Almost every new purchase mortgage rate average dropped by double-digit basis points Friday, including a fall of more than an eighth of a point for the 30-year average to 6.95%. That's the flagship average's biggest one-day drop in a month, and takes rates back near the 7-month low we saw between Christmas and New Year's.

Since 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're seeking.

National Averages of Lenders' Best Rates
Loan Type	New Purchase	Refinance
30-Year Fixed	6.95%	7.30%
FHA 30-Year Fixed	6.73%	7.00%
Jumbo 30-Year Fixed	6.45%	6.45%
15-Year Fixed	6.12%	6.33%
5/6 ARM	7.52%	7.57%

Today's Mortgage Rate Averages: New Purchase

With a drop of 16 basis points Friday, 30-year mortgage rates have fallen almost a quarter point over two days. Now down to 6.95%, the average is just a few points above the 6.91% low point registered on Dec. 28, which was the lowest level for 30-year loans since mid-May. In stark contrast, October saw rates climb to a historic 23-year peak of 8.45%. The 15-year new purchase average was meanwhile one of the biggest movers Friday, plunging 31 basis points. That reduces the 15-year average to 6.12%—just above its 7-month low of 6.10% registered on Dec. 28. In October, 15-year rates soared to a 7.59% peak, the most expensive average since 2000. The jumbo 30-year average was one of only two new purchase readings that didn't decline Friday. Holding for a sixth day at 6.45%, the average ended the week a bit above its recent low of 6.31%. Though daily historical jumbo rates are not available before 2009, it's estimated the 7.52% peak reached in October was the most expensive jumbo 30-year average in more than 20 years. Rates on 10-year fixed-rate loans saw the biggest Friday decline, plunging 38 basis points. At the other end, the 5/6 adjustable-rate average was the only climber Friday, though it tacked on just 2 basis points.

National Averages of Lenders' Best Rates - New Purchase
Loan Type	New Purchase Rates	Daily Change
30-Year Fixed	6.95%	-0.16
FHA 30-Year Fixed	6.73%	-0.18
VA 30-Year Fixed	6.66%	-0.10
Jumbo 30-Year Fixed	6.45%	No Change
20-Year Fixed	6.69%	-0.27
15-Year Fixed	6.12%	-0.31
FHA 15-Year Fixed	6.78%	-0.10
Jumbo 15-Year Fixed	6.41%	-0.12
10-Year Fixed	5.95%	-0.38
10/6 ARM	7.38%	-0.21
7/6 ARM	7.36%	-0.19
Jumbo 7/6 ARM	6.08%	-0.12
5/6 ARM	7.52%	+0.02
Jumbo 5/6 ARM	6.18%	-0.12

Today's Mortgage Rate Averages: Refinancing

Refinancing rates moved even more dramatically downward Friday than their new purchase counterparts. The 30-year refi average plummeted 41 basis points, narrowing the spread between 30-year new purchase and refi rates to 35 basis points—after a 60-point gap on Thursday. The refi average for 15-year loans meanwhile subtracted 33 basis points, while the flat jumbo 30-year refi average was Friday's only non-declining reading for refi rates. Besides the 30-year and 15-year averages, Friday's next biggest refi rate movers were the FHA 30-year and standard 20-year refi averages, which each gave up 27 basis points. The 10-year fixed-rate refi average declined a similar 26 basis points.

National Averages of Lenders' Best Rates - Refinance
Loan Type	Refinance Rates	Daily Change
30-Year Fixed	7.30%	-0.41
FHA 30-Year Fixed	7.00%	-0.27
VA 30-Year Fixed	7.14%	-0.16
Jumbo 30-Year Fixed	6.45%	No Change
20-Year Fixed	7.06%	-0.27
15-Year Fixed	6.33%	-0.33
FHA 15-Year Fixed	6.84%	-0.14
Jumbo 15-Year Fixed	6.41%	-0.12
10-Year Fixed	6.26%	-0.26
10/6 ARM	7.64%	-0.08
7/6 ARM	7.62%	-0.09
Jumbo 7/6 ARM	6.18%	-0.12
5/6 ARM	7.57%	-0.12
Jumbo 5/6 ARM	6.18%	-0.12

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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. The states with the cheapest 30-year new purchase rates were Vermont, Arkansas, Mississippi, Louisiana, Wisconsin, and Idaho, while the states with the most expensive rates were Nevada, Oregon, Arizona, Georgia, 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.

Since that time, the Fed has been aggressively raising 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.

However, given the historic speed and magnitude of the Fed's 2022 and 2023 rate increases—raising the benchmark rate 5.25 percentage points over the last 18 months—even the indirect influence of the fed funds rate has resulted in an upward impact on mortgage rates over the last two years.

The Fed has opted to hold rates steady at its last three meetings, the last of which concluded Dec. 13. Though Fed Chair Jerome Powell indicated the rate-setting committee is leaving the possibility of another rate hike on the table, should inflation not progress further downward as projected, data released with the recent Fed announcement show that none of the 19 Fed members expect another rate increase. In fact, the committee's median expectation is that three rate cuts will be implemented by the end of 2024, with 80% predicting two to four rate decreases. The Fed's next rate-setting meeting will conclude on Jan. 31.

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.