Today's Mortgage Rates & Trends - February 28, 2023: Rates dip

After last week climbing to their highest level of this year, 30-year mortgage rates pulled back several basis points Monday, dipping back under the 7% threshold. Averages on most other loan types also moved moderately downward.

Today's National Mortgage Rate Averages

Rates on 30-year mortgages took their foot off the gas to start the week, with the flagship average shedding six basis points to land at 6.99%. The dip comes on the heels of notching a 2023 high of 7.05% on Friday. Though rates have now elevated seven-eighths of a point over the five-month low set early this month, the average is still almost six-tenths of a point cheaper than the 20-year peak of 7.58% notched in October.

Rates on 15-year loans declined more substantially Monday, giving up 12 basis points to lower to 6.37%. That's still near a three-month high, but like 30-year rates, the 15-year average is roughly six-tenths of a point under October's 15-year high of 7.03%.

Monday's Jumbo 30-year rates similarly dropped, declining 13 basis points. The average is back to 6.02% after its 6.15% reading last week marked its highest level since November 9. Compared to the October peak of 6.27%, a 12-year high, the current average is just a quarter of a point lower..

Monday's refinancing rates moved a little more substantially for 30-year loans, giving up nine basis points, while the Jumbo 30-year refi average dropped 13 basis points and 15-year refi rates were essentially flat. The cost to refinance for 30 years is currently 34 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 March 22.

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.