Mortgage rates are on a slightly lower trend, with the average rate for fixed mortgages for 30 years falling from the 6.9% range in early February to around 6.7% this week. However, a volatile economy could continue to freeze the housing market for a while.
US stocks fell after President Donald Trump refused to rule out a full-scale recession In a Sunday interview. Future home buyers have what Trump currently calls a “transitional period,” accompanied by sudden inflation, economic austerity and slowing the job market.
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Higher unemployment rates reduce consumer spending, slower demand, and generally lead to lower mortgage rates. Colin Robertsona mortgage industry expert and founder of Truth on mortgage websites. “Mortgage rates could fall into scope due to uncertainty regarding tariffs, trade and government spending,” Robertson added.
Housing giant Fanny May expects average mortgage rates to exceed 6.5% for most of the year. Lenders set fees based on a variety of factors, including investors’ expectations and the monetary policy of the Federal Reserve. Changes in economic outlook could change mortgage forecasts over the coming months.
What is the decline in mortgage rates this week?
Growing concerns over the Trump administration’s tumultuous economic agenda have led to reduced investors’ confidence in the stock market, increased bond demand and lower yields. A decrease in bonds will lead to a reduction in borrowing costs for home buyers (a 30-year fixed-rate mortgage is closely tied to a 10-year Treasury banknote).
If the decline in mortgage rates are based on expectations for slow economic growth, it says it is “far from the desired economic environment.” Matt Collieran economist in Moody’s analysis. “This is not a rosy painting,” Korea said.
In any case, a slightly lower mortgage fee this month won’t change the housing affordability equation, especially if household incomes can’t keep up with the high cost of living. As shown below, today’s mortgage rates are still higher than last September.
How does the Fed have an impact on prices?
The big question is how new employment data and fiscal tightening will affect the Federal Reserve interest rate adjustments in the coming months. The Fed does not directly set mortgage fees, but changes to federal funds in the benchmark will affect other consumer borrowing rates, such as mortgages, over the long term.
The Fed has cut interest rates three times after inflation showed continued signs of slowing down in the second half of 2024. However, it is unlikely that central banks will cut the cut at future meetings on March 19th. meanwhile New York Forum Last Friday, Fed Chairman Jerome Powell repeatedly reiterated the need to maintain a stable rate based on the unpredictable impact of government policies. “We’re in a good position to wait for it to become clearer,” Powell said.
The market expects the Fed to resume interest rate cuts in May or June, when it becomes clear whether the risk of an employment recession is increasing. The wave of federal layoffs and job cuts has not yet been reflected as a sustained trend in labor data. “To change policy stances, the Fed will need more than a month of negative employment data,” he said. Julia PollackChief economist of Ziprecruiter.
Mortgages today are expensive compared to 2% interest rates during the pandemic era, but experts say that rock bottom rates won’t return unless there’s another serious economic downturn. Prices may continue to decline, but by the end of 2025 it will not fall significantly below 6%.
Expert Tips for Home Buyers
With the spring home buying season approaching, future home buyers are wondering if they’ll enter the market or are waiting for a bystander. Buying a home without establishing a clear budget is never a good idea.
This is something experts recommend before you buy a home.
Build your credit score. Your credit score will help you decide whether you qualify for a mortgage and what interest rates and what interest rates. A credit score of 740 or above will help you qualify for a lower rate.
Save on your comeded down payment. With more down payments, you can reduce your mortgage and get lower interest rates from lenders. If you have the chance, at least 20% down payment will also eliminate private mortgage insurance.
Horm Mortgage lender shop. Comparing loan offers from multiple mortgage lenders will allow you to negotiate a better rate. Experts recommend getting estimates for at least two to three loans from different lenders.
Consider bormortage mortgage points. By purchasing mortgage points, you can earn a lower mortgage fee, costing 1% of the total loan amount for each point. One mortgage point equals a 0.25% reduction in mortgage rate.
