Mortgage Rates Tumble from 21-Year Highs

Mortgage shoppers got a little bit of relief Wednesday, as rate averages dropped significantly across every loan type. The 30-year average gave up more than an eighth of a point, sinking to its lowest level in a week. That's after hitting a 21-year high Tuesday.

The latest 30-year fixed-rate average is 7.66%. 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 shopping for.

Today's National Mortgage Rate Averages

Wednesday saw the 30-year mortgage average drop a notable 14 basis points, tumbling to 7.66%. A day prior, the flagship average had notched 7.80%, its highest level since 2002.

The 15-year mortgage average only edged slightly lower Wednesday. Subtracting a minor 3 basis points, the average now sits at 7.14%. Like 30-year rates, the 15-year average hit a 21-year high Tuesday when it registered 7.17%.

Jumbo 30-year rates also dropped back Wednesday, giving up 12 basis points to average 6.90%. Tuesday saw the average rise above 7.00% for the first time in Investopedia's rate tracking of the last two-and-a-half years. Daily jumbo averages are not available from any sources before 2009, but it's fair to assume that Tuesday's 30-year jumbo average was also a 21-year high.

The biggest rate declines Wednesday were a 40-basis-point drop for the VA 30-year fixed-rate average and 30 basis points for 10/6 ARM loans.

Refinancing rates moved roughly in line with new purchase rates Wednesday, with every refi average showing notable declines except a flat 15-year refi average. The 30-year average for refi loans plunged 19 basis points after Tuesday hitting 8.18%, its highest average in our records since early 202. The gap between 30-year new purchase and refi rates is now 33 basis points.

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 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 federal funds rate, which is set every six to eight weeks by the Fed's rate and policy committee—the Federal Open Market Committee (FOMC)—can also influence mortgage rates. However, it does not directly drive mortgage rates, and in fact, the fed funds rate and mortgage rates can move in opposite directions.

At its latest meeting, which concluded on July 26, the Fed hiked rates by a widely expected 25 basis points, raising the fed funds rate to a range of 5.25% to 5.50%. Fed Chairman Jerome Powell said that because inflation is still above the Fed's target rate of 2%, the rate-setting committee could either raise rates again or pause when it meets on Sept. 20, depending on economic conditions.

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.