7% On The Horizon: Mortgage Rates Inching Closer Once More

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7% On The Horizon: Mortgage Rates Inching Closer Once More

May 26, 2023 | News | 0 comments

There are several general rate surveys/indices indicating that 30-year fixed mortgage rates are below 6.5% or in that vicinity, but the reasons behind such figures remain somewhat unclear, even when considering the usual time delay between weekly surveys and our daily data.

During the majority of the previous week, the average top-tier rate for lenders stood at 6.625% or even higher. Unfortunately, as of today, we are dangerously close to reaching 7.0% once again. It’s worth noting that we were already near 7.0% last Friday. While most lenders haven’t experienced significant increases since then, a considerable number of them were already at that level.

It is important to remember that our discussion pertains to top-tier scenarios, where there are no extra upfront expenses associated with FICO/LTV. Furthermore, it is worth reiterating that the most favorable loan pricing is still reserved for individuals with excellent credit scores. Unfortunately, some news sites consistently misinterpret this fact, leading to inaccurate reporting on the subject.

What is causing the sudden increase? Overall, the market is starting to acknowledge the possibility that the Federal Reserve’s stance of maintaining higher rates for a longer period may have been more accurate than previously thought in recent months. The latest economic data has revealed greater economic strength and a higher level of inflation persistence than initially anticipated after the Fed’s last projection update in March.

The mortgage rate landscape has been marked by some surprising developments. Despite initial skepticism, recent surveys and indices indicate rates below 6.5% for 30-year fixed mortgages. However, the reasons behind these figures remain somewhat elusive. Additionally, the market is grappling with the potential validity of the Federal Reserve’s stance on keeping rates higher for an extended period. As economic data continues to unfold, it becomes evident that there is a need to reassess expectations and stay attentive to the evolving dynamics of the mortgage market.