Today's Mortgage Rates & Trends - October 31, 2022: Rates waver

After dramatically dropping the first four days of last week, 30-year mortgage rates edged slightly higher Friday. Still, the 30-year average ended the week four-tenths of a point below the previous week, when the flagship average had hit its highest level since early 2002.

Today's National Mortgage Rate Averages

Rates on 30-year mortgages modestly reversed course Friday, climbing a minor four basis points after four consecutive days of decline. The week-ending average of 7.18% is down 40 basis points from last week's peak of 7.58%, which was its most expensive level in more than 20 years.

Rates on 15-year mortgages meanwhile dipped further Friday, giving up another seven basis points to land at 6.62%. Like 30-year rates, the 15-year average is currently down four-tenths of a percentage point from the prior week's peak, a reading of 7.03% that marked the average's highest level since 2007.

Jumbo 30-year rates held steady Friday at 6.02%, representing a decline of a quarter point across the week. The Jumbo 30-year average had hit a 12-year peak of 6.27% in mid-October.

Refinancing rates for 30-year and Jumbo 30-year loans moved identically to new purchase loans Friday, with the 30-year refi average dropping four basis points and the Jumbo 30-year refi average remaining flat. Refi rates for 15-year loans also held steady Friday. The current cost to refinance with a fixed-rate loan is up to 40 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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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.