30-Year Mortgage Rates Come Down for a Second Day

Rates on 30-year mortgages edged a bit lower Tuesday, adding to Monday's bigger decline. That further shaves off some of last week's three-day climb to the mid-7% range, and drops the flagship average to 7.34%. Almost all other loan types, both new purchase and refi, moved lower or held steady.

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're seeking.

Today's Mortgage Rate Averages: New Purchase

Rates on 30-year new purchase mortgages fell another 2 basis points Tuesday, after a 9-point drop Monday. That's welcome news after the flagship average added 34 points over the second half of last week. The current average is now down to 7.34%.

Given that 30-year rates sank into 6% territory at the start of February, current rates are still elevated. But they're dramatically cheaper than in October, when the 30-year average notched a historic 23-year peak of 8.45%.

Rates on 15-year new purchase loans also declined Tuesday, subtracting 6 basis points to drop the average to 6.67%. Though current rates are significantly pricier than the seven-month low of 6.10% we saw just before the new year, they're still much more affordable than last fall's 7.59% average—a peak since 2000.

Jumbo 30-year rates marked time for a third day Friday. Holding at 6.95%, the average matches its highest mark since November. Though 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.

Most other new purchase averages either held steady or showed minimal movement Tuesday. The only sizable change was seen for FHA 30-year loans, whose average dipped a tenth of a percentage point.

The Weekly Freddie Mac Average

Every Thursday afternoon, Freddie Mac publishes a weekly average of 30-year mortgage rates, and last week's reading subtracted 14 basis points to fall to 6.74%. Back in late October, Freddie Mac's average reached a historic peak of 7.79%—its most expensive 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

Tuesday refinancing rates were similarly flat or down for most loan types. The 30-year refi average gave up 3 basis points, leaving the spread between 30-year new purchase and refi rates at 51 basis points.

Only one refi average rose Tuesday, with FHA 30-year refi rates tacking on 8 basis points. Moving the other way, the 15-year and FHA 15-year refi averages declined 6 points. All other refi averages we flat or roughly steady Tuesday.

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.

The states with the cheapest 30-year new purchase rates were Mississippi, Louisiana, Hawaii, Iowa, and Vermont, while the states with the most expensive rates were Alabama, Minnesota, Arizona, Idaho, Nevada, and Oregon.

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 is overwhelmingly expected to hold rates steady at the conclusion of its meeting today, which would make that the central bank's fifth consecutive rate hold. The Fed will also be releasing its latest "dot plot" forecast of where it expects the federal funds rates to be at the end of this year and the next two. In its December dot plot, the Fed indicated it expected two to four rate cuts by the end of 2024. But today's renewed forecast could show a softening in those predictions. The Fed's statement and accompanying projections will be released today at 2:00 p.m. ET.

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.