Understanding Today's Mortgage Rates: Insights and Forecasts

Lisa Mailhot  |  July 19, 2023

Buyers

Understanding Today's Mortgage Rates: Insights and Forecasts

 

If you're closely monitoring mortgage rates because of their impact on your borrowing costs, you might be curious about their future trajectory. Unfortunately, predicting mortgage rates is notoriously challenging, making it difficult to provide a definitive answer.

However, there is one factor that historically serves as a reliable indicator for rate movements: the relationship between the 30-Year Mortgage Rate and the 10-Year Treasury Yield. To illustrate this, here's a graph depicting these metrics since Freddie Mac began recording mortgage rates in 1972:

The graph demonstrates that historically, the average difference between the two rates over the past five decades has been 1.72 percentage points (also known as 172 basis points). By examining the trend line, it becomes apparent that when the Treasury Yield rises, mortgage rates usually follow suit. Conversely, when the Yield drops, mortgage rates tend to decrease. While they typically move together in this manner, the gap between the two rates has remained around 1.72 percentage points for a considerable period.

However, it's important to note that the spread has recently widened significantly beyond the norm, as depicted in the graph below:

You may wonder what is causing this spread to deviate from its typical average. The primary reason is the uncertainty prevailing in the financial markets. Various factors, including inflation, other economic drivers, and the decisions made by the Federal Reserve (The Fed), all play a role in influencing mortgage rates and widening the spread.

Why Does This Matter for You?

While this information may seem technical and detailed, homebuyers need to grasp the significance of the spread. Based on historical trends, the current gap between the two rates suggests there is room for mortgage rates to improve at present.

Furthermore, experts believe that this improvement is likely to occur as long as inflation continues to moderate. Odeta Kushi, Deputy Chief Economist at First American, explains:

It’s reasonable to assume that the spread and, therefore, mortgage rates will retreat in the second half of the year if the Fed takes its foot off the monetary tightening pedal . . . However, it’s unlikely that the spread will return to its historical average of 170 basis points, as some risks are here to stay.”

Similarly, an article from Forbes asserts: 

Though housing market watchers expect mortgage rates to remain elevated amid ongoing economic uncertainty and the Federal Reserve’s rate-hiking war on inflation, they believe rates peaked last fall and will decline—to some degree—later this year, barring any unforeseen surprises.”

Bottom Line

Whether you're a first-time homebuyer or a current homeowner considering a move to a property that better suits your needs, it's crucial to stay informed about mortgage rates and the predictions offered by experts for the upcoming months. By staying up to date with these developments, you can make more informed decisions regarding your housing plans.


Recent Blog Posts

Stay up to date on the latest real estate trends.

Buyers

Navigating Lessons from the Real Brokerage Settlement's Shifting Landscape

Lisa Mailhot  |  April 12, 2024

Discover insights into the recent $9.25 million settlement between Real Brokerage and commission suits. Learn about the implications for buyers, sellers, and agents in… Read more

Buyers

Hot Vacation Home Markets Ripe for Investment in 2024

Lisa Mailhot  |  April 12, 2024

Discover the top vacation home markets across the U.S. experiencing remarkable price appreciation in 2024. Learn how to capitalize on these trending destinations as an… Read more

Buyers

New Rules Shine a Light on Cash Deals in Real Estate

Lisa Mailhot  |  April 11, 2024

The U.S. government is tightening regulations to combat money laundering in residential real estate transactions. This blog explores the proposed rules requiring real … Read more

Buyers

A Beginner's Guide to Building Wealth and Financial Wellness

Lisa Mailhot  |  April 10, 2024

Discover how to kickstart your financial journey with expert advice from Tiffany Aliche, The Budgetnista. Learn three essential steps to release financial shame, seek … Read more

Buyers

Embrace Luxury Living in Pasadena's Brantwood for Active Seniors

Lisa Mailhot  |  April 9, 2024

Discover Brantwood, a luxurious 55-unit apartment complex in Pasadena's vibrant Playhouse Village, offering all-inclusive lease plans and boutique hotel-style service… Read more

Buyers

Shifting Grounds in Real Estate After NY Lawsuit

Lisa Mailhot  |  April 8, 2024

Dive into the heart of a groundbreaking antitrust lawsuit in New York that could redefine real estate transactions nationwide. This blog post offers a comprehensive an… Read more

Buyers

Celebrating Endurance and Vision: Lessons from 50 Years in Real Estate

Lisa Mailhot  |  April 5, 2024

Explore the journey and insights of William Raveis, a real estate visionary, who has led his brokerage to success over five decades. Learn the secrets of endurance, in… Read more

Buyers

America's Hottest Housing Markets Signs of Cooling Off

Lisa Mailhot  |  April 4, 2024

Renters often feel limited in making their homes eco-friendly, but there are small steps you can practice to reduce your carbon footprint and live more sustainably, ev… Read more

Buyers

Thriving Through Turmoil: Realtors' Guide to Crisis Management 

Lisa Mailhot  |  April 3, 2024

Learn essential crisis management tips for handling commission uncertainty in the ever-changing real estate landscape. Gain insights from industry expert Julia Lashay … Read more

Let’s Talk

You’ve got questions and we can’t wait to answer them.