Today’s Mortgage Rates & Trends – November 4, 2022: Rates jump

After a week of bobbing up and down, 30-year loan rates shot up Thursday, taking the flagship average back to within a tenth of a point of the 20-year high it hit less than two weeks ago.

Today’s National Mortgage Rate Averages

The 30-year average shook off its wavering of the last week and catapulted almost a full quarter point higher Thursday. Rising 24 basis points to 7.49%, the average is back to within nine basis points of the 7.58% peak it registered October 23, which was its highest level since early 2002.

The 15-year average climbed more moderately Thursday, adding nine basis points. Now at 6.79%, the 15-year average is about a quarter point under its recent peak, which at 7.03% was its highest level in 15 years.

Jumbo 30-year rates meanwhile added about an eighth of a percentage point, with the average rising to 6.15%. Jumbo 30-year rates recently hit their highest point since 2010, with an average of 6.27%.

Thursday’s refinancing rates moved somewhat similarly to new purchase rates, with the 30-year refi average shooting up a bold third of a percentage point and the 15-year and Jumbo 30-year refi averages adding an eighth of a point. The current cost to refinance with a fixed-rate loan is up to 28 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 is dramatically outdoing the summer peak, with the 30-year average having reached 1.2 percentage points above June’s high.

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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 have kept the mortgage market relatively low for much of this year. In particular, the Federal Reserve has been buying billions of dollars of bonds in response to the pandemic’s economic pressures, and it continues to do so. This bond-buying policy (and not the more publicized federal funds rate) is a major influencer on mortgage rates.

Since June, the Fed has been reducing its balance sheet. Identical sizable reductions occurred monthly through the summer and are being accelerated in September. This is on top of its plan to reduce new bond purchases by an increment every month, the so-called taper, which began in November.

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 November 1-2.

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.