Quick Take: Mortgage Rates on the Rise Again
Following a minor decrease, mortgage refinancing rates have risen again.
It's up, up, and away for 30-year refinance rates, climbing 8 basis points to a three-week high of 7.24%. This uptick may have you scratching your head, given it's still a smidgen below mid-April's peak of 7.31%. But remember, rates dropped as low as 6.71% just a few weeks ago, so today's rate is certainly elevated.
In fact, the current average is an astounding 1.25 percentage points above last September's two-year low of 6.01%. If you're feeling a tad gloomy, fret not. The journey to the perfect mortgage rate is seldom a smooth one.
As far as other loan types go, the major fixed-rate averages all witnessed a hike. The 15-year refi average added 8 basis points, while 20-year and jumbo 30-year refinance rates each jumped 9 points on average.
Now, before you're tempted to tear your hair out, we've got some good news: remember those teaser rates you see advertised online? The ones that make your dream home seem nearer than ever? Well, they're not exactly meant to be compared to the averages you see here. Expect to see points and ultra-high credit scores as part of the deal!
The moral of the story? Always store around for the tastiest mortgage refi option, shop, and compare rates like there's no tomorrow. Better yet, take a whirl with our Mortgage Calculator and check out your potential monthly payments depending on your down payment, loan term, and credit score. Remember, a little patience goes a long way!
What's Driving Those Rising Rates?
You're probably wondering why, oh why, mortgage rates just can't seem to make up their minds. The answer lies in a tangled web of macroeconomic and industry factors, but at the heart of it are the following:
- The swings of the bond market, and especially 10-year Treasury yields
- The Federal Reserve's monetary policy and its effects on the mortgage market
- Competitive rivalries between lenders and the various loan types
Since these factors love to dance together, it's tough to pinpoint a single culprit when rates take a leap or a stumble. But fear not, for enlightenment awaits!
When the economy was feeling the brunt of the pandemic in 2021, the Federal Reserve was like a superhero, swooping in with its bond-buying policy to help out. Other economic factors similarly kept the mortgage market fairly sedate.
However, starting November 2021, the Fed began tapering its bond purchases and reducing them sizably until it reached net-zero in March 2022. This tightening approach led to the slow but steady rise of mortgage rates.
The Fed didn't stop there, though. It boldly raised the federal funds rate, a historic, rapid series of increases that lasted 16 months and managed to boost mortgage rates significantly over two years.
Interestingly enough, the Fed has now released its quarterly rate forecast and is indicating a mere two quarter-point rate cuts for the rest of the year. It seems we might be in for a few rate-hold announcements in 2025, folks.
How Mortgage Rates are Tracked
The national and state averages provided are obtained via the Zillow Mortgage API, assuming an 80% loan-to-value ratio and an applicant with a credit score between 680 and 739. These rates should match borrowers' expectations when they start receiving quotes from lenders, so don't be too disheartened if they don't line up with those eye-catching teaser rates!
[1] Federal Reserve[2] Investopedia[3] Zillow, Inc. (2025)[4] CNBC[5] Forbes[6] The Balance[7] Bankrate[8] Investopedia (2022)
- In the realm of personal-finance, a surge in mortgage rates might inspire you to explore alternative investment opportunities, such as token trading in an ICO during a bull run in the finance sector.
- If you're looking to diversify your investing portfolio, considering tokens, especially those from a successful ICO, could potentially generate higher returns compared to the current state of personal-finance with rising mortgage rates.
- On the other hand, the elevated mortgage rates might compel you to seek better returns through engaging in personal-finance strategies like shopping around for the best possible trading deals in the token market or ICOs.
