Today's Mortgage Rates & Trends - October 28, 2022: Rates keep lowering

Rates on 30-year loans continue to drop, with the flagship average sinking every day this week. But since it hit a 20-year high as recently as Friday, the 30-year average is still well above 7%.

Today's National Mortgage Rate Averages

For a fourth day, the 30-year average fell, subtracting another five basis points Thursday to rest at 7.14%. That lowers it 44 basis points from last week's peak of 7.58%, which was its most expensive level since early 2002.

Rates on 15-year mortgages dipped more boldly, shedding a full eighth of a percentage point Thursday. Now at 6.69%, the 15-year average is more than a third of point under last week's 15-year high of 7.03%.

For a second day in a row, the Jumbo 30-year average gave up an eighth of a percentage point Thursday, to land at 6.02%. The average's recent peak of 6.27% was the highest reading for Jumbo 30-year loans since 2010.

Thursday's refinancing rates moved similarly to new purchase loans, with the 30-year refi average dropping five basis points, the 15-year average sinking 16 points, and Jumbo 30-year refi rates down 12 points. The current cost to refinance with a fixed-rate loan is up to 41 basis points higher than new purchase rates.

After a historical rate plunge in August 2021, mortgage rates skyrocketed in the first half of this year. 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 this fall is dramatically outdoing the summer peak, with the 30-year average having reached 1.2 percentage points above June's 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 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 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 have kept the mortgage market relatively low for much of this year. In particular, the Federal Reserve has been buying billions of dollars of bonds in response to the pandemic's economic pressures, and it continues to do so. This bond-buying policy (and not the more publicized federal funds rate) is a major influencer on mortgage rates.

Since June, the Fed has been reducing its balance sheet. Identical sizable reductions occurred monthly through the summer and are being accelerated in September. This is on top of its plan to reduce new bond purchases by an increment every month, the so-called taper, which began in November.

The Fed's rate and policy committee, called the Federal Open Market Committee (FOMC), meets every six to eight weeks. Their next scheduled meeting takes place November 1-2.

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.