Today's Mortgage Rates & Trends - May 25, 2023: Rates Falter

The average mortgage rate on 30-year home loans fell for the first time on Wednesday after eight days of growth in a row. This drop comes after the rate reached a 6-month high on Tuesday.

The 15-year average also fell, ending its eight-day growth streak as a well. However, the difference between its increase yesterday and today's drop isn't as stark as it was for 30-year home loans. Fixed rates for refinance loans were also slightly down.

Today's National Mortgage Rate Averages

Rates on 30-year fixed mortgages fell on Wednesday, with a 9 basis points decrease ending the continuous growth it experienced over the past eight business days. At 7.36%, this is still the second-highest rate it's reached since mid-November; however, this drop bumped the rate below the 6-month high of 7.45% it hit yesterday. Since the 30-year rate began to climb on May 12, it's increased by 54 basis points. Despite Wednesday's drop, rates on 30-year home loans continue to move in a range well above the five-month low of 6.11% enjoyed in February but are now just a little over a fifth of a percentage point below the 20-year high of 7.58% seen in October.

Wednesday's average 15-year rate also moved lower, though just by 2 basis points. Now at 6.44%, the 15-year mortgage rate average continues to move in a space between a February valley of 5.23% and an October 15-year peak of 7.03%. The 30-year jumbo mortgage rate didn't change for the eighth day in a row, still remaining at 6.27%. Likewise, rates for the jumbo 15-year, the jumbo 7/6 ARM, and the jumbo 5/6 ARM all experienced no change from the day prior.

Refinancing rates experienced largely modest movements in both directions, with the 30-year average refinance rate falling by 4 basis points to a rate of 7.65%, and the 15-year rate losing just 1 basis point from the day prior, bringing the rate down to 6.62%. The gap between the 30-year new purchase and refinance mortgage rate averages is now 29 basis points. The jumbo 30-year refi average neither rose nor fell, holding steady alongside its jumbo 30-year new purchase rate of 6.27% yet again.

After a historical rate plunge in August 2021, mortgage rates skyrocketed in the first half of 2022. The 30-year average shot to 6.38% by June 2022, which was more than double the rate of 2.89% seen just 10 months earlier. Then an even more dramatic surge in September and October 2022 outdid the June peak, with the 30-year average ultimately climbing another 1.2 percentage points and recording a 20-year high.

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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 type, 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—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.