Today’s Mortgage Rates & Trends – September 29, 2022: Rates back down

Investing News

The astonishing ascent of 30-year mortgage rates over the past two weeks finally hit reverse Wednesday, with the flagship average knocking off more than four-tenths of point to lower the average back below 7%, though barely.

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

From September 11 to September 27, rates on 30-year mortgages bolted repeatedly higher, ultimately rising a whopping 1.27 percentage points over the short 16-day period. The pattern finally broke yesterday, with Wednesday’s 30-year average plummeting a dramatic 43 basis points to land at 6.99%.

Because only weekly readings, not daily averages, are available earlier than 2008, it’s difficult to nail down the historical perspective of how high the 30-year average rose Tuesday. By some estimates, we just saw the highest daily average since 2002, while Freddie Mac (which uses a much different methodology for tracking rates) today reported that its weekly average is now at its highest point since July 2008.

Meanwhile, the 15-year average gave up a more modest 16 basis points Wednesday, dropping to 6.50%. Like 30-year loans, 15-year rates had climbed more than a full percentage point over the previous two weeks to notch their highest mark since at least 2008.

Jumbo 30-year rates similarly declined Wednesday, shedding 12 basis points to average 5.90%. Though not quite as historically elevated as the standard 30-year and 15-year averages, Jumbo 30-year rates had reached their most expensive point since 2010 on Tuesday.

Refi rates were more mixed Wednesday than new purchase rates. The 30-year and Jumbo 30-year refi averages moved down a similar 36 and 13 basis points, respectively. But rates on 15-year refi loans actually gained, tacking on seven basis points. The cost to refinance with a fixed-rate loan is currently zero to 41 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 the September surge easily outdid this summer’s peak, with the 30-year average reaching 104 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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