30-Year Mortgage Rates Jump Almost a Third of a Point to Reach New 20-Year High

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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 June 14, the Fed paused rate hikes, keeping the fed funds rate at the current range of 5.00% to 5.25%. This was the first meeting in 15 months in which the Fed did not raise interest rates. There is a chance that rates could go up one or two more times this year, though, with members of the FOMC projecting the fed funds rate could increase another 50 basis points before the year ends.

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.