Mortgage Rates Plummet, Sinking 30-Year Average to Lowest Level in 8 Weeks

One day after briefly revisiting 8% territory, rates on 30-year mortgage rates plunged. The Tuesday 30-year average dropped almost a third of a point, sinking to a much cheaper 7.77%. That's its lowest level in about 8 weeks. Rates for many other loan types also moved dramatically lower.

Because rates vary widely across lenders, it's always smart to shop around for your best mortgage option and compare rates regularly, no matter what type of loan you're seeking.

Today's Mortgage Rate Averages: New Purchase

Rates on 30-year new purchase loans declined a dramatic 30 basis points Tuesday, lowering the average to 7.77%. Just the previous day, the 30-year average had spiked back into 8% territory. With Tuesday's massive drop, the flagship average is now down to its lowest level since Sept. 20.

Rates on 15-year loans saw an even bigger drop, sinking 38 basis points to dip below the 7% threshold for the first time in two and half months. Now at 6.99%, the current average has fallen 60 basis points below the record peak of 7.59% recorded Oct. 23, which was the highest 15-year average since 2000.

Jumbo 30-year rates also declined Tuesday, but by a more moderate 13 basis points to land at 7.06%. Though daily jumbo rates were not available before 2009, it's estimated that the 7.52% peak on Oct. 19 was the most expensive average for jumbo 30-year loans in more than 20 years.

All new purchase rates declined Tuesday, with the biggest mover being the 20-year fixed-rate average, which slid almost a half percentage point. The 10-year average also plunged, by 43 points, and the FHA and VA 30-year averages each dipped roughly a third of a percentage point. Adjustable-rate loan averages saw less substantial decreases.

Today's Mortgage Rate Averages: Refinancing

Refinancing rates also sank Tuesday, with the 30-year refi average plummeting 40 basis points. That narrows the gap between 30-year new purchase and refi rates to 39 basis points. The 20-year refi average meanwhile plunged 36 basis points, the 10-year refi average, 29 points, and the 15-year refi average, 25 points. Rates on jumbo 30-year refi loans dipped a more moderate 12 basis points.

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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 type, and size, in addition to individual lenders' varying risk management strategies.

The states with the lowest 30-year new purchase averages were Vermont, North Carolina, Arizona, Louisiana, Missouri, New York, Wyoming, and Iowa, while the states with the highest averages were Arizona, Nevada, Minnesota, Oregon, Idaho, Georgia, Washington, and Texas.

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, especially 10-year Treasury yields
• The Federal Reserve's current monetary policy, especially as it relates to bond buying and funding government-backed mortgages
• Competition between mortgage 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 kept the mortgage market relatively low for much of 2021. In particular, the Federal Reserve had been buying billions of dollars of bonds in response to the pandemic's economic pressures. This bond-buying policy is a major influencer of mortgage rates.

But starting in November 2021, the Fed began tapering its bond purchases downward, making sizable reductions each month until reaching net zero in March 2022.

Since that time, the Fed has been aggressively raising the federal funds rate to fight decades-high inflation. While the fed funds rate can influence mortgage rates, it does not directly do so. In fact, the fed funds rate and mortgage rates can move in opposite directions.

However, given the historic speed and magnitude of the Fed's 2022 and 2023 rate increases—raising the benchmark rate 5.25 percentage points over the last 18 months—even the indirect influence of the fed funds rate has resulted in an upward impact on mortgage rates over the last two years.

The Fed has opted to hold rates steady at its last two meetings, which concluded Sept. 20 and Nov. 1. But Fed Chair Jerome Powell has made it clear that another rate increase is still possible at a future meeting. The Fed’s next rate announcement will be made Dec. 13.

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.