Today's Mortgage Rates & Trends - February 1, 2023: Rates edge down

Rates on 30-year mortgages dipped Tuesday, while the averages for other loan types were mixed. The 30-year average has now wavered within a range slightly above and below 6.4% for a week.

Today's National Mortgage Rate Averages

The 30-year mortgage average inched downward Tuesday, shedding six basis points to land at 6.37%. For a week now, the flagship average has yo-yoed around the 6.4% mark, and since January 10, it's registered between 6.25% and 6.51%. Thirty-year rates are currently 1.21% lower on average than the 20-year peak of 7.58% they reached in October.

The 15-year average meanwhile moved the other way. Rising a full eighth of a percentage point Tuesday, the 15-year average is up to 5.60%. Still, that leaves it more than 1.4% below its October high of 7.03%, its most expensive average in 15 years.

Jumbo 30-year rates split the difference Tuesday, holding steady at 5.52%. The Jumbo 30-year average is currently three-quarters of a point cheaper than its 12-year high of 6.27%, also registered in October.

Tuesday's refinancing rates moved similarly to new purchase rates. The 30-year refi average declined ten basis points, while the 15-year refi average climbed an eighth of a point and Jumbo 30-year refi rates remained flat. The cost to refinance for 30 years is currently 15 basis points more expensive than 30-year new purchase 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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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.