Many factors are putting upward and downward pressure on mortgage rates, and prospective borrowers have observed a seesaw pattern in the cost to finance a home recently.
While the benchmark 30-year rate has climbed from a 5.22 percent average a month ago, it dropped slightly in late May, backing off from 5.45 percent May 18 to 5.27 percent May 25, according to Bankrate’s national survey of lenders.
Make no mistake: The trend continues to point north, considering that a year ago the 30-year fixed rate averaged just 3.16 percent. Experts say inflation is just one factor pushing mortgage rates. They are increasingly concerned about the possibility of a recession looming on the horizon.
All of which begs important questions for homebuyers and refinance prospects: secure a rate now or sit things out? Shift to an adjustable rate or stick with fixed-rate financing? Is this a bad time overall to bet on the housing market?
Read on to learn what industry pros predict and suggest regarding rate leanings over the next few weeks and months.
Don’t count on a June swoon in rates
As we head into summer and more pleasant temperatures, the borrower forecast calls for cloudy conditions.
“There is a tug of war between sellers and buyers in the bond market right now,” says Nadia Evangelou, director of forecasting for the National Association of Realtors. “Sellers are worried about inflation, while buyers are concerned about the economy. With the Federal Reserve raising short-term interest rates in half-a-percentage-point increments at its June and July meetings, I expect mortgage rates will continue their upward trek.”
Evangelou foresees the 30-year fixed-rate mortgage to average 5.4 percent in June, versus 4.6 percent for a 15-year fixed-rate loan.
Meanwhile, Greg McBride, chief financial analyst for Bankrate, is a bit more hopeful that rates could dip marginally.
“The average 30-year rate should be between 5.1 percent and 5.4 percent throughout June, with the average 15-year rate staying within a 4.25 percent to 4.5 percent band,” says McBride. “My reasoning is that concerns have expanded beyond just inflation to include worries about slower economic growth. This is keeping mortgage rates range-bound for now.”
Selma Hepp, deputy chief economist at CoreLogic, believes the 30-year fixed rate will oscillate around 5.3 percent, on average, in June.
“That’s because markets have already priced in the more aggressive source of action by the Federal Reserve, including its May and June hikes of 50 basis points,” says Hepp. “But if core inflation has not peaked and continues to intensify for some time — driven by higher prices of oil and other commodities, persistent supply chain disruptions, higher wages and continued strong increases in home prices and rents — the Fed could respond by hiking rates …….
Source: https://www.bankrate.com/mortgages/will-mortgage-rates-go-up-in-june/