Today’s Mortgage Rates & Trends – August 19, 2022: Rates ease lower
Rates on most mortgage types moved moderately lower Thursday, with the 30-year average easing off the four-week high it hit Wednesday. The exception was Jumbo rates, with all Jumbo averages rising Thursday.
Today’s National Mortgage Rate Averages
After climbing almost three-tenths of a point Wednesday, 30-year mortgage rates dropped seven basis points Thursday, lowering the average to 5.77%. That puts the flagship indicator roughly six-tenths of a percentage point below the 14-year peak of 6.38% recorded in mid-June.
Rates on 15-year loans were also down Thursday, shedding four basis points to 5.12%. Like 30-year loans, 15-year rates reached their highest level since 2008 a little more than two months ago, when they touched 5.41%.
Meanwhile, rates on Jumbo mortgages moved in reverse Thursday, with every Jumbo average climbing higher. After almost a week of no movement, the Jumbo 30-year average moved up seven basis points to 5.02%, the first time it has breached the 5% mark in a month.
Refinancing rates for 30-year and 15-year loans moved in a similar pattern Thursday, with the 30-year refi average dropping six basis points and the 15-year average, seven points. But unlike Jumbo new purchase rates, the Jumbo 30-year refi average moved downward Thursday, by one basis point. The cost to refinance with a fixed-rate loan is currently zero to 49 points more expensive than a new purchase loan.
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 by an eye-popping 3.49 percentage points above its August 2021 low of 2.89%.
Meanwhile, mid-June saw the 15-year and Jumbo 30-year averages shoot 3.21 and 2.38 percentage points higher, respectively, than their summer 2021 valleys.
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.
On May 4, the Fed announced that it will begin reducing its balance sheet on June 1. Identical sizable reductions will occur in June, July, and August and then be doubled beginning in September. This will be on top of its existing move 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 September 20–21.
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.