The average interest rate on 30-year mortgages fell to 6.48 percent this week, down from 6.66 percent last week, according to Bankrate’s national survey of large lenders. Mortgage rates tumbled in recent weeks after a sudden banking crisis roiled markets.

The Federal Reserve has been acting aggressively to control inflation, raising rates at nine consecutive meetings dating to early 2022. Those moves have created upward pressure on rates while also intensifying the risk of a recession.

“As long as the dust settles in the banking system, the Fed is intent on raising rates further,” says Greg McBride, chief financial analyst for Bankrate. “With inflation still at 6 percent, it is hard to imagine any significant decline in mortgage rates without a big drop in either inflation or economic activity.”

While its moves are influential, the Fed doesn’t directly set fixed mortgage rates. The most relevant benchmark is the 10-year Treasury yield, which also has bounced around in recent weeks.

Mortgage rates rose steeply for most of 2022, topping 7 percent in November. They retreated from that autumn peak, but they remain well above their 2021 lows of less than 3 percent.

What happened to mortgage rates this week

The 30-year fixed mortgages in this week’s survey had an average total of 0.35 discount and origination points.

Over the past 52 weeks, the benchmark 30-year fixed-rate mortgage has averaged 6.16 percent. A year ago, the 30-year fixed-rate mortgage was 4.73 percent. Four weeks ago, the rate was 6.73 percent. The 30-year fixed-rate average for this week is 1.53 percentage points higher than the 52-week low of 4.95 percent.

As for other loans:

• The 15-year fixed-rate mortgage was 5.83 percent, down from 5.91 percent last week.

• The 5/6 adjustable-rate mortgage (ARM) fell to 6.5 percent, down from 6.57 percent a week ago.

• The 30-year fixed-rate jumbo mortgage was 6.23 percent, down from 6.31 percent last week.

How mortgage rates affect affordability

The national median family income for 2022 was $90,000, according to the U.S. Department of Housing and Urban Development, and the median price of an existing home sold in February 2023 was $363,000, according to the National Association of Realtors. Based on a 20 percent down payment and a mortgage rate of 6.48 percent, the monthly payment of $1,832 amounts to 24 percent of the typical family’s monthly income.

A year ago, median family income was $79,900, the median home price was $364,600 and the average mortgage rate was 3.4 percent. Buying the typical home then required just 19 percent of a family’s monthly income.

Where mortgage rates are headed

Experts expected to see rates decrease by the end of 2023 as the Fed’s round of rate hikes draws to an end, but the resilience of the U.S. economy is throwing a wrinkle into those expectations. Stubbornly high prices are also creating upward pressure.

Mortgage rates typically move in lockstep with the 10-year Treasury. The average rate on a 30-year loan is usually 1.5 to 2 percentage points above the 10-year rate. In the turbulent times of 2022, however, that gap — known as the “spread” — widened to more than 2.5 percentage points.

“The spread between mortgage rates and the 10-year Treasury has been abnormally wide since early 2022,” says Joel Kan, vice president and deputy chief economist for the Mortgage Bankers Association. “Further narrowing of that spread is expected to put downward pressure on mortgage rates in the coming months.”

Methodology

The Bankrate.com national survey of large lenders is conducted weekly. To conduct the National Average survey, Bankrate obtains rate information from the 10 largest banks and thrifts in 10 large U.S. markets. In the Bankrate.com national survey, our Market Analysis team gathers rates and/or yields on banking deposits, loans and mortgages. We’ve conducted this survey in the same manner for more than 30 years, and because it’s consistently done the way it is, it gives an accurate national apples-to-apples comparison. Our rates differ from other national surveys, in particular Freddie Mac’s weekly published rates. Each week Freddie Mac surveys lenders on the rates and points based on first-lien prime conventional conforming home purchase mortgages with a loan-to-value of 80 percent. “Lenders surveyed each week are a mix of lender types — thrifts, credit unions, commercial banks and mortgage lending companies — is roughly proportional to the level of mortgage business that each type commands nationwide,” according to Freddie Mac.