A new Reuters poll conducted between June 1st and June 11th revealed that housing experts expect elevated mortgage rates through at least 2028.
The survey found that the median forecast for the popular loan type is 6.4% for the third quarter of this year and 6.3% for the fourth quarter.
So those looking for any sort of interest rate relief this year might need to be a little more patient.
And the same apparently goes for 2027 and 2028 too, meaning this might be as good as it gets for some time.
When (and how) things could actually improve is another story.
Stubbornly High Mortgage Rates Aren’t Going Anywhere?
The Reuters poll painted a somewhat bleak picture for mortgage rates, which had hit 3.5-year lows in the beginning of March.
But after an unexpected conflict broke out in the Middle East, oil prices shot higher and so did bond yields (and mortgage rates).
They’ve pretty much been stuck there ever since, with a little ebb and flow depending on expectations for a resolution.
Now all we hear is that a deal is right around the corner, only to be told there is no deal, followed by a ratcheting up of threats. Rinse and repeat.
In the meantime, the Strait of Hormuz, a key energy thoroughfare, remains shuttered, keeping costs elevated.
That has ushered in renewed inflation concerns, though many also think it’s transitory as well.
However, the longer it persists, the more it affects the prices of everything we buy, whether it’s gas prices or groceries, which rely on energy inputs to produce or transport.
That’s partially why the housing experts polled by Reuters are seemingly pessimistic about mortgage rates going forward.
The higher risk of inflation being more than just transitory could lead to an eventual Fed rate hike (as opposed to a cut), which would put pressure on bond yields and long-term mortgage rates as well.
The Poll Is Merely a Moment in Time Based on Current Conditions
But it’s important to remember that this is just a snapshot in time and subject to change. It can also be plain wrong.
Things can transpire between now and the next poll, at which point these housing experts might change their tune.
For example, if there is a peace deal at some point and the Strait is reopened and oil prices drop, all of a sudden Fed rate hikes are off the table.
With hikes gone, mortgage rates could ease back to the low 6s or even below 6 again depending on other economic conditions.
And these pundits would simply adjust their outlook as such. That’s kind of the flaw with polls.
They are a moment in time based on conditions at the time of the survey. So using the data in front of them, they make a one-time prediction.
Give them new data in three or six months and they could have an entirely different prediction.
For me, the trajectory of mortgage rates continues to be mostly driven by what happens in Iran.
After all, that’s what pushed mortgage rates back up from those 2022-lows a few months ago…and that’s pretty much what will bring them down again.
So instead of worrying about what the experts say or think, keep an eye on the situation in the Middle East.
If they sort things out, get bullish on mortgage rates. If it drags on, watch out for a 30-year fixed that could rise above 7% or even higher!
Read on: Give my mortgage rate calculator a whirl to see how different rates affect your monthly payment.
