mortgage Rates & Trends – January 10, 2022: Rates sink

After dropping more than a quarter percentage point Friday, 30-year mortgage rates again subtracted that much and more on Monday. The 30-year average now sits below 6.5% for the first time since December 15.

Today’s National Mortgage Rate Averages

After twice approaching 7% last week, 30-year mortgage rates have taken a two-day tumble, plummeting 55 basis points since Thursday. Monday’s drop of 28 basis points takes the average to 6.44%, its lowest level in almost four weeks. Compared to the 20-year high of 7.58% registered in October, the current average is down 1.14%.

Rates on 15-year loans declined by 16 basis points Monday, similarly dropping that average to its lowest level since mid-December. Now at 5.80%, the 15-year average is 1.23% cheaper than its fall peak of 7.03%, which was its highest mark in 15 years.

Jumbo 30-year rates meanwhile gave up a lesser eighth of a point for a second day, falling Monday to 5.64%. The Jumbo 30-year average is now about two-thirds of a percentage point below its 12-year high of 6.27%, also registered in October.

Refinancing rates moved even more dramatically downward Monday for 30-year and 15-year loans, with the 30-year refi average plunging 55 basis points and the 15-year refi average giving up 29 points. The Jumbo 30-year refi average subtracted just 13 points. The cost to refinance for 30 years is currently 29 basis points more expensive than 30-year new purchase loans.

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 in 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 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 will conclude February 1.

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.