As I’ve said before when talking about mortgages, what a difference a week makes. Or a few days.
If you’re new to mortgage rates, know that first and foremost, they can change a lot. And it can change from one day to the next.
Similar to a stock, the price may not be the same tomorrow (it may be higher or lower or it may not change).
In addition, the price can change several times a day, usually when there is a lot going on.
That happened today, with the afternoon price coming in after prices had improved since yesterday.
Why Are Mortgage Rates Down Today (and Yesterday)?
In short, weak economic data was the driver and low mortgage rates were the beneficiaries.
We had several economic reports coming in that were cooler than expected this week, including PPI, CPI, initial jobless claims, and retail sales.
It was basically the best you could ask for in terms of economic data. And as we all know, weak economic data leads to lower mortgage rates (and vice versa).
So if you’re fighting for low mortgage rates, unfortunately you also have to focus on keeping the economy cool.
Granted, you don’t need to root for it to fall, so it’s not entirely a matter of trusting some weakness.
Inflation has been hot for years, and it’s okay if it slows down while the economy continues to move forward at a reasonable pace.
There is a sweet spot in the middle, often known as a “soft landing,” which is where the economy slows down but does not fall into recession.
It remains to be seen what happens there, but if you’re curious about what mortgage rates do during a recession, I wrote about that too.
On top of this data win, the confirmation of new Treasury Secretary Scott Bessent took place today.
Bonds got a jump when they were first announced in November as well, and the market seems to like him again today.
He basically sees a voice of reason in what could be a tumultuous administration. In addition, he has reduced prices like inflation.
Finally, Federal Reserve Governor Christopher Waller has said that the Fed may cut rates faster and faster if the outlook for inflation continues to be positive.
Long story short, these events have fueled many of the reasons that mortgage rates have jumped over the past few months.
How Much Are Mortgage Rates Rising?
Although it is difficult to find the perfect gauge, since not all banks and lenders offer the same rates, or adjust them accordingly, we can at least pack it in.
One good place to see daily rate movements is the Mortgage News Daily compilation, which posts daily rates for 30-year mortgages.
They had a posted rate of 7.26% on Tuesday, which was the highest rate since May 2024!
Rates have since dropped to 7.07% as of today. And there is a tax in the afternoon as well, as noted.
The first release put the 30-year at 7.11%, before additional releases dropped another four basis points to 7.07%.
In fact, many borrowers who close their rates are now getting loans that start at 6 instead of 7.
That’s because real-time lock-in data from Optimal Blue put the 30-year yield at 6.96% as of Wednesday.
Probably dropped a decent amount today as well, which we will get tomorrow. In other words, borrowers may be closing in rates closer to 6.875% instead of 7.125% or 7.25%.
So maybe a weekly improvement of .25% to .375%, and mental efficiency from 7 to 6.
Can the Interest Rate Continue?
The million dollar question is can this continue or will it face an inevitable disaster. Perhaps it is inevitable.
If the data continues to cooperate and the new administration, which takes office on Monday, does not confuse the markets, the rally could continue.
And mortgage rates can continue to fall. How low is another question, but if the data, like unemployment and inflation, come right, we could be back to where we were in September.
If you remember, the 30 year fixed rate was around 6% back then, just before the Fed cut its fed funds rate. Then we got a report of hot jobs, which was full of pain.
Assuming those things get resolved and inflation slows down and the labor market doesn’t look hot, mortgage rates could return to those levels.
But there’s also government spending to worry about and Treasury withdrawals, which a lot of people are worried about under Trump. Not to mention the many other inflationary ideas that may or may not come to fruition.
I wrote about what might happen to mortgage rates in Trump’s second term if you want to know.
The cliffnotes are that it depends on what you actually do versus what you say you will do, and how these actions will affect the economy.
But the rest may be out of his hands, if for example, we are already facing a recession.
To sum things up, just like every other year, there will be opportunities as prices ebb and flow, so if you’re buying a home, pay close attention to prices every day.
Read on: Mortgage rate predictions 2025
Before creating this site, I worked as an account manager for a real estate broker in Los Angeles. My experiences in the early 2000s inspired me to start writing about mortgages 18 years ago to help prospective (and existing) home buyers better navigate the mortgage process. Follow me on Twitter for the latest.
Source link
