The last couple of weeks have been a bit frustrating for those hoping interest rates might drop a bit. The Middle East conflict has been pushing borrowing costs higher with increased oil prices. Here are some updates from this past week.
The Iran war is adding pressure to rates globally. In the UK, five year fixed rates rose from about 4% in January to 4.8%, adding about $24,000 to the average buyer’s borrowing costs.
There is a chance of a Fed rate hike in September. This comes and goes based on inflation and employment numbers. Right now markets are pricing in a 42% chance of an increase at the September Fed meeting. This is an investor forecast, not a Fed decision, but it could keep mortgage rates elevated.
Mortgage demand is slowing a bit. The Mortgage Bankers Association reported that applications fell 1%, with refinances down 2% and purchases down 0.3%. This shows that elevated borrower costs continue to weigh on demand.
New home sales are slowing. July sales fell 10.5% from June to their lowest level in six months, again showing that elevated borrowing costs are continuing to hold back buyers.
It’s hard to say what will happen to interest rates and things can change quickly. One week it’s all about inflation and the next something else creates waves. For now, know that no one expects rates to change much this year but I know every little movement up, makes it harder for those looking to buy. I’ve been talking with clients about buying rates down and also temporary buydowns, both can help you. Feel free to reach out with questions.
Leslie Vanderwerf, NMLS ID#335509, CrossCountry Mortgage LLC, An Equal Housing Lender, NMLS#3029 – Email – Website
