Today's Mortgage Rates & Trends - January 12, 2023: Rates dip

Rates on 30-year new purchase loans moved moderately lower Wednesday, while 30-year refinancing rates plunged to their lowest level in about four weeks.

Today's National Mortgage Rate Averages

The 30-year mortgage average is seesawing just above and below 6.5% this week. Wednesday saw the flagship average shed 13 basis points to dip to 6.47%. Compared to the 20-year high of 7.58%, the current average is 1.11% cheaper than that October peak.

The 15-year average declined six basis points Wednesday, taking the average to its lowest point in about a month. Now averaging 5.77%, 15-year rates are 1.26% cheaper than their fall peak of 7.03%, which was a 15-year high average.

For their part, Jumbo 30-year rates marked time for a third day Wednesday. Holding at 5.64%, the Jumbo 30-year average is now almost two-thirds of a percentage point below its 12-year high of 6.27%, also registered in October.

Refinancing rates sank more dramatically than new purchase rates for 30-year and 15-year loans Wednesday. The 30-year refi average dropped an eye-popping 48 basis points and the 15-year refi average, 37 points. The Jumbo 30-year refi average was meanwhile flat for a second day. The cost to refinance for 30 years is now just 28 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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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.