Historically, mortgage rates have followed the 10-year U.S. Treasury yield. A growing number of investors, concerned about instability in the banking sector, are now fleeing to the safety of these government-backed bonds. An increase in bond prices means lower yields—and lower mortgage rates.
But, this situation is rapidly evolving. On Wednesday, the U.S. Federal Reserve announced that it will hike its benchmark rate again as it continues its efforts to fight inflation, but this time by only a quarter percentage point. It also hinted that its series of rate hikes may be nearing an end.
Economists at the Mortgage Bankers Association (MBA) and National Association of Home Builders predict that this could put further downward pressure on mortgage rates.
“With this move from the Federal Reserve, MBA is holding to its forecast that mortgage rates are likely to trend down over the course of this year, which should provide support for the purchase market. The housing market was the first sector to slow as the result of tighter monetary policy and should be the first to benefit as policymakers slow—and ultimately stop—hiking rates,” said MBA SVP and Chief Economist Mike Fratantoni in a statement following the Fed’s announcement.
However, no one can predict with certainty how the market will react to the Fed’s policy moves—or how the banking crisis will play out and ultimately impact rates.
Bottomline: We could see some major volatility in mortgage rates in the coming months.
What All This Could Mean for You
BUYERS:
If you have considered buying a home, it’s important to be aware of the situation and to be prepared to lock in a low rate when the time is right. A lower mortgage rate could potentially save you hundreds of dollars on your monthly payment, so you can’t afford to miss out.
It’s also going to be crucial to work with knowledgeable real estate professionals (like us!) who are monitoring this situation closely as it continues to unfold. We can also refer you to a trusted mortgage professional, who can help you get pre-qualified for a home loan.
SELLERS:
A further dip in mortgage rates could bring more buyers to the market. These buyers may want to act quickly in case rates rise again.
If you’ve been on the fence about selling your home, now may be the perfect time. We can help you prep your home and get it listed quickly to take advantage of a possible increase in demand.
HOMEOWNERS:
Depending on the terms of your current mortgage, you could save a bundle by refinancing if rates fall significantly. Let us connect you with a mortgage professional to discuss your options.
What Steps You Should Take Now
You don’t want to miss out on this potential window of opportunity! Contact us today to schedule a free consultation so that you can be prepared.
And as always, don’t hesitate to reach out with any questions about this or other real estate issues. We would love to hear from you!
