30-year mortgage rates fall below 6%, but there is ‘risk of rapid reversal’

What will happen to mortgage rates in the near future?

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While 30-year fixed-rate mortgage rates have remained above the 6% mark for most of the past two weeks, for the second day in a row this week, mortgage rates fell below the 6% mark. 6%. Indeed, the average rate for 30-year fixed-rate mortgages reached 5.88%, according to the latest data from Bankrate. (You can see the lowest fares you could qualify for here.) So what’s going on?

“With a lack of inflation data this week and growing concern over a Fed-induced recession, rates have moved lower. However, until inflation begins to show a steady deceleration, there is a risk reversal to higher mortgage rates,” says MGreg McBride, Chief Financial Analyst at Bankrate.

This week, Fed Chairman Jerome Powell stressed in congressional testimony that the central bank will continue to raise rates until it sees inflation come down. “It convinced bond markets that inflation will eventually be brought under control. Money flowed into bonds, including mortgage-backed securities, which drove interest rates down,” says Holden Lewis, housing and mortgage expert at NerdWallet.

That said, it’s also important to remember that mortgage rates can fluctuate daily due to a variety of factors, such as who is applying for loans, what kind of resources lenders have to service those loans, and even who is reporting the rates. . “Therefore, to get a real sense of what mortgage rates are doing, you need to step back and look at how they have behaved over longer periods of time – think weeks and months rather than days,” says Jacob Channel. , senior economist at LendingTree. You can see the lowest fares you could qualify for here.

In the coming weeks, Channel says rates could come down slightly as lenders get used to the high inflation environment we live in and try to do more to attract more borrowers, although it adds that is far from guaranteed. “Having said that, even if rates go down, they’re likely to stay close to their current level and it wouldn’t be surprising to see them rise even further by the end of the year,” Channel said.

As for when we’re likely to see rates rise above 6%, McBride says it all depends on inflation. “If the inflation numbers improve from here, we’ve probably seen the peak in mortgage rates. If the inflation numbers continue to deteriorate, mortgage rates will jump above 6%,” McBride says.

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