30-Year Mortgage Rates Pull Back

Rates on 30-year purchase mortgages fell back a little on Wednesday to 7.16%, losing 3 basis points after gaining 7 basis points earlier this week. The flagship rate was not the biggest mover though: the FHA 30-year mortgage rate average dropped 15 basis points to land at 6.98%—the first time it has been below 7.00% in seven weeks. All but one new purchase mortgage rate fell or remained unchanged on Wednesday.

Rates vary widely across lenders, so it's always smart to shop around for your best mortgage option and compare rates regularly no matter the type of home loan you seek.

Today's Mortgage Rate Averages: New Purchase

Rates on 30-year new purchase mortgages dropped 3 basis points on Wednesday, just one day after rising 6 basis points. The flagship rate is now back to where it was two weeks ago, and still 29 basis points lower than its recent high of 7.45% on Friday, March 15.

The 30-year rate average is still far from its recent drop into 6.00% territory, which we saw at the start of February. Nevertheless, mortgage rates are still well off the records seen in October, when the 30-year average notched a historic 23-year peak of 8.45%.

The biggest mover on Wednesday was the FHA 30-year mortgage rate. FHA loans often appeal to first-time homebuyers due to the lower down payment and credit score requirements. The FHA 30-year rate dropped to 6.98% on Wednesday, 15 basis points lower from the day before, and the first time it's sunk below 7.00% in seven weeks.

The jumbo 30-year fixed rate average and the jumbo 7/6 ARM average both dropped 13 basis points, making them the second biggest movers on Wednesday. Although daily historical jumbo rates were not available before 2009, it's estimated the 7.52% peak reached last October was the most expensive jumbo 30-year average in more than 20 years.

All other new purchase mortgage rates inched slightly lower or were unchanged, except for one: the VA 30-year mortgage rate average rose 3 basis points on Wednesday.

The Weekly Freddie Mac Average

Every Thursday afternoon, Freddie Mac publishes a weekly average of 30-year mortgage rates. This week's reading slipped 8 basis points to 6.79%. Back in late October, Freddie Mac's average reached a historic peak of 7.79%—its highest level in 23 years. But since then, it has come down significantly, registering a recent low of 6.60% in mid-January.

Freddie Mac’s average differs from our own 30-year average for two notable reasons. First, Freddie Mac calculates a weekly average that blends five previous days of rates, while our Investopedia averages are daily, offering a more precise and timely indicator of rate movement. Second, the rates included in Freddie Mac's survey can include loans priced with discount points, while Investopedia’s averages only include zero-point loans.

Today's Mortgage Rate Averages: Refinancing

On Wednesday, mortgage refinancing rates were a mixed bag, with some inching up, some dropping back, and others unchanged. While the 30-year refi rate only increased 1 basis point, the most notable movers were the jumbo 30-year rate which dropped 12 basis points, and the jumbo 7/6 ARM average which fell 13 basis points. Other loan types saw slight increases or decreases or remained unchanged.

The spread between 30-year new purchase and refi rates widened again to 31 basis points. The biggest spread on Wednesday was between FHA 30-year rates: the difference between the average new purchase rate and the refi rate for FHA loans was over half a percentage point (53 basis points).

Calculate monthly payments for different loan scenarios with our Mortgage Calculator.

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 cheapest 30-year new purchase rates on Wednesday were Rhode Island, Vermont, Louisiana, and Mississippi. The states with the highest average mortgage rates were Minnesota, Montana, and New Hampshire.

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.

Between that time and July 2023, the Fed aggressively raised 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.

But given the historic speed and magnitude of the Fed's 2022 and 2023 rate increases—raising the benchmark rate 5.25 percentage points over 16 months—even the indirect influence of the fed funds rate has resulted in a dramatic upward impact on mortgage rates over the last two years.

The Fed has been maintaining the federal funds rate at its current level since July, with a fifth consecutive rate hold announced on March 20. Although inflation has come down considerably, it is still above the Fed's target level of 2%. Until the central bank feels confident inflation is falling sufficiently and reliably, it has said it is hesitant to start cutting rates.

Still, Fed committee members do collectively expect to reduce rates in 2024. The March 20 meeting included the latest installment of the Fed's "dot plot" forecast, which showed that the median expectation among the 19 Fed members is for three rate decreases—totaling 0.75 percentage points—by year's end. The dot plot also shows similar expected rate cuts in 2025 and 2026.

The Fed will hold six more meetings this year, with the next scheduled for April 30 to May 1.

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.

Correction - March 28, 2024: This article has been updated to state that the next Federal Open Market Committee is scheduled for April 30 to May 1, 2024.