Today's Mortgage Rates & Trends - March 27, 2023: Rates Drop

After a major drop Thursday, 30-year loan rates subtracted more on Friday, for a cumulative decline of more than a third of a point over two days. Almost every other mortgage average was notably down as well.

Today's National Mortgage Rate Averages

The 30-year mortgage average gave up another eight basis points Friday, for a two-day drop of 35 points. Now averaging 6.57%, 30-year rates are the cheapest they've been in more than six weeks, and wavering in a range between October's historic 20-year peak of 7.58% and early February's five-month low of 6.11%.

Rates on 15-year loans have also been dropping quickly, subtracting another 13 basis points Friday to land at 5.75%. The 15-year average is likewise at its lowest level since early February, and is registering between the 15-year high of 7.03% seen in October and the 5.23% low reading in the first days of February.

Once again, the Jumbo 30-year average was flat, holding at 5.77% for a third day. Jumbo 30-year rates are currently half a percentage cheaper than October's 12-year high average of 6.27%.

Friday's refinancing rates moved along similar lines as new purchase rates. The 30-year refi average shed a less dramatic five basis points, while the 15-year refi average plunged 20 points. Jumbo 30-year refi rates meanwhile marked time for a third day. The cost to refinance for 30 years is currently 35 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 May 3, 2023.

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.