Mortgage Rates Drop for Almost Every Loan Type

Rates on 30-year mortgages fell a tenth of a percentage point Tuesday to 7.20%—their cheapest level since March. Virtually all other new purchase and refi mortgage rates also fell, with only a few loan types seeing rates hold steady. Tuesday's drop in the FHA 30-year average takes it down to a 2-month low.

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 gave up 10 basis points Tuesday, lowering the flagship average to 7.20%. That's the lowest average we've so far this month.

Rates on 30-year loans are still mildly elevated compared to the start of February, when the 30-year average dipped down to high-6% territory. But the average is considerably cheaper than October's historic 23-year peak of 8.45%.

New purchase 15-year mortgages meanwhile subtracted 7 basis points, dropping the average to 6.66%. The previous day's average of 6.73% was its highest level in three weeks. Rates on 15-year loans are still much more affordable than last fall's 7.59% average—a peak since 2000.

Jumbo 30-year loans meanwhile reversed the 12 basis points they gained Monday, dropping Tuesday's jumbo 30-year average back to 6.95%. The recent 7.07% peak was the most expensive mark since mid-November. Daily historical jumbo rates are not available before 2009, but it's estimated the 7.52% peak reached last fall was the most expensive jumbo 30-year average in 20-plus years.

Aside from two averages that marched in place Tuesday, rates moved lower for every other new purchase mortgage type as well. Especially notable was the rate movement for FHA 30-year loans, whose average plummeted 38 basis points to register their lowest mark since Feb. 1.

The Weekly Freddie Mac Average

Every Thursday afternoon, Freddie Mac publishes a weekly average of 30-year mortgage rates. Last week's reading inched up 3 basis points to 6.82%. 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

Refinancing rates were also largely down Tuesday. In line with its new purchase sibling, the 30-year refi average dropped a tenth of a percentage point. That keeps the spread between 30-year new purchase and refi rates at a narrow 24 basis points. The VA 30-year refi average meanwhile sank 29 basis points.

Tuesday's 15-year refi average fell 6 basis points, while jumbo 30-year refi rates gave up the 13 points they climbed the previous day. Except for three steady refi averages, all other refi loan types saw rate drops Tuesday.

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 Tuesday were Mississippi, Vermont, Hawaii, Louisiana, New York, and Rhode Island, while the states with the highest average rates were Minnesota, Arizona, Alabama, Idaho, Maryland, Oregon, 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 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.