Today’s Mortgage Rates & Trends – September 23, 2022: Rates surge again

Investing News

Mortgage rates are back on a dramatic ascent, after retreating for just a single day. The 30-year average shot up more than two-tenths of a point Thursday, rising to its fifth 14-year high in just a week and a half.

National averages of the lowest rates offered by more than 200 of the country’s top lenders, with a loan-to-value ratio (LTV) of 80%, an applicant with a FICO credit score of 700–760, and no mortgage points.

Today’s National Mortgage Rate Averages

Rates on 30-year mortgages bolted higher again Thursday, climbing 21 basis points to reach a 6.73% average. That now represents a climb of more than half a percentage point over the last two weeks, which has raised the average to its highest level since fall 2008 for the fifth time in eight market days.

Rates on 15-year loans were also at their 14-year high, and on Thursday they surged still higher. Rising a bold 31 basis points to cross the 6% threshold, the 15-year average is now at 6.24%.

Jumbo 30-year rates also gained, after previously holding steady all week. Adding an eighth of a percentage point Thursday, the current Jumbo 30-year average is 5.77%, which is its most expensive level since July 2010.

Refinancing rates on 30-year loans were much flatter Thursday than new purchase rates, with the 30-year refi average inching up only five basis points. But the movement on other fixed-rate refi averages moved more dramatically, with 15-year refi rates climbing 28 points and Jumbo 30-year rates, 12 points. The cost to refinance with a fixed-rate loan is currently zero to 27 points more expensive than new purchase loans.

After a major rate dip last summer, mortgage rates skyrocketed in the first half of 2022, with the 30-year average peaking in mid-June almost 3.5 percentage points above its August 2021 low of 2.89%. But September’s spike has outdone that peak, with the current 30-year average sitting 35 basis points higher than June’s high-water mark.

The rates you see here generally won’t compare directly with teaser rates you see advertised online, since those rates are cherry-picked as the most attractive. They may involve paying points in advance, or they may be selected based on a hypothetical borrower with an ultra-high credit score or taking a smaller-than-typical loan given the value of the home.

Calculate monthly payments for different loan scenarios with our Mortgage Calculator.

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.

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