Today’s Mortgage Rates & Trends – May 10, 2023: Rates Continue Higher

Mortgage rates moved generally higher for a fourth consecutive day Tuesday, including a bump up for the 30-year rate average that almost returns it to 7% territory. The jumbo 30-year average meanwhile held at a 12-year peak.

Today’s National Mortgage Rate Averages

Rates on 30-year mortgages climbed again Tuesday, accumulating a 16-basis-point gain over the last four market days. The latest addition of six basis points takes the flagship average to 6.99%, its highest level in almost three weeks. That puts it well above the five-month low of 6.11% registered in February, but still considerably cheaper than October’s 20-year high of 7.58%.

Tuesday’s 15-year average moved almost identically, rising six basis points to extend a four-day ascent that’s taken the average to a three-week high. Now reading 6.22%, the 15-year average is about a percentage point above a February five-month low of 5.23%, but still well under the 15-year high of 7.03% reached in October.

After jumping Monday to match a 12-year high last seen in October, jumbo 30-year rates held steady Tuesday. The current average is 6.27%, and averages on other jumbo products also held firm Tuesday.

Refinancing averages moved much more dramatically for 30-year loans Tuesday, with the 30-year refi average spiking 20 basis points to 7.48%. The refi average for 15-year loans moved similarly to its new purchase counterpart, gaining four basis points, while the jumbo 30-year refi average marked time. The gap between 30-year new purchase and refi rates jumped to 49 basis points Tuesday.

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. The next scheduled meeting will conclude on June 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.