Today's Mortgage Rates & Trends - December 22, 2022: Rates drop

30-year average backtracks after three-day climb, dropping back near 6.5%

MR1222

Mortgage rates retreated Wednesday, erasing much of their previous three-day climb. Shedding more than two-tenths of a point, the 30-year average is back to 6.5% territory.

National Averages of Lenders' Best Rates
Loan Type Purchase Refinance
30-Year Fixed 6.54% 6.97%
FHA 30-Year Fixed 6.65% 7.11%
Jumbo 30-Year Fixed 5.77% 5.78%
15-Year Fixed 5.92% 6.20%
5/6 ARM 6.87% 6.95%
National averages of the lowest rates offered by more than 200 of the country's top lenders, with a loan-to-value ratio (LTV) of 80%, an applicant with a FICO credit score of 700–760, and no mortgage points.
2022.12.16

Today's National Mortgage Rate Averages

After recently rising more than a third of a percentage point, the 30-year average gave up a bold 21 basis points Wednesday, dropping back to 6.54%. Averages on 30-year loans have bounced around between 6.40% and 6.75% since the start of December, after notching a 20-year high of 7.58% in October.

Rates on 15-year loans declined as well Wednesday, but by only six basis points to 5.92%. That leaves the average 1.11% cheaper than its 7.03% fall peak, which was its highest reading since 2007.

Jumbo 30-year rate movement split the difference, dropping a moderate 13 basis points Wednesday. Now back down to 5.77%, the current Jumbo 30-year average is half of a point below the average's October high of 6.27%, a level not previously breached in over 12 years.

Wednesday's refinancing rates for 30-year mortgages sank even more dramatically than new purchase rates, with the 30-year refi average plunging 33 basis points. The 15-year average meanwhile declined ten points and Jumbo 30-year refi rates, 12 points. The cost to refinance for 30 years is now 43 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.

The rates you see here generally won’t compare directly with teaser rates you see advertised online, since those rates are cherry-picked as the most attractive. They may involve paying points in advance, or they may be selected based on a hypothetical borrower with an ultra-high credit score or taking a smaller-than-typical loan given the value of the home.

National Averages of Lenders' Best Rates - New Purchase
New Purchase Daily Change
30-Year Fixed 6.54% -0.21
FHA 30-Year Fixed 6.65% -0.26
VA 30-Year Fixed 6.66% -0.30
Jumbo 30-Year Fixed 5.77% -0.13
20-Year Fixed 6.15% -0.15
15-Year Fixed 5.92% -0.06
Jumbo 15-Year Fixed 5.90% -0.12
10-Year Fixed 5.91% -0.06
10/6 ARM 6.98% -0.07
7/6 ARM 6.99% +0.04
Jumbo 7/6 ARM 5.61% -0.12
5/6 ARM 6.87% -0.06
Jumbo 5/6 ARM 5.56% -0.13
National Averages of Lenders' Best Rates - Refinance
Loan Type Refinance Daily Change
30-Year Fixed 6.97% -0.33
FHA 30-Year Fixed 7.11% -0.20
VA 30-Year Fixed 7.31% -0.19
Jumbo 30-Year Fixed 5.78% -0.12
20-Year Fixed 6.41% -0.24
15-Year Fixed 6.20% -0.10
Jumbo 15-Year Fixed 5.90% -0.12
10-Year Fixed 6.18% -0.08
10/6 ARM 7.04% -0.22
7/6 ARM 7.05% +0.09
Jumbo 7/6 ARM 5.69% -0.12
5/6 ARM 6.95% -0.08
Jumbo 5/6 ARM 5.57% -0.12

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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.