2023 Update: 30-Year Mortgage Rates Drop to 7.01%, Lowest in 7 Months – Refi Rates Climb

Mortgage Rates & Trends Update – December 20, 2023

The mortgage rate landscape showed mixed trends on Tuesday. Notably, the average 30-year fixed-rate mortgage for new home purchases declined to 7.01%, marking its lowest level since May 17, 2023. Conversely, 30-year refinancing rates edged upward.

Since mortgage rates can vary significantly among lenders, it's essential to regularly compare offers to secure the best loan terms, regardless of your home loan type.

Current 30-Year Mortgage Rates for New Purchases

Following a sharp decline of nearly 0.4 percentage points last week, the 30-year mortgage rate has dipped further to 7.01%, a new low not seen in over seven months. This is a notable shift from just two months ago when rates peaked at 8.45%, the highest in 23 years.

Freddie Mac’s October 26 report highlighted a historic peak in 30-year mortgage rates at 7.79%. Since then, rates have steadily declined, with the latest weekly average dropping to 6.95%, the lowest since August 10. Note that Freddie Mac averages are weekly and factor in loans with discount points, whereas ZAMONA’s daily averages focus on zero-point loans.

15-year fixed-rate mortgages for new purchases also saw significant decreases, now averaging 6.22%, their lowest since mid-May. Jumbo 30-year loan rates stabilized at 6.44%, their most affordable level since July, after reaching a 20-year high of 7.52% in October.

Treasury-backed VA 30-year loan rates increased by 34 basis points on Tuesday, while jumbo 15-year loan rates dropped by 13 basis points.

Refinancing Rate Trends

In contrast to purchase rates, the 30-year refinancing average increased by 9 basis points Tuesday, widening the gap between purchase and refinance rates to 57 basis points. Rates for 15-year refinance loans fell 6 basis points, while jumbo 30-year refinance rates remained steady.

The largest refinance rate increase was seen in 7/6 adjustable-rate mortgages, rising 15 basis points, whereas FHA 30-year refinance rates dropped by 25 basis points.

Use ZAMONA’s Mortgage Calculator to estimate monthly payments for different loan scenarios.

Important Considerations

Advertised teaser rates often do not reflect the average mortgage rates shown here. They may require upfront points or be based on borrowers with exceptional credit scores or smaller loan amounts. Your final mortgage rate will depend on individual factors including credit score, income, and loan specifics.

Lowest Mortgage Rates by State

Mortgage rates vary by state due to factors like average credit scores, loan types, and lender risk strategies. States with the lowest 30-year fixed purchase rates include Vermont, Delaware, Louisiana, Mississippi, Iowa, Wisconsin, and Wyoming. Conversely, Maryland, Oregon, Georgia, Nevada, Arizona, and Minnesota have the highest averages.

Factors Influencing Mortgage Rate Fluctuations

Mortgage rates are influenced by a complex mix of factors, including:

• Trends in the bond market, particularly 10-year Treasury yields
• The Federal Reserve's monetary policy and bond-buying programs
• Competition among lenders and different loan products

Since late 2021, the Federal Reserve has significantly shifted its policies—tapering bond purchases and raising the federal funds rate to combat inflation—which have indirectly pushed mortgage rates higher. Despite recent rate hikes, the Fed has paused increases, with forecasts suggesting potential rate cuts in 2024.

How ZAMONA Tracks Mortgage Rates

ZAMONA calculates national mortgage rate averages based on quotes from over 200 leading lenders, assuming an 80% loan-to-value ratio and a borrower credit score between 700 and 760. This approach provides realistic expectations for typical borrowers, differing from advertised teaser rates.

State-specific rates reflect the best lender offers under the same assumptions, helping consumers identify regional opportunities for more affordable mortgages.

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