Today's Mortgage Rates & Trends - December 29, 2022: Rates surge

With another double-digit gain Wednesday, 30-year mortgage rates have spiked more than a half percentage point over the past four market days. The 30-year average is now back above 7% for the first time since November 30.

Today's National Mortgage Rate Averages

The 30-year average climbed another 12 basis points Wednesday, combining with three previous daily increases for a cumulative 53 basis point gain since last Thursday. Now up to 7.07%, the flagship average returns to 7% territory for the first time this month. Still, the current average is well below October's 20-year high of 7.58%.

In contrast, rates on 15-year loans bumped only slightly higher for a second day. Adding a single basis point Wednesday, the 15-year average inched up to 6.17%, which is still 0.86% lower than the fall peak of 7.03%, its highest reading since 2007.

Like standard 30-year rates, the Jumbo 30-year average added an eighth of a percentage point Wednesday, rising to 6.02%. That leaves the Jumbo average only a quarter point below its October high of 6.27%, a level not seen in more than 12 years.

Refinancing rates for 30-year loans were almost flat Wednesday, edging up a since basis point, while 15-year refi rates rose a minor three basis points. The Jumbo 30-year refi average meanwhile tacked on an eighth of a point. The cost to refinance for 30 years is now 35 basis points more expensive than new purchase 30-year loans.

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 in 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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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.