Mortgage rates jumped A LOT since last week... what happened and will it turn around?
The short answer is that last Friday's inflation data sent markets spiraling, because inflation still shows no signs of slowing down. Inflation is bad for rates, and the reaction by markets pushed mortgage rates shooting higher Friday, only to continue higher on Monday and Tuesday as markets prepared for a larger Fed policy rate hike this week.
The Fed did indeed raise rates more than originally forecast today, by .75%. It is important to realize though that this rate increase was for the Fed's policy rate, the fed funds rate. This was not a direct increase to mortgage rates, which the Fed doesn't control and which had already increased in expectations of this move by the Fed.
The good news is that when the Fed raised rates this week, mortgage rates actually IMPROVED. That is because the markets had already priced the move in, and investors are happy to see the Fed is aggressively acting to bring down inflation. Although we have seen extreme volatility in rates, we could see rates continue to improve as we end the week.
Rates right now are a roller coaster, and although no one has a crystal ball I'd be glad to talk with you anytime about what might be the right move for you if you are considering buying a home or possibly refinancing. Feel free to reach out by phone, text, email or DM me.
