Today's Mortgage Rates & Trends - May 18, 2023: Rates Mostly Flat

Mortgage rates showed little movement Wednesday, with more than half of the averages flat for the day. Both the 30-year and 5/6 ARM averages, however, inched up just enough to cross the 7% threshold.

Today's National Mortgage Rate Averages

The 30-year mortgage average rose for a fourth day Wednesday, for a cumulative gain of 18 basis points. Though yesterday's increase was for a minor two basis points, it was enough to push the flagship average back above 7% for the first time in four weeks. Rates on 30-year loans continue to reside in a range under the 20-year high of 7.58% seen in October but above a five-month low of 6.11% registered in February.

Rates on 15-year mortgages were flat Wednesday, with the average holding at 6.25%. Fifteen-year rates are also at their highest level in a month. Like 30-year rates, the 15-year average continues to move in a space between a February valley of 5.23% and an October peak of 7.03%.

Rate averages for every jumbo loan type marched in place Wednesday. Holding at 6.27%, the current jumbo 30-year average matches its highest point in nearly 13 years, though it has revisited that level several times this month.

Refinancing rates moved mostly in step with their new purchase counterparts. The 30-year refi average crept three basis points higher, the 15-year refi average subtracted a point, and all jumbo refi averages were flat for a second day. The gap between 30-year new purchase and refi rates was 42 basis points Tuesday.

After a historical rate plunge in August 2021, mortgage rates skyrocketed in the first half of 2022. Indeed, the 30-year average's 2022 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 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.