![]() “Although the national housing market is experiencing a slow spring, there is growing competition in relatively affordable markets, particularly in the Northeast and Midwest regions,” said Xu. ![]() High prices and elevated mortgage rates have prompted buyers to seek more affordable options, said Xu. “Prospective sellers continue to be reluctant to jump into the market because of still-high mortgage rates that would replace their existing low rate mortgages.” “Ongoing volatility in the financial markets has pushed mortgage rates higher recently, contributing to weaker activity for purchase and refinance applications,” said Bob Broeksmit, MBA president and CEO. Home buyers remain sensitive to mortgage rate spikes, with mortgage applications dropping last week, according to the Mortgage Bankers Association. When Treasury yields go up, so do mortgage rates when they go down, mortgage rates tend to follow. ![]() Mortgage rates tend to track the yield on 10-year US Treasuries, which move based on a combination of anticipation about the Fed’s actions, what the Fed actually does and investors’ reactions. The Fed does not set the interest rates that borrowers pay on mortgages directly, but its actions influence them. “Generally, officials concurred on the importance of closely monitoring incoming economic data and maintaining flexibility leading up to the next policy meeting.” “Although investors anticipate a pause at the upcoming meeting after ten consecutive rate hikes, the minutes revealed a sense of uncertainty regarding the future direction of monetary policy,” said Xu. If that weren’t enough, investors are also looking at the Federal Reserve’s actions, as revealed in the minutes released from May’s meeting. “Resolving the debt impasse sooner rather than later would mitigate potential adverse effects on the housing market, which is already contending with high prices and elevated mortgage rates.” “Although the probability of a default remains low, even the fears and panic related to a potential government default could cause creditors to ask for higher interest rates from the US Treasury, resulting in a significant increase in various borrowing costs, including mortgages,” said Xu. ![]() The rate climbed this week following the trend of 10-year Treasury yields, as investors closely track the ongoing debt ceiling negotiations and evaluate the possible direction of Federal Reserve interest rate policy, said Jiayi Xu, an economist at. Even the threat of a deal not being reached is having a financial impact on people. Zillow projects that home buying costs could spike by 22% and mortgage rates could top 8% should the US default on its debt. Since mid-March, rates have gone up and down but have stayed under 6.5%.īut with current uncertainty, rates tipped over 6.5% this week. Since then they have gone as high as 7.08%, last reached in November. Mortgage rates topped 5% for the first time since 2011 a little more than a year ago and have remained over 5% for all but one week during the past year. economy is showing continued resilience which, combined with debt ceiling concerns, led to higher mortgage rates this week,” said Sam Khater, Freddie Mac’s chief economist. A year ago, the 30-year fixed-rate was 5.10%. The 30-year fixed-rate mortgage averaged 6.57% in the week ending May 25, up from 6.39% the week before, according to data from Freddie Mac released Thursday. Mortgage rates are beginning to feel the impact of the debt-ceiling standoff, jumping higher for the second week in a row amid the uncertainty.
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