The mortgage industry has been on a roller coaster ride this year due to a resilient economy. In the span of a month, mortgage rates rose nearly 7% after hitting a low of 6%.
Thank you for reading this post, don't forget to subscribe!“The economy continues to show strength, and interest rates are turning to the threat of stronger-than-expected growth, a tight labor market and stagnant inflation,” said Sam Khater. Freddie MacChief Economist of
The latest economic data, including the job market, consumer spending — which remained strong — and inflation numbers, which displayed unpredictable staying power, prompted investors to bet that federal Reserve Will continue to raise its federal funds rate through the summer.
Even before the release of these figures, the minutes from Jan. 31-Feb. 1 Fed officials meeting showed they need to do more to get inflation back to 2% fast.
“With inflation still well above the Committee’s long-term target, participants generally noted that risks to the upside to the inflation outlook remain an important factor shaping the policy outlook, and that while inflation clearly Maintaining a restrictive policy stance is appropriate from a risk management perspective,” the minutes released on Wednesday said.
The 10-year Treasury yield, which serves as a benchmark for mortgage rates, rose to 3.93% on Wednesday from 3.81% the previous week.
After the rise in the 10-year Treasury yield, Freddie Mac’s fixed rate for 30-year loans also continued to rise.
The latest survey from Freddie Mac showed the 30-year fixed-rate mortgage rose again to 6.5% on February 23, up 18 basis points from last week’s 6.32%. A year ago this time the rates were at 3.89%.
About three weeks ago, Freddie Mac’s mortgage rates fell to 6.09% — despite the Fed’s aggressive tone of keeping inflation on target at 2%.
Optimal Blue data at HousingWire’s Rate Center showed the rate at 6.64% on Wednesday, up from 6.48% last week. mortgage news daily The rates shown on Wednesday were 6.88%, up one bps from the previous day.
‘Somebody’s Market’
realtor.com Economist Jiayi Xu said that although it is difficult to predict whether the Fed will take an aggressive move next month, if companies gear up to prepare for a possible economic downturn, it could put jobs in the tech industry and service sectors at risk. can put
“This means that the housing market will remain a ‘nobody’s market’ – neither favorable to buyers nor to sellers. Mortgage rates are expected to move in the range of 6% – 7% over the next few weeks, which is an indication of affordability.” remains a significant challenge,” Xu said.
In turn, potential buyers may choose to stay in the rental market, increasing the already high rental demand, Xu explained.
Higher mortgage rates also make it less attractive for people to list their homes to sell and buy, said Logan Mohtashmi, principal analyst at HousingWire.
“As we saw after June of last year, when mortgage rates rose above 6%, new listing data began to decline year over year and are still falling year over year,” he said.
But for those looking to shop in a rate-rising environment, borrowers are advised to shop around among lenders to find the best rate.
“Our research shows that rate spreads increase as mortgage rates rise. This means homebuyers could potentially save $600 to $1,200 annually by taking the time to shop between lenders to find a better rate. Are.
