If you’re keeping an eye on mortgage rates—whether you’re planning to buy, refinance, or just stay informed—you’re probably wondering what’s been going on with rates and where they might head next.
Here’s a breakdown of the past six months and a peek into what the future might hold, brought to you by your friends at Bluebird Home Loans.
How Mortgage Rates Have Played Out Recently
Over the last twelve months, mortgage rates have been volatile, but the overall trend has been down. The average 30-year fixed mortgage rate topped out just under 8% in late October, but today rates are around 6.5% according to Freddie Mac.
Source: Freddie Mac
What’s Been Driving These Changes?
- The Fed’s Moves: The Federal Reserve has had a big hand in shaping mortgage rates. Over the first half of 2024, the Fed kept things pretty tight to keep inflation in check. They were cautious about hiking rates too much but also wary of cutting them too soon. Their decisions impact not just short-term interest rates but also set the stage for longer-term trends.
- Inflation’s Role: Inflation has been a hot topic, and for good reason. Higher inflation means higher costs for goods and services, which can prompt the Fed to keep rates up to cool things down. When inflation data came in stronger than expected, it put pressure on mortgage rates to rise.
- Unemployment Facts: Unemployment has hovered around 3.8% to 4.2%—fairly steady and relatively low. While this is great for job stability and spending, it can also contribute to inflationary pressures. The balance between low unemployment and inflation is a tricky one and influences how the Fed reacts. The July reading on inflation saw an increase that has most economists thinking it has created the narrative the Fed needs to start cutting and will do so with a 50 basis point cut in September.
What’s Next for Mortgage Rates?
Mortgage rates have had their share of ups and downs, but the next six months are likely to bring lower rates, which will lead to more competition and higher prices on homes.
