Key Takeaways
- This year saw mortgage rates climb to a historic high, notching their most expensive levels since 2000.
- The lowest period for 2023 rates was in February, while the 23-year peak arrived in mid-October.
- Rates have since been tempered by a dramatic December fall-off.
- The spread between 2023's lowest and highest averages was more than 2 percentage points for the major fixed-rate loan types, and almost 1.5 percentage points for the 5/6 ARM average.
- Future mortgage rates are always difficult to forecast. But given the Fed's expectation of cutting rates in 2024, it's generally anticipated mortgage rates will ease lower next year.
A 2023 Roller Coaster for 30-Year Mortgage Rates
While it's true that 2022 was a remarkable year for 30-year mortgage rates, surging almost 4 percentage points between December 2021 and December 2022, it was 2023 that sent 30-year mortgage rates into the historic stratosphere.
The 30-year new purchase rate average ended 2022 at 7.17%. But within six weeks, it had dropped more than a percentage point to a 6.11% reading on Feb. 2. For three months afterward, it bobbed around between that lower 6% range and 7.30% in early March.
But since its 7.01% reading on May 17, the flagship average has not dipped back below 7%. Worse, in the five months from mid May to mid October, the 30-year average skyrocketed almost another 1.5 percentage points. On Oct. 17, it peaked at 8.45%, which is estimated to be the highest level for 30-year rates since 2000.
Fortunately, the end of the year has delivered some holiday relief for anyone who needs to secure a new loan. In less than two months since October's historic high-water mark, 30-year mortgage rates have sunk back down to about 7%. On both Dec. 19 and 20, the 30-year average sat as low as 7.01%, though the average has inched a bit higher to 7.06% today.
Dramatic 2023 Movement for All Major Loan Types
The 30-year mortgage average was not the only loan type to see a major swing between its 2023 peak and valley. The FHA 30-year, 15-year, and jumbo 30-year averages all saw a spread of more then 2 percentage points between their lowest and highest 2023 readings.
The span between the lowest 5/6 adjustable-rate average of the year and its 2023 high point was not quite as wide, but still showed a swing of almost 1.5 percentage points.
| New Purchase Loan Type | 2023 Low Average | 2023 High Average | Spread from Lowest to Highest | Most Recent Average |
|---|---|---|---|---|
| 30-year fixed | 6.11% | 8.45% | 2.34% | 7.06% |
| FHA 30-year fixed | 6.03% | 8.30% | 2.27% | 6.95% |
| 15-year fixed | 5.40% | 7.52% | 2.12% | 6.31% |
| Jumbo 30-year fixed | 5.23% | 7.59% | 2.36% | 6.27% |
| 5/6 ARM | 6.56% | 8.00% | 1.44% | 7.48% |
Freddie Mac's Historical Context for 2023 Rates
Investopedia's mortgage rate averages are daily readings, and only include zero-point loans. In contrast, Freddie Mac publishes a weekly average, which blends five previous days of rates, and includes loans priced with discount points.
But while Freddie Mac's 30-year rate average does not provide the same precision as Investopedia's average, a useful advantage of Freddie Mac's reading is its more than 50-year historical record. Because it has tracked 30-year mortgage rates all the way back to 1971, Freddie Mac is an excellent resource for putting today's rates into a historical perspective.
This decades-long rate log is what shows that October's peak was the highest point for 30-year new purchase rates since November 2000. In the Freddie Mac average, the weekly peak was notched on Oct. 26, with a reading of 7.79%. But after eight consecutive weeks of declines, the Freddie Mac 30-year average has dropped more than a percentage point to 6.67%.
Where Mortgage Rates Are Headed in 2024
Though the Federal Reserve's decisions on its federal funds rate do not directly move mortgage rates, major rate decisions by the Fed do have an indirect impact on what lenders are charging for mortgages. And with the central bank raising its benchmark rate in 2023 to its highest level since 2001, it's unsurprising that the aggressive Fed campaign—plus decades-high inflation—caused mortgage rates to move substantially higher.
But inflation has now cooled, and though it's not yet at the Fed's desired 2% target level, the Fed committee announced a third consecutive rate hold on Dec. 13. More importantly, data released by the Federal Reserve that day shows that 80% of the committee members anticipate the federal funds rate will be cut two to four times in 2024, with a median forecast of three rate cuts of 0.25% each.
Whether this rate movement will occur as expected is unknown. But if the federal funds rate does indeed come down next year, it's generally expected mortgage rates will ease lower as well. Of course, the magnitude and speed of mortgage rate reductions are left to be seen. Falling substantially from 2023's record peak may be a slow decline that takes much longer than just the next calendar year.
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.
Article Sources
Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in oureditorial policy.
Freddie Mac. “Mortgage Rates.”
Federal Reserve Board. "Federal Reserve Issues FOMC Statement, Dec. 13, 2023."
Federal Reserve Board. "Economic Projections From the Dec. 12-13 FOMC Meeting."
