Today's Mortgage Rates & Trends - March 20, 2023: Rates Edge Down

Rates on 30-year mortgages inched down again Friday, reducing the average to its lowest level since February 10. It's the third consecutive day of decreases. Rate movement across other mortgage types was mixed.

Today's National Mortgage Rate Averages

The 30-year mortgage average shed two basis points Friday. Though it's a minor change, it further subtracts after two previous days' decline, lowering the flagship average 16 basis points across the last three days. Now at 6.83%, the average has been bobbing between the five-month valley of 6.11% enjoyed in early February and October's historic 20-year peak of 7.58%.

Rates on 15-year loans dipped more substantially Friday. An eight basis point drop takes the 15-year average to 5.94%, the first time it's registered below 6% since February 9. The current 15-year average is 1.09 percentage points cheaper than the 15-year high of 7.03% seen in October, but still well above the 5.23% low point registered in early February.

Jumbo 30-year rates were unchanged Friday, marking time at 5.77% for a second day. It's the lowest Jumbo 30-year average since mid-February, and is a full half point under October's 12-year high of 6.27%.

Refinancing rates moved somewhat similarly to new purchase rates Friday. The 30-year refi average declined a slightly bolder seven basis points, while the 15-year refi average gave up a lesser five basis points. The Jumbo 30-year refi average was again flat. The cost to refinance for 30 years is currently 31 basis points more expensive than new purchase rates.

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 November 2021, 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.