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What is Disrupting the Steady Climb of Mortgage Rates?

Mortgage Rates The 30-year fixed-rate mortgage (FRM) averaged 3.04%, another decrease this past week, according to Freddie Mac, which Thursday released the results of its Primary Mortgage Market Survey (PMMS).

“Mortgage rates took another dip this week as the 30-year fixed-rate mortgage decreased by almost ten basis points, week over week,” said Sam Khater, Freddie Mac’s Chief Economist. “The economy is improving on the demand side and on the supply side, a variety of goods and materials remain scarce. As a result of this imbalance, pricing pressures are building and causing inflation to rise. Despite the pause in mortgage rates recently, we expect them to increase modestly for the remainder of this year.”

The Chief Economist for Realtor.com, Danielle Hale, says markets seem to agree with the Federal Reserve’s expectation that the recent rise in inflation will be temporary, and, she adds, "that means investors aren’t demanding higher rates to compensate."

"Additionally, the Fed continues to give forward guidance indicating that there will be plenty of monetary support in the near term," she said. "These factors plus the potential for a slower pace of vaccination resulting from a recommended pause in the use of one of the three COVID-19 vaccines authorized for emergency use in the U.S. have disrupted the steady climb in mortgage rates we’ve seen through most of 2021."

While this is welcome news for homebuyers already grappling with low supply and double-digit price gains, Hale says, "the break could be temporary with the upward trend resuming as the outlook for the economy brightens."
Fortunately, Hale concluded, seasonal trends are lining up to bring some relief.

"In fact, our weekly data show that new sellers this week were up 36% compared to a year ago," Hale said. "This won’t solve the inventory crunch overnight, but it’s a big step in the right direction, and one we’re likely to see more of in the weeks ahead as we approach the best time of the year to sell a home."
The data analysts at ATTOM Data Solutions weighed in with more intel about what the again-declining rates might mean for refinancing.

"Today’s rate pushes the number of high-quality refinance candidates back up to just above 13 million, for an aggregate potential monthly savings of $3.68 billion. That’s roughly an increase of about 2 million from just last week," according to ATTOM.

Black Knight defines refinance candidates as 30-year mortgage holders with a maximum 80% loan-to-value ratio and credit scores of 720 or higher, who could shave at least 0.75% off their current first lien rate by refinancing.

About Author: Christina Hughes Babb

Christina Hughes Babb is a reporter for DS News and MReport. A graduate of Southern Methodist University, she has been a reporter, editor, and publisher in the Dallas area for more than 15 years. During her 10 years at Advocate Media/Dallas Magazine, she published thousands of articles covering local politics, real estate, development, crime, the arts, entertainment, and human interest, among other topics. She has won two national Mayborn School of Journalism Ten Spurs awards for nonfiction, and has penned pieces for Texas Monthly, Salon.com, Dallas Observer, Edible, and the Dallas Morning news, among others. Contact Christina at christina.hughesbabb@thefivestar.com.
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