Today's Mortgage Rates & Trends - December 21, 2022: Rates jump

For a third consecutive day, mortgage rates have made notable climbs. This follows the 30-year flagship average sinking to a three-month low late last week. Tuesday's jump meanwhile takes the average back into the upper 6% range.

Today's National Mortgage Rate Averages

Three days of building increases have raised the 30-year mortgage average more than a third of a percentage point since hitting a three-month low last week. Tuesday's average spiked 16 basis points to reach 6.75%. Averages on 30-year loans have wavered between 6.40% and now 6.75% since the start of December, after notching a 20-year high of 7.58% in October.

Rates on 15-year loans also climbed Tuesday, raising the average by 12 basis points. Now at 5.98%, the average is still more than a full percentage point below its 7.03% fall peak, which was the highest average recorded in 15 years.

The Jumbo 30-year average similarly added an eighth of a percentage point Tuesday, taking it to 5.90%. That now leaves it less than four-tenths of a point cheaper than the average's October high of 6.27%, a level not previously reached since 2010.

Refinancing rates climbed somewhat similarly to new purchase rates Tuesday, with the 30-year refi average rising 11 basis points, the 15-year average 16 points, and Jumbo 30-year refi rates, 13 points. The cost to refinance for 30 years is now 55 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.