It’s been tough sledding for mortgage rates since early March.
And especially rough over the past month and change, with very few down days.
But today just might be a winner though because both oil prices and bond yields moved lower.
That means 30-year fixed mortgage rates should also get some much-needed relief.
However, the drop will likely be pretty minimal and the larger trend still isn’t our friend.
Mortgage Rates Get a Rare Win Today
The bellwether 10-year bond yield that correlates strongly with 30-year fixed mortgage rates is down about five basis points today.
The move lower is being driven by lower oil prices, which take pressure off inflation and thus bond yields.
That should translate to a slightly lower 30-year fixed mortgage rate as well, though the movement probably won’t be anything major.
Still, getting a down day these days is hard to come by. So any sort of relief will be welcomed by both home buyers and industry participants.
We’re already hearing rumblings of mortgage layoffs again, and if rates stay at these high levels, there will surely be more.
In the meantime, expect the 30-year fixed to continue to hover around 7.50%, assuming things don’t get worse.
If things do get even worse, we could be looking at new highs this cycle, which were around 8% back in late 2023.
Mortgage Rates Remain Near Cycle Highs
Mortgage rates are falling today. That’s the good news.
The bad news is the 10-year is less than 10 bps off its recent high, and we hit new highs yesterday, so we’re still very much at the wrong end of things.
In other words, it’s a game of one step forward, two steps back. Repeated over and over again.
This upward trend in rates has pushed us from sub-6% at the beginning of March to as high as 7.60% this past week.
Perhaps we settle in around 7.50% if the global bond rout subsides. If it doesn’t, there’s not much to stop us from testing 8% again.
Or even going higher than that.
I wrote recently that if we follow a path similar to those 1980s mortgage rates, we could see a double-top and a terminal rate for the 30-year fixed around 8.88%.
That’s effectively a 9% mortgage rate and would surely spell disaster for the housing market, which is already reeling from the rise in rates this year.
But for today, take comfort that rates are lower and not higher. You’ve got to start somewhere.
Read on: Try my mortgage rate calculator to see payments at different rates.
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