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The rates you see here will generally not be compared directly to the teaser rates you see advertised online, as those rates are selected as the most attractive, while these rates are averages. Teaser rates may involve paying points up front, or they may be selected based on a hypothetical borrower with an extremely high credit score or taking a lower-than-typical loan. The mortgage rate you ultimately get will be based on factors like your credit score, income and more, so it may be higher or lower than the averages you see here.
Lowest Mortgage Rates by State
The lowest mortgage rates available vary depending on the state in which originations occur. Mortgage rates may be affected by state-level variations in credit scores, average mortgage loan type and size, as well as individual lenders’ different risk management strategies.
The states with the lowest 30-year averages of new purchases on Thursday were Vermont, Mississippi, Delaware, Iowa, Louisiana and North Dakota, while the states with the highest averages were Nevada, Minnesota, Arizona, Washington, Oregon and Idaho.
What causes mortgage rates to rise or fall?
Mortgage rates are determined by a complex interaction of macroeconomic and sectoral factors, such as:
- The level and direction of the bond market, particularly 10-year Treasury bond yields
- The Federal Reserve’s current monetary policy, especially as it relates to bond purchasing and government-backed mortgage financing
- Competition between mortgage lenders and types of loans
Because fluctuations can be caused by any number of these factors at once, it is generally difficult to attribute the change to any one specific factor.
Macroeconomic factors have kept the mortgage market relatively subdued for much of 2021. Notably, the Federal Reserve has purchased billions of dollars in bonds in response to economic pressures from the pandemic. This bond-buying policy is one of the main factors influencing mortgage rates.
But starting in November 2021, the Fed began tapering bond purchases, making sizable reductions each month until reaching net zero in March 2022.
Since then, the Fed has aggressively raised the federal funds rate to combat decades-high inflation. While the federal funds rate can influence mortgage rates, it does not do so directly. In fact, the federal funds rate and mortgage rates can move in opposite directions.
However, given the historic speed and magnitude of the Fed’s rate hikes in 2022 and 2023 – which raised the policy rate by a cumulative 5.25% over the past 18 months – the indirect influence of the funds rate federal taxes has led to an upward impact on mortgage rates over the last 18 months. the last two years.
The Fed’s next rate-setting meeting is expected to end on September 20, and financial markets have priced in a near certainty that the central bank will keep rates stable this time. A rate hike in November or December is still a possibility, however, with traders predicting 35-40% chances of a hike being announced at one of these meetings.
The national averages above were calculated based on the lowest rate offered by more than 200 of the country’s major lenders, assuming a loan-to-value (LTV) ratio of 80% and an applicant with a FICO credit score between 700 and 760. true. 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 and 760.