Today’s Mortgage Rates & Trends – September 28, 2022: Rates soar

The end is not yet in sight for mortgage rates’ dramatic September ascent. For a fourth consecutive day, the 30-year average has risen by two-tenths to a quarter percentage point, raising the flagship average an astonishing 1.27 percentage points in just over two weeks and pushing it into the mid-7% range.

Today’s National Mortgage Rate Averages

Rates on 30-year mortgages continued their eye-popping pattern Tuesday, adding a fourth day of increases exceeding two-tenths of a percentage point. Yesterday’s rise of 26 basis points takes the average to 7.42%, which is estimated to be its highest point since 2002 (only weekly averages, not daily readings, are available that far back).

The 15-year average also rose Tuesday, gaining a tenth of a percentage point to land at 6.66%. Like 30-year loans, 15-year rates have climbed more than a full percentage point over the last two weeks, and are at their highest mark since at least 2008.

Jumbo 30-year rates similarly climbed, tacking on another eighth of a percentage point Tuesday to notch a 6.02% average. 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 2010.

Rates moved very similarly for 30-year and Jumbo 30-year refinancing loans, with the 30-year refi average climbing 20 basis points and the Jumbo 30-year refi average gaining 13 points. Rates on 15-year refi loans meanwhile moved a minor two basis points. The cost to refinance with a fixed-rate loan is currently one to 31 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 the early summer peak, with the current 30-year average sitting 104 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.