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30-year rates take a major step back after two-week surge
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Sabrina Karl
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Sabrina Karl has over two decades of experience writing about savings, CDs, and other banking topics. She is currently a staff writer at Investopedia and one of the country's top experts on how to earn as much as possible on the money you hold in the bank. She previously wrote for Bankrate.com, CreditCards.com, DepositAccounts.com, and RateSeeker.
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Published May 31, 2023
05:14 PM EDT
:max_bytes(150000):strip_icc()/March23MortageRatesNews-311-03f3ebd81bb74a1db6720bc49498c91c.jpg "Today's Mortgage Rates & Trends - May 31, 2023: Rates Sink (2)")
While most mortgage averages moved moderately lower Tuesday, 30-year rates dropped dramatically. The flagship average had skyrocketed over the previous two weeks, but Tuesday saw a decline of more than a quarter percentage point.
A similarly large decline was seen in the 20-year fixed-rate average, while the jumbo 30-year average held steady at a level not seen since at least 2009.
| National Averages of Lenders' Best Rates | ||
|---|---|---|
| Loan Type | Purchase | Refinance |
| 30-Year Fixed | 7.37% | 7.82% |
| FHA 30-Year Fixed | 7.49% | 7.75% |
| Jumbo 30-Year Fixed | 6.39% | 6.39% |
| 15-Year Fixed | 6.61% | 6.72% |
| 5/6 ARM | 7.17% | 7.35% |
Today's National Mortgage Rate Averages
The 30-year mortgage average dropped almost three-tenths of a point Tuesday, lowering significantly after hitting what was estimated to be a 20-year high before the holiday weekend. Rates on 30-year loans had been on a fast-and-furious rise since May 12, climbing 83 basis points across two weeks and ultimately reaching 7.65% Friday. Tuesday's average is back down to 7.37%, which erases the two previous days' increases.
Tuesday's 15-year mortgage average dropped as well, but more modestly. Subtracting 9 basis points, the 15-year average is down to 6.61%. Though 15-year rates had also soared for two weeks, the average still sits well under its October peak, which was a 15-year high of 7.03%.
The jumbo 30-year average marched in place Tuesday, but that comes after rising Friday to a new peak of 6.39%. Since published historical data on jumbo 30-year rates is not available prior to 2009, it's unknown what the previous high-water mark was. But the current jumbo 30-year average is the highest reading in at least 14 years.
Refinancing rates moved generally in line with new purchase rates Tuesday. While the 30-year refi average dropped a less dramatic 18 basis points, the 15-year refi average dropped 9 basis points and the jumbo 30-year refi average held still, both matching the moves of their new purchase counterparts. The gap between new purchase and refi rates for a 30-year loan was 45 basis points.
After a historical rate plunge in August 2021, mortgage rates skyrocketed in the first half of 2022. The 30-year average shot to 6.38% by June 2022, which was more than double the rate of 2.89% seen just 10 months earlier. Then an even more dramatic surge in September and October 2022 outdid the June peak, with the 30-year average ultimately climbing another 1.2 percentage points and recording a 20-year high.
It's difficult to nail down how far back we'd have to go to find 30-year rates higher than Friday's, since daily rate averages weren't published before 2009. On Thursday, Freddie Mac will release its new average, which may provide context about how historic the current levels are. However, Freddie Mac's average is a weekly calculation spanning five day's worth of rate activity, so it can vary significantly from our more precise daily averages.
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.
| National Averages of Lenders' Best Rates - New Purchase | ||
|---|---|---|
| New Purchase | Daily Change | |
| 30-Year Fixed | 7.37% | -0.28 |
| FHA 30-Year Fixed | 7.49% | -0.07 |
| VA 30-Year Fixed | 7.51% | +0.01 |
| Jumbo 30-Year Fixed | 6.39% | No Change |
| 20-Year Fixed | 7.20% | -0.26 |
| 15-Year Fixed | 6.61% | -0.09 |
| Jumbo 15-Year Fixed | 6.52% | No Change |
| 10-Year Fixed | 6.55% | -0.14 |
| 10/6 ARM | 7.27% | -0.01 |
| 7/6 ARM | 7.06% | -0.11 |
| Jumbo 7/6 ARM | 6.21% | -0.12 |
| 5/6 ARM | 7.17% | +0.09 |
| Jumbo 5/6 ARM | 6.43% | No Change |
| National Averages of Lenders' Best Rates - Refinance | ||
|---|---|---|
| Loan Type | Refinance | Daily Change |
| 30-Year Fixed | 7.82% | -0.18 |
| FHA 30-Year Fixed | 7.75% | -0.03 |
| VA 30-Year Fixed | 7.48% | -0.08 |
| Jumbo 30-Year Fixed | 6.39% | No Change |
| 20-Year Fixed | 7.74% | -0.20 |
| 15-Year Fixed | 6.72% | -0.09 |
| Jumbo 15-Year Fixed | 6.52% | No Change |
| 10-Year Fixed | 6.69% | -0.10 |
| 10/6 ARM | 7.38% | -0.02 |
| 7/6 ARM | 7.31% | -0.02 |
| Jumbo 7/6 ARM | 6.31% | -0.12 |
| 5/6 ARM | 7.35% | No Change |
| Jumbo 5/6 ARM | 6.43% | No Change |
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 type, 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 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 (and not the more publicized federal funds rate) is a major influencer on 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.
The Fed's rate and policy committee—the Federal Open Market Committee (FOMC)—meets every six to eight weeks. The next scheduled meeting will conclude on June 14.
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.
Do you have a news tip for Investopedia reporters? Please email us at
tips@investopedia.com
Article Sources
Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in oureditorial policy.
Congressional Research Service. "Federal Reserve: Tapering of Asset Purchases," Page 1.
Board of Governors of the Federal Reserve System. "FOMC Meeting Calendar."
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