Mortgage rates are on the rise after remaining steady for more than six weeks. According to Mortgage News Daily, the average rate for a 30-year fixed rate mortgage jumped to 3.11%, an increase of 10 basis points from last week. This increase signals the first time mortgage rates have risen since early 2021, raising some concern about volatility in the market.
To understand the extent to which volatility has returned to the mortgage rate market, it is helpful to first consider the factors that have shaped home finance over the past several months. Since the COVID-19 pandemic began, lenders have been particularly conservative in their lending practices, resulting in a prolonged period of mortgage rates hovering around historic lows. The trend of lower rates was further encouraged by the Federal Reserve’s decision to maintain its near-zero interest rate policy until at least 2023.
In spite of this steady trend, however, mortgage rates are beginning to climb in response to a mid-May sell-off of bonds. The 10 basis point increase, while not considered significant, highlights the potential for additional volatility. This could mean that rates are more likely to fluctuate over the coming months, with the potential for further rises in response to economic data and other influences.
Although mortgage rates have increased for the first time in over a year, the long-term outlook remains supportive of low mortgage rates. With the Federal Reserve’s commitment to low interest rates continuing through at least 2023, there is still an expectation that mortgage rates will remain near record-low levels for the foreseeable future. As such, potential homeowners may still benefit from taking out a mortgage now in order to lock in low rates and take advantage of the likely stability of mortgage markets over the coming year.
You can read this full article at: https://www.housingwire.com/articles/mortgage-rates-rise-for-the-first-time-in-2023-is-volatility-back/(subscription required)
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