Today's Mortgage Rates & Trends - January 20, 2023: Rates rise

Rates on 30-year mortgages moved back up Thursday, extending an up-and-down pattern that has seen the flagship average wavering below 6.5% for more than a week.

Today's National Mortgage Rate Averages

Thursday's 30-year mortgage average reversed much of the decline it registered the previous day, rising 12 basis points to 6.37%. Wednesday's 6.25% reading was the first time the average had dipped below 6.40% since mid-September. The average is currently 1.21% cheaper than October's 20-year high of 7.58%.

The 15-year average rose only slightly Thursday, tacking on a minor four basis points. Now reading 5.39%, the 15-year average is 1.64 percentage points below its October high of 7.03%, its most expensive level in 15 years.

Jumbo 30-year rates meanwhile remained flat Thursday, holding at 5.40%. Compared to its own October peak, the Jumbo 30-year average is now seven-eighths of a percentage point below that 12-year high of 6.27%.

Refinancing rates moved similarly to new purchase rates Thursday. The 30-year refi average gained 13 basis points while the 15-year and Jumbo 30-year refi averages both marched in place. The cost to refinance for 30 years is now 34 basis points pricier 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.