Today's Mortgage Rates & Trends - December 20, 2022: Rates edge higher

Mortgage rates climbed for a second day Monday, lifting the 30-year average almost two-tenths of a percentage point above the three-month low it registered last week.

Today's National Mortgage Rate Averages

After dropping Thursday to 6.40%, two days of increases have returned 30-year mortgage rates back above 6.5%. Monday's gain of eight basis points has taken the flagship average to 6.59%. Averages on 30-year loans have wavered between 6.40% and 6.66% since the start of December, and are currently about one percentage point below the 20-year high of 7.58% reached in October.

Monday's 15-year average also climbed, but by a modest four basis points to 5.86%. The current average is still 1.17% cheaper than its 7.03% fall peak, which was the highest average recorded in 15 years.

Jumbo 30-year rates added a full eighth of a percentage point Monday, after holding steady for three days. Now up to 5.77%, the Jumbo 30-year average is half of a percentage point cheaper than its October high of 6.27%, a level not previously reached since 2010.

Monday's 30-year refinancing rates climbed more dramatically, with the 30-year refi average jumping another 19 basis points following a 28-point climb Friday. The 15-year refi average meanwhile gained eight points and the Jumbo 30-year refi average, 12 points. The cost to refinance for 30 years is now 60 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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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.