30-Year Mortgage Rates Fall to 6% Territory

Rates on 30-year mortgages dropped below the 7% threshold Wednesday, sinking to 6.84%. That's the flagship average's most affordable level in seven weeks. Most other mortgage types also saw strong declines Wednesday.

Because rates vary widely across lenders, 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 sank 16 basis points Wednesday, lowering the average to 6.84%. It's the first reading below 7% since early April and marks the cheapest level for 30-year rates since March 29. After surging to a 5-month high of 7.37% in late April, 30-year mortgage rates have since shed more than a half percentage point.

Rates on 30-year mortgages still remain elevated vs. early February, when the average dipped as low as 6.36%. But 30-year rates are now more than a percentage point below the historic 23-year high of 8.01% we saw in October.

New purchase 15-year mortgage rates also dropped substantially Wednesday, plunging 17 basis points. Now down to 6.01%, the 15-year average is also at its lowest level since late March. Additionally, today's 15-year rates are now more than a percentage point under last fall's 7.08% peak —the highest level registered since 2000.

Wednesday's jumbo 30-year rates fell 11 basis points, landing at a 7.02% average. That compares to a recent high of 7.30%. Though daily historical jumbo rates were not published before 2009, it's estimated the 8.14% peak reached last fall was the most expensive jumbo 30-year average in 20-plus years.

Rate movement across most other new purchase loan types was also markedly down Wednesday, though rates on FHA loans held steady.

The Weekly Freddie Mac Average

Every Thursday afternoon, Freddie Mac publishes a weekly average of 30-year mortgage rates. Today's reading fell 7 basis points to 7.02%, marking a second week of declines. Back in October, however, Freddie Mac's average reached a historic 23-year peak of 7.79%. It later dropped significantly, registering a low point of 6.60% in mid-January.

Freddie Mac’s average differs from what we report for 30-year rates because Freddie Mac calculates a weekly average that blends five previous days of rates. In contrast, our Investopedia 30-year average is a daily reading, offering a more precise and timely indicator of rate movement. In addition, the criteria for included loans (e.g., amount of down payment, credit score, inclusion of discount points) varies between Freddie Mac's methodology and our own.

Today's Mortgage Rate Averages: Refinancing

Refinancing rates showed a little less movement Wednesday than their new purchase siblings. The 30-year refi average subtracted just 2 basis points, stretching the gap between 30-year new purchase and refi rates to a wide 55 basis points. The 15-year and jumbo 30-year refi averages meanwhile declined 18 basis points. Several other refi averages were flat on Wednesday.

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 Wednesday were New York, Texas, California, Florida, New Jersey, and Washington, while the states with the highest average rates were Alaska, Washington, D.C., South Carolina, West Virginia, Iowa, and North Dakota.

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 sixth consecutive rate hold announced on May 1. 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 sustainably, it has said it's hesitant to start cutting rates.

The Fed will hold five more meetings this year, with the next one scheduled to conclude June 12.

How We Track Mortgage Rates

The national and state averages cited above are provided as is via the Zillow Mortgage API, assuming a loan-to-value (LTV) ratio of 80% (i.e., a down payment of at least 20%) and an applicant credit score in the 680–739 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. © Zillow, Inc., 2024. Use is subject to the Zillow Terms of Use.