Mortgage rates won't stop climbing.
Thursday, government-backed Freddie Mac pushed the headline: "Mortgage Rates Reach Highest Level In Almost 23 Years," backed by the group's most recent weekly report that showed average 30-year fixed-rate mortgage rates up to 7.31% nationwide.
Two years ago, rates were 2.99%.
But that's only part of it. The Freddie Mac rate of 7.31% is only available to buyers willing to pay mortgage discount points, which can add more than ten thousand dollars to a mid-sized loan's closing costs.
Don't want to pay discount points? Fine. How does an 8% mortgage rate sound to you?
And that's the reality of this week's mortgage rates. It's Wall Street's reaction to the Federal Reserve's comments last week that rates may have to be "higher for longer."
Now, it's my thought that traders don't actually believe what the Fed is trying to communicate. However, the last time they ignored Chairman Powell, they paid for it. So, this time, they're playing safe.
Wall Street has been dumping mortgage bonds since the Fed meeting despite signs of slowing inflation, a strengthening dollar, and a looming government shutdown. These 3 elements each correlate with lower U.S. mortgage rates, so something strange is afoot.
If you're seeing mortgage rates in the 8s "mortgage r8s" and don't have to commit, maybe sit this one out a few days. The market appears over-corrected. Rates could be lower by this time next week.
Happy homebuying,
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