What happened to mortgage rates this week?
The Freddie Mac 30-year mortgage rate ticked 7 basis points higher to 6.3% this week as all eyes were on the FOMC meeting. While the Fed unsurprisingly held rates steady, the dissent among the voters raises further uncertainty of monetary policy ahead. Despite the key decisions and upcoming leadership transition for the Fed, geopolitics will likely be the bigger driver of mortgage rates in the near term. With the U.S.-Iran peace talks hitting an impasse this week, the 10-year Treasury bond rose above 4.3% and passed the 4.4% threshold after the Fed left rates unchanged and expressed concerns about the overall uncertainty tied to Middle East tension. The 10-year Treasury yield serves as a key economic benchmark, and mortgage rates tend to follow it.
Â
What does this mean for the housing market?
Recent volatility in mortgage rates has undoubtedly created hurdles for prospective homebuyers. However, borrowers have more control over their mortgage rate than they might think. A previous study by Realtor.com® found that shopping around is the single biggest rate-reducer: Choosing the right lender in a high-rate environment can save up to 0.55 percentage points—equivalent to more than $40,000 over the life of a 30-year loan. Meanwhile, while still-elevated rates have kept many would-be homeowners on the sidelines, remaining in the rental market presents an opportunity to save for a larger down payment—particularly for those in markets like Austin, TX; Seattle, WA; and Phoenix, AZ. Reaching the 20% down payment threshold is a key milestone, as it can more than double the rate discount compared to smaller down payment increments, while also eliminating the cost of private mortgage insurance.
