Finance
In a year marked by significant market swings, mortgage rates have found themselves stuck in a narrow range, hovering just below 6.9% to just above 7%. The average rate on a 30-year loan recently ticked down to 6.87%, but experts warn that further decreases may be challenging given the current financial landscape.
The volatility in financial markets, particularly in stock and bond prices, has been a key factor in keeping mortgage rates stable. This week alone, 10-year Treasury yields, which typically mirror mortgage rates, experienced sharp fluctuations. On Wednesday, yields rose following the release of the Consumer Price Index data, which showed inflation exceeding the Federal Reserve's 2% target. However, a day later, yields dropped after President Donald Trump announced plans for reciprocal tariffs on U.S. imports, though they won't take effect immediately.
Market Gyrations and Mortgage Rates
The frequent market swings have become a norm, especially in response to evolving tariff proposals. These fluctuations often cancel each other out, resulting in mortgage rates remaining within a tight range for most of 2025. According to Zillow senior economist Kara Ng, "Given a range of potential outcomes and a lack of clarity, markets are really what's driving mortgage rates to fluctuate weekly."
Mortgage rates, while not directly controlled by the Federal Reserve, typically move based on expectations about benchmark interest rates. Following the latest inflation data, traders have reduced their expectations for further Fed cuts, seeing low odds of a rate reduction before September.
Prospects for Future Rate Changes
Realtor.com senior economist Joel Berner noted that mortgage rates are unlikely to drop significantly soon. "Mortgage rates are unlikely to drop much any time soon, as debt market investors demand higher returns to account for weakening spending power, and the Federal Reserve is unlikely to lower interest rates," Berner stated. "The days of sub-4% mortgage rates are over, and if inflation continues to resist being stamped out, they may not be back for a long time."
As the financial landscape continues to evolve, potential homebuyers and existing homeowners are left to navigate these challenging conditions, with mortgage rates likely to remain near their current levels for the foreseeable future.
Source:
Claire Boston, Yahoo Finance https://finance.yahoo.com/news/stock-and-bond-prices-are-whipping-around-weirdly-thats-leaving-mortgage-rates-stuck-near-7-170219725.html
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