When the fed increased interest rates recently, many panicked as they believed mortgage rates would be higher, but that’s not the case this week for fixed-rate mortgages.
Fixed-rate mortgage interest rates took a nosedive this week, with the 30-year fixed ending the week at 6.08 percent, falling 22 basis points from last week’s average. The 15-year fixed ended the week at 5.48 percent, down 23 basis points from last week. The one-year adjustable rate mortgage slipped to 4.33 percent, diving 10 basis points lower from last week.
I predicted this would happen due to the Fed’s rate increase when I was speaking with a mortgage lender I know earlier this week. The Fed’s move to increase was to curb inflation, according to Alan Greenspan, and it appears that the rate increase curbed the inflation of interest rates, possibly more than anything else.
Many experts attribute the rate drop to the low number of jobs created during the same economic cycle, which is certainly a possibility, but definitely not the only factor.
David Berson, Fannie Mae’s chief economist, said there’s a larger indicator at work. He said that the rate drop, occurring after the Fed increased rates, occurred due to a “brief pause” in the economy, meaning that there was a pause in economic growth this week.
Berson’s argument seems to make the most sense of the ones put forward by most economists, and while retail sectors did not see much action this week, home sales appear to have continued to knock down doors, which they likely will continue to do next week with rates much lower than last week.Powered by Sidelines