Economic and geopolitical uncertainty have mortgage rates trapped — and experts say they aren’t holding out hope for major changes.
As of Thursday, the 30-year, fixed-rate mortgage was 6.77% on a weekly basis, according to mortgage giant Freddie Mac, which buys loans from banks, bundles them into securities, and sells them. It's a decrease from the previous week.
The 15-year, fixed-rate mortgage averaged 5.89% during the same time frame, also a decrease from the week prior.
Though it's a weekly decrease in the averages, the data is the continuation of a bigger picture trend that started taking shape in April: Mortgage rates are stuck.
For 11 weeks now, the 30-year, fixed-rate mortgage has bounced between 6.76% and 6.89%, shackled by rampant uncertainty permeating markets and affecting investor and borrower decisions.
“Anyone who’s going to make a prediction with any sort of certainty is a fool,” Melissa Cohn, regional vice president of William Raveis Mortgage, said in an emailed statement. “We are fully loaded with uncertainty.
On a daily basis, there’s been more wiggle room in mortgage rates, as lenders can react more quickly to fluctuations in the market. As of Wednesday afternoon, the daily 30-year, fixed-rate mortgage had decreased to 6.79% and the 15-year, fixed-rate mortgage had fallen to 6.02%.
Economists warn mortgage market could stay stuck
Economists and industry experts have signaled that there likely won’t be much change in the mortgage market anytime soon.
One indicator is the Federal Reserve’s approach to interest rates. Though the central bank doesn’t set mortgage rates, its interest rate policy often affects investor behavior, which in turn dictates movement in the mortgage market.
Last week, the Fed voted to keep interest rates unchanged. And earlier this week, chairperson Jerome Powell testified before Congress and explained that decision in depth, citing economic data and — unsurprisingly — uncertainty.
“Policy changes continue to evolve, and their effects on the economy remain uncertain,” Powell said Tuesday. “For the time being, we are well-positioned to wait to learn more about the likely course of the economy before considering any adjustments to our policy stance.”
The recent constriction in the mortgage market has some economists worried. The Mortgage Bankers Association, for example, updated its forecast for the rest of the year, predicting that rates will “decline only slightly to 6.7% by the end of the year,” according to CEO Bob Broeksmit.
“Economic, financial, and geopolitical uncertainty have kept mortgage rates volatile and in the same narrow range,” he added in a statement.