Today’s Mortgage Rates & Trends – September 26, 2022: Rates bolt higher

Mortgage rates are still on a tear, climbing more than eight-tenths of a percentage point in just two weeks. The steep ascent has raised the flagship 30-year average to nearly 7%.

Today’s National Mortgage Rate Averages

Rates on 30-year mortgages bolted still higher Friday, adding another 23 basis points to approach 7% for the first time since mid-2008. Now at 6.96%, the 30-year average has gained a dramatic 81 basis points over the last two weeks, and notched a new peak for the sixth time in nine market days.

Rates on 15-year loans also jumped Friday to establish a new 14-year high. Tacking on another 19 basis points to 6.43%, the 15-year average has climbed almost a full percentage point in two weeks.

After adding an eighth of a point Thursday to 5.77%, Jumbo 30-year rates marched in place Friday. Though not quite as historically elevated as the standard 30-year and 15-year averages, Jumbo 30-year rates are at their most expensive level since July 2010.

On the refinancing side, rates on 30-year refi loans climbed even more starkly Friday than new purchase rates, with the 30-year refi average adding almost a third of a percentage point. The 15-year refi average meanwhile gained 14 basis points while Jumbo 30-year refi rates remained flat. The cost to refinance with a fixed-rate loan is currently zero to 33 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 easily outdone that peak, with the current 30-year average sitting 58 basis points higher than June’s high-water mark.

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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.