As the Federal Reserve likely holds interest rates steady, mortgage rates are expected to stay in a narrow range. Tharon Green/CNET
With each passing day, it seems like average 30-year mortgage rates could remain stuck near 6.8% for the rest of the year. Yet conflicting economic forces could push mortgage rates up or down in the coming months.
Housing market experts say the same thing: The direction of mortgage rates depends on the economic impact of policies by the Trump administration and the projected pace of the interest rate cuts by the Federal Reserve.
On Wednesday, the Fed plans to keep borrowing rates the same at its fourth monetary policy meeting this year. Given ongoing political and economic uncertainty, markets don't expect any interest rate cuts until September.
"While two Fed rate cuts are still projected for 2025, they continue to get pushed back due to the global trade war," according to Colin Robertson, founder of The Truth About Mortgage. "Ultimately, economic data related to inflation and employment is what matters to the Fed (and bond traders)."
Mortgage rates are linked to 10-year Treasury yields in the bond market, and they are also sensitive to other factors such as investor sentiment.
"Concerns remain about higher inflation and federal debt, which would drive both the bond yields and the mortgage rates higher," said Selma Hepp, deputy chief economist for Cotality. Overall, Hepp noted that mortgage rates are unlikely to move outside the narrow range of 6.5% to 7% unless there's an economic downturn or a spike in joblessness.
Homebuyers waiting for mortgage rates to fall for the past few years are adjusting to the "higher for longer" rate environment. Costly borrowing rates are just one stressor prospective buyers face in a housing market plagued by high home prices and low inventory.
Here are some possible scenarios affecting if mortgage rates move up or down over the next period.
CNET
... continue reading