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Mortgage rates today: Thursday, Feb. 2, 2023
On Thursday, Feb. 2, 2023, the average interest rate on a 30-year fixed-rate mortgage dropped 19 basis points to 6.002% APR. The average rate on a 15-year fixed-rate mortgage fell 35 basis points to 5.167% APR, and the average rate on a 5-year adjustable-rate mortgage fell four basis points to 6.587% APR, according to rates provided to NerdWallet by Zillow. The 30-year fixed-rate mortgage is 29 basis points lower than one week ago and 244 basis points higher than one year ago. A basis point is one one-hundredth of one percent. Rates are expressed as an annual percentage rate or APR.
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Mortgage rates this week
Fixed mortgage rates moved in opposite directions in the week ending Feb. 2, but they have reason to head down over the next few days.
The 30-year fixed-rate mortgage averaged 6.2% APR, down six basis points from the previous week's average.
The 15-year fixed-rate mortgage averaged 5.32% APR, up six basis points from the previous week's average.
The five-year adjustable-rate mortgage averaged 6.62% APR, down two basis points from the previous week's average.
All three loan terms, including the 15-year mortgage, fell Thursday, the day after the Federal Reserve raised short-term interest rates, and may have room to fall more. That might sound odd: Why would mortgage rates go down after the Fed moved short-term rates up? The answer is that mortgage rates respond to broad economic trends, not only to the Fed's rates decisions. So when it looks like the economy is about to slow down, mortgage rates tend to fall.
The Federal Reserve is deliberately slowing the economy to bring inflation under control. In prepared comments following Wednesday's Fed meeting, Chair Jerome Powell described this plan in Fedspeak: "We have been taking forceful steps to moderate demand so that it comes into better alignment with supply." In regular English, that means, "We have aggressively raised mortgage rates so consumers and businesses will buy fewer goods and services."
In a news conference following his prepared remarks, multiple reporters asked Powell questions that boiled down to a version of: "Are you worried about raising rates too much? Why not pause before raising rates again?" Powell responded that "a couple of more rate hikes" are likely to come "because inflation is still running very hot."
Mortgage markets seem concerned that the Fed might tip the economy into recession as it labors to cool inflation.
"Waning economic indicators and fears that the Fed may go too far in its battle against inflation are likely driving the decline" in mortgage rates, Orphe Divounguy, senior macroeconomist for Zillow Home Loans, said in a statement.