Mortgage Rates Slide to 6.6%. Expect Volatility to Continue.

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The drop in rates has led to an increase in applications for mortgages.

Jim Watson/AFP via Getty Images

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Mortgage rates fell sharply this week, according to data released today. Lower rates are good news for buyers – but in the short term, expect volatility.

The average rate on a 30-year fixed-rate mortgage fell 0.13 percentage point to 6.6% on Thursday, according to Freddie Mac.,
The decline capped a five-straight week of gains, during which time warmer-than-expected economic data pushed 10-year Treasury yields higher, with mortgage rates often higher.

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“Mortgage rates declined after five consecutive weeks of rising by more than a half percentage point,” Sam Khater, chief economist at Freddie Mac, said in a statement. “The turbulence in the financial markets is putting significant downward pressure on rates, which should benefit borrowers in the short term.”

The financial turmoil began late last week following the failure of Silicon Valley Bank. Volatility continued this week as investors digested the implications of the news, including broader bank concerns and implications for the Federal Reserve’s fight against inflation.

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Such turmoil has sent the 10-year Treasury yield, along with mortgage rates, on an often wild ride. The yield fell 0.179 percent on Monday, gained 0.118 percent on Tuesday, and slipped 0.141 percentage points to 3.492 percent on Wednesday, according to Dow Jones Markets data.

Daily mortgage rates have moved similarly: Mortgage News Daily’s measure of the 30-year fixed-rate mortgage fell to 6.57% on Monday, rose to 6.75% on Tuesday, and fell again to 6.55% on Wednesday.

So far, there are few signs that the decline in mortgage rates is helping home demand. Mortgage applications as measured by the Mortgage Bankers Association rose last week as its gauge of mortgage rates fell.

“Mortgage applications rose for a second week in a row amid falling rates, fueled by concerns about the health of many institutions in the banking sector,” Bob Brockschmidt, CEO of the trade group, said in a statement. “Additional applications could benefit from the anticipated further rate declines as the spring home buying season begins.”

The trade conglomerate isn’t the only industry player seeing an uptick. On March 10, Redfin’s mortgage lending company locked rates on more loans than any other day this year, the brokerage said on Thursday, though it noted that demand remained low relative to last year’s levels. happened.

“Buyers jumped in when rates fell because they are very volatile right now, indicating that many people are waiting for the right time to enter the market,” Redfin Economics Research Lead Chen Zhao said in a statement.

“Where mortgage rates go from here will largely depend on how the Fed reacts to extremely high inflation, along with chaos in the banking industry in the US and abroad,” Zhao said. The company expects the Federal Reserve to either raise rates slightly or keep them the same, Zhao said, “which will then send mortgage rates down and bring back many sidelined buyers and sellers.”

Investors will get the answer on March 22 after the conclusion of the two-day Federal Open Market Committee meeting. As of Thursday afternoon, market participants had expected a 79% chance of a 0.25 percentage point rate hike during the Federal Reserve’s upcoming meeting. CME Fedwatch Tool,

Until then, it could be a bumpy ride for mortgage rates based on Treasury yield movements. While the 10-year Treasury yield fell earlier in the day, it eventually rose 0.088 percentage points to 3.580%, according to Dow Jones market data, as bank news was bright. The Mortgage News Daily’s rate gauge also rose, rising 0.14 percentage points to 6.69% on Thursday.

Freddie Mac said the volatility means it’s an opportune time for buyers to shop for mortgages. “During times of high mortgage rate volatility, home buyers would benefit greatly from shopping around for additional rate quotes,” Khater said. “Our research concludes that homebuyers can potentially save $600 to $1,200 annually by taking the time to shop among multiple lenders.”

Write to Shaina Mishkin at [email protected]

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