Even as the Federal Reserve continues to take up arms against inflation, mortgage interest rates actually came down across all terms from just a week ago, according to Bankrate.com. Mortgage rates for 30-year fixed, 15-year fixed, 5/1 ARMs, as well as jumbo loans, all dropped
Even the once-feared threshold of 7 percent has been passed, said a recent report.
Greg McBride, chief financial analyst for Bankrate, said recently. “The speed with which mortgage rates have increased in recent months has been whiplash-inducing and the cumulative effect — from near 3 percent at the beginning of the year to near 7 percent now — would’ve seemed laughably unlikely at the beginning of the year “Inflation running at 40-year highs will do that.”
According to numerous experts, the ride of mortgage rates could be a toss-up. Some anticipate a possible 8% for mortgage rates, while others hold that subsequent Fed hikes have already been accounted for and rates should stabilize. Still others see the Fed pulling back on its tight hold on rates at the end of the year.
According to Forbes, Rates for home loans are caught between high inflation and the Federal Reserve’s actions to restrain inflation, which indirectly pushed rates higher.
Since December, the Federal Reserve has hiked its benchmark interest rate seven times in 2022.
At the same time, the latest Consumer Price Index (CPI) reports that inflation rose by 6.5% in December, down from a 7% increase the previous month. This was after the Fed signaled plans to continue raising the federal funds rate into 2023, though likely at smaller increases, said Forbes.
Meanwhile, some experts expect that the Fed’s ongoing monetary policies will continue to nudge mortgage rates up in the coming months.
“We can expect financial market volatility to continue until investors have more clarity about the economy’s direction,” said George Ratiu, Realtor.com’s director of economic research, in a recent statement. “With the Fed committed to monetary tightening until inflation is decidedly moving toward 2%, borrowing costs will remain elevated, keeping housing affordability at the top of the year’s list of challenges.”
