After a seven-week streak, mortgage rates reversed the course, and the current average rate for fixed home loans for 30 years is about 6.7%.
This week, investors will stick to the Fed’s interest rate forecast, while concerns over potential recessions and uncertain trade policies put pressure on financial markets. Mortgage rates related to bond markets have fueled momentum due to President Trump’s on-site tariffs, stock market volatility and geopolitical uncertainty.
Tax transactions this week
The transaction was selected by the CNET Group business team and may not be related to this article.
Central banks are expected to keep interest rates stable at a FAP meeting on Wednesday – despite inflation, increased unemployment and slower economic growth may force the Fed to lower interest rates in late spring or early summer. In the long run, a benchmark federal funding rate reduction will indirectly reduce other consumer lending rates, such as mortgages.
Fannie Mae projected mortgage rates, which remained above 6.5% for most of the year. However, lenders base their interest rates on a range of factors and do not set the forecast to stone. Given the instability of the economy, any sign of risk or disruption could change the trajectory of mortgage rates.
For example, if the downturn seems likely to start to decline, but they need to lower nearly 5.5% of people to get buyers into the market on a large scale, said Alex Thomas, a research and consulting firm for John Burns.
While cheap home loan rates are positive for housing affordability, a shaky economy can freeze the housing market. “If lower mortgage rates are the result of the recession, housing demand may be muted,” Thomas said.
What happened to the mortgage market this week?
The key question is how the Trump administration’s economic tightening measures and trade policies will affect the Fed’s interest rate adjustment in the coming months. At the FOMC meeting from March 18 to 19, the central bank will release a latest summary of economic forecasts outlining policymakers’ outlook for interest rates in 2025.
The Fed’s mission is to maintain maximum employment and include inflation. A slow economy usually requires lower interest rates to stimulate growth, but when inflation remains viscous, lower interest rates too quickly promote price growth.
Although the latest data does not show a surge in unemployment or a surge in inflation, it does not have enough time to cook in real time. For example, the wave of federal layoffs and layoffs has not yet been a continuing trend in official labor data. “To change its policy stance, it will take more than a month of negative employment data,” said Julia Pollak, chief economist at Ziprecruiter.
This is because the numbers and statistics economists and the Fed rely on are backward looking, while investors make moves based on expectations and speculation. “It may take some time for us to see the data catching sentiment, but it’s clear that it’s hard for businesses and consumers to calibrate their future plans right now,” Thomas said.
Mortgage rates will continue to fluctuate until the economic impact of government policies becomes clearer. Tariffs are widely considered inflation, but they can prove temporary and only translate into one-time price increases in goods and services.
What is the prospect of the housing market this year?
In addition to daily volatility, mortgage rates may remain above 6% for a period of time. This seems to be high compared to the 2% rate in recent pandemic times. But experts say it is unlikely that fixed mortgages will fall below 3% in 30 years without a severe recession. Since the 1970s, the average interest rate for fixed mortgages in 30 years has been around 7%.
Potential homebuyers who have been waiting for mortgage rates to drop in the past few years may need to adapt to the “new normal” of the mortgage market, thus volatility between 5% and 7% over the long term.
Today’s unaffordable housing market is not only the result of high mortgage rates. Over the past few years, long-standing housing shortages, expensive housing prices and loss of purchasing power due to inflation have turned buyers out.
Expert skills for home buyers
As the spring home buying season approaches, potential home buyers want to know whether to enter the market or continue to wait off the market. It’s never a good idea to rush to buy a home without having a clear budget.
Here is what the experts suggest before buying a home:
💰Build your credit score. Your credit score will help determine if you are eligible for a mortgage and at what interest rate. A credit score of 740 or higher will help you get a lower interest rate.
💰 Save a bigger down payment. A larger down payment allows you to take out a smaller mortgage and get a lower interest rate from the lender. If you can afford it, a down payment of at least 20% will also eliminate private mortgage insurance.
💰Shopping Mortgage Lender. Comparing loan offers from multiple mortgage lenders can help you negotiate higher interest rates. Experts recommend getting at least two to three loan estimates from different lenders.
💰 Consider the mortgage point. You can earn a lower mortgage rate by purchasing mortgage points, with each point costing 1% of the total loan. One mortgage point equals your mortgage rate drops by 0.25%.
More information about today’s housing market
