30-Year Mortgage Rates Ease Ahead of Today's Fed Meeting.

Today's Mortgage Rates & Trends - Dec. 13, 2023

After holding steady on Monday, 30-year mortgage rates dropped by 3 basis points on Tuesday. At 7.40%, 30-year rates remain near their lowest level in four months. Rates for almost all other loan types eased slightly or remained unchanged, though.

Rates vary widely across lenders, so 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 mortgages moved down by a modest 3 basis points on Tuesday after holding steady the day before. Currently standing at 7.40%, the 30-year new purchase average continues to be within its least expensive range since Aug. 10. Also notable is that the current reading is more than a full percentage point below the historic 23-year peak average of 8.45%, which we saw on Oct. 17.

Compare the Best Mortgage Rates Today (December 2023)

Note

Freddie Mac's Oct. 26 release of weekly mortgage data was historic, indicating that 30-year mortgage rates had climbed to a 7.79% average—the highest level since 2000. But in each of the six weeks since, the Freddie Mac 30-year average has fallen. Last week's newly published average is down to 7.03%, the lowest mark since August.

Freddie Mac’s averages differ from those we publish here due to Freddie Mac calculating a weekly average that blends five previous days of rates, which may include loans priced with discount points. In contrast, ProPedia’s averages indicate daily rate movement and only include zero-point loans.

Rates on 15-year new purchase loans dropped by 7 basis points to an average of 6.76%, keeping it near its own 4-month low. In contrast, October saw 15-year loan rates surge to a 7.59% peak, the highest average since 2000.

The jumbo 30-year average marched in place for a seventh day Tuesday, after falling substantially the previous Friday. Holding at 6.69%, jumbo 30-year rates are also at their lowest level since August. Though daily historical jumbo rates are not available before 2009, it's estimated that the 7.52% peak in October was the most expensive average for jumbo 30-year loans in more than 20 years.

The only rates that moved up on Monday were the 10/6 ARM and 7/6 ARM, which only increased in modest single-digit increments.

Today's Mortgage Rate Averages: Refinancing

Refinancing rates showed mixed results on Tuesday, with the 30-year refi average shedding a single basis point to 7.95%. That modestly increases the spread between 30-year new purchase and refi rates to 55 basis points, which continues to be unusually wide. Refi rates for 15-year loans dropped by a bolder 11 basis points, while the jumbo 30-year and jumbo 15-year refi averages again held firm.

Monday's biggest refi rate movers were a double-digit drop of 20 basis points in the FHA 15-year fixed-rate average and an 11-point drop in the 15-year fixed-rate average.

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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, while these rates are averages. Teaser rates 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. The mortgage rate you ultimately secure will be based on factors like your credit score, income, and more, so it may be higher or lower than the averages you see here.

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 New York, Iowa, North Carolina, Vermont, and Tennessee while the states with the most expensive averages were Oregon, Nevada, Arizona, Minnesota, and Washington.

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 Nov. 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 September 20 and November 1. Though Fed Chair Jerome Powell made it clear that another rate increase is still possible at a future meeting, encouraging inflation data released November 14 has since dampened almost all expectations of future increases. The Fed’s next rate announcement will be made today, December 13.

How We Track Mortgage Rates

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.