- The average rate on the popular 30-year fixed mortgage fell to 6.57% on Monday, according to Mortgage News Daily.
- If rates continue to fall now, buyers may return to the housing market.
- “This mini banking crisis should lead to a change in consumer behavior to have a long-term positive impact on rates. It still has to do with inflation,” said Matthew Graham, COO of Mortgage News Daily.
The average rate on the popular 30-year fixed mortgage fell to 6.57% on Monday. Mortgage News Daily. This is below the 6.76% on Friday and the recent high of 7.05% last Wednesday.
Mortgage rates freely follow yields on 10 year treasurywhich fell to a monthly low due to the failures Silicon Valley Bank And Signature bank and the subsequent wave in the country’s banking sector.
In real terms, for a buyer looking for a $500,000 home with a 20 percent down payment on a 30-year fixed mortgage, this week’s monthly payment is $128 less than last week. However, it is still higher than in January.
So what does this mean for the spring housing market?
In October, rates rose by more than 7%, and this led to a real slowdown in home sales. But then in December, rates began to fall and by the end of January they were about 6%. This caused an unexpected 8 percent monthly jump in pending home sales, which is the National Association of Realtors’ record of signed contracts for existing homes. Sales of newly built homes, which the Census Bureau estimates from signed contracts, also rose much higher than expected.
While the numbers for February are not yet known, agents and developers are reporting that sales picked up significantly in February as rates soared. So if rates keep dropping now, buyers might come back again, but that’s a big if.
“This mini banking crisis should lead to a change in consumer behavior to have a long-term positive impact on rates. It still has to do with inflation,” said Matthew Graham, COO of Mortgage News Daily.
Markets must now grapple with the “inflationary impact of consumer fear,” he added, noting that Tuesday’s latest report on the consumer price index, the economy’s monthly measure of inflation, is due.
As recently as last week, Federal Reserve Chairman Jerome Powell told members of Congress that the latest economic data was stronger than expected.
“If the backbone of the data indicated the need for faster tightening, we would be ready to increase the pace of rate hikes,” Powell said.
Although mortgage rates do not exactly follow the federal funds rate, they are strongly influenced by both the Fed’s monetary policy and its outlook on future inflation.
Credit: www.cnbc.com /