Mortgage rates have been on a wild rollercoaster the last couple of weeks. By most measures, rates have gone up about 1% full percent since the beginning of April. 

The easiest way to describe the market right now is this: Imagine you are holding a dice that will tell you how mortgage rates will change tomorrow. 4 of the sides are "bad" and only 2 are "good". Rates historically go up much more quickly than they go down, they are considered "sticky". 

So, whenever we have an event that causes rates to go up, it will usually take 2-3 "good" events to undo the damage for mortgage rates to go back down again. We need inflation to come down before our economy will relax and mortgage rates will head down. As a result, even a Fed Reserve President recently said a rate INCREASE this year is not off the table.

That being said, an updated rates forecast is still holding on to mortgage rates around low 6's at the end of this year.

Brief review of why rates went back up (again) in the first place. (Article here with some more detail for the nerds among us):

1. Inflation causes mortgage rates to go up. If inflation is on the rise, then mortgage bonds are less valuable to investors, and so mortgage lenders need to charge higher rates to clients, to offer a higher rate of return to investors.
2. We received a strong jobs report on April 5th. Unemployment is low. Nationally, most people that want to work are able to find work (based on national data, individuals may have a different experience trying to find a job of course).
3. Inflation report was high April 10. Prices are still rising higher and faster than we would like to see.
4. On April 15 we saw a strong retail sales report (consumers are showing signs of feeling confident in their jobs, financial future and savings, and so they are spending lots of money!)
5. Finally, April 25, the PCE quarterly report also came in stronger than expected.

That being said, is there a silver lining, or good news in all of this?

In my opinion, yes!

So long as a homebuyer can afford their current payment, and they expect their income to be stable/increase into the future, they may even save money on their home purchase with a higher rate.

Approximately 3 million households on average will enter the homebuying market for every .5% that rates go down. This is based on average annual household income, and average home prices. Nationally speaking, if rates go down 1% there are about 6 million more "competitors" in the market. 

Assuming the higher rates cause people in the local market to hit the pause button, then a homebuyer may even get a "deal" on a home 

As always, if you have any questions, don't hesitate to text/call me at 414-488-0438!