Today's Mortgage Rates & Trends - January 9, 2023: Rates seesaw

Rates on 30-year mortgages plunged more than a quarter point Friday, erasing a spike by the same amount Friday. The 30-year average now sits in the upper-mid 6% range.

Today's National Mortgage Rate Averages

Thursday and Friday saw a one-for-one seesaw in 30-year mortgage rates. The average surged 27 basis points Thursday and then subtracted those same 27 points Friday. Ending the week at 6.72%, the average is currently 86 points cheaper than October's 20-year high of 7.58%.

Rates on 15-year loans also plunged Friday, by 22 basis points to bring the average back below 6%. Now sitting at 5.96%, the 15-year average is more than a full percentage point lower than its fall peak of 7.03%, which was its highest level since 2007.

The Jumbo 30-year average meanwhile dropped a lesser eighth of a point, falling to 5.77%. Friday's average is now a half percentage point below its October high of 6.27%, a level not previously seen in 12 years.

Friday's refinancing rates also moved downward but not quite as dramatically as new purchase rates. The 30-year refi average gave up 17 basis points, the 15-year average declined 11 points, and the Jumbo 30-year refi average lost 12 points. The cost to refinance for 30 years is currently 56 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.