Today's Mortgage Rates & Trends - May 16, 2023: Rates Jump

Mortgage rates rose for every loan type Monday, adding double-digit basis points to every average. Rates on 30-year loans are again approaching 7%, while the jumbo 30-year rates has jumped back up to match its 12-year high.

Today's National Mortgage Rate Averages

The 30-year mortgage average climbed 11 basis points Monday, returning to territory just under the 7% threshold. Now at 6.96%, the flagship average has been vacillating in a narrow range below 7% for about four weeks, after breaking through on April 19 to 7.03%. Monday's average resides between a February five-month valley of 6.11% and an October 20-year peak of 7.58%.

Rates on 15-year loans, meanwhile, jumped more dramatically Monday, returning to 6% territory. Rising 21 basis points to 6.17%, the 15-year average continues to move in a range bounded by a February five-month low of 5.23% and October's 15-year high of 7.03%.

Monday's jumbo 30-year rates climbed another 12 basis points, after a 13-basis-point increase the day before. That's enough to take the average back up to the 12-year high of 6.27%. Averages for jumbo 15-year, 7/6 ARM, and 5/6 ARM loans were also up about an eighth of a percentage point Monday,

Most refinancing rate averages also moved by double digits Monday. The 30-year refi average jumped 15 basis points, the 15-year refi average climbed a more modest 11 basis points, and the jumbo 30-year refi average rose an eighth of a point. The gap between 30-year new purchase and refi rates was 40 basis points Thursday.

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 last 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 mortgage 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 in 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. The next scheduled meeting will conclude on June 14.

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.