Another Drop in Mortgage Rates
The end of March saw another rate drop for the second week in a row even with the uncertainty stemming from the economy and bank failures. According to Freddie Mac, the 30-year fixed-rate mortgage averaged 6.42% which was down from 6.60% the week prior. Unfortunately, this is still no match for the 30-year fixed-rate mortgage rate from a year ago at 4.42%.
“Mortgage rates continued to slide down as financial market concerns came to the fore over the last two weeks,” said Sam Khater, Freddie Mac’s chief economist.
“If mortgage rates continue to slide over the next few weeks, look for a continued rebound during the first weeks of the spring homebuying season,” replies Khater.
The Fed will still likely boost the rates a little to offset the volatile economy we are currently in. Robust economic data suggested the Federal Reserve was not done in its battle to cool the US economy and would likely continue hiking its benchmark lending rate. The rate was raised by the Feds at the end of March by a quarter point but the Fed also said that the aggressive rate hikes will more than likely stop.
“Depending on the extent of the impact of a tighter banking sector, Powell expressed a ‘wait-and-see’ approach to further contractionary policy. However, the federal funds rate is expected to remain elevated through the end of the year, meaning that a higher interest rate environment is here to stay for the time being, including for home loans,” says Hannah Jones with Realtor.com.
The rate is based on the yield on 10-year US Treasury bonds which will move according to the Fed’s action. Basically, when the Treasury goes up, mortgage rates will also go up and when the Treasury goes down, so do mortgage rates.
“At the current price and mortgage rate level, the typical housing payment on a median-priced home is 43% higher than one year ago,”said Jones.
