Today's Mortgage Rates & Trends - March 13, 2023: Rates Drop

Rates on 30-year mortgages saw a major falloff Friday, ending the week under 7% and hitting their lowest level in three weeks. The averages for virtually every other mortgage type also sank by double digits.

Today's National Mortgage Rate Averages

After hitting a four-month high of 7.30% just over a week ago, 30-year mortgage rates have notably eased, punctuated by a major drop Friday. Declining a substantial 29 basis points to end the week, the 30-year average is down to 6.96%, a level not seen since Feb. 17. It's still significantly above the five-month low of 6.11% notched as recently as early February, while being 62 basis points cheaper than October's 20-year peak of 7.58%.

Rates on 15-year loans also dropped substantially, giving up 22 basis points to land at 6.25%. The 15-year average had climbed to 6.54% on March 2, a high since early November. Compared to the 15-year peak of 7.03% in October, the 15-year average is currently 78 basis points lower.

After holding at a four-month high for more than a week, Jumbo 30-year rates have finally moved, shedding an eighth of a point Friday. Now at 6.02%, the Jumbo 30-year average is still just a quarter point below October's 12-year high of 6.27%.

Friday's refinancing rates moved fairly similarly to new purchase rates, with the 30-year refi average declining 24 basis points, the 15-year average losing 25 points, and the Jumbo 30-year refi average subtracting 13 points. The cost to refinance for 30 years is currently 36 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.