Mortgage rates have been on a steady climb upwards: While they started the year at around 3.5% for a 30-year fixed-rate mortgage, they’ve since climbed above 6%, Bankrate data shows. And some pros say that upward march could continue. (You can see the lowest rates you may qualify for here.)
“There’s not much reason to expect rates to drop in the near term,” says Zillow senior economist Jeff Tucker, who adds that it’s very hard to predict exactly where rates will land. But does that mean rates will hit 7% soon?
National Association of Realtors (NAR) chief economist Dr. Lawrence Yun says he thinks rates may settle within the range of 6.3% to 6.5% in July, and could then go even higher. “A recession can dampen consumer confidence even for those with financial capabilities to buy a home. The housing market is sensitive to changes in mortgage rates and if somehow inflation turns ugly and the Fed has to be even more aggressive, then mortgage rates could top 7% and actually halt home price gains,” says Yun.
And Greg McBride, chief financial analyst at Bankrate, notes that until we know inflation has peaked, mortgage rates probably won’t either. Even with the most recent 75-basis point hike from the Fed, signs are pointing to additional aggressive rate increases following the Federal Open Market Committee (FOMC) meetings in late July and September. “While there is always the possibility rates may level off or fall later in the year depending on the Fed’s inflation projections, as long as inflation remains high, mortgage interest rates will continue to rise. By some estimates, the average 30-year fixed rate has already exceeded 6% and the Fed’s semiannual monetary policy report offered a guide of 4% to 7% given the current economic conditions. Whatever the exact increments are, buyers should expect to see interest rates continue to rise in the near future,” says Steve Reich, COO of Finance of America Mortgage. (You can see the lowest rates you may qualify for here.)
Of course, there will be fluctuation in rates, and for her part, Realtor.com chief economist Danielle Hale expects that we may see some pullback or settling in rates after the big surge mid-June (where rates climbed above 6%). “In general, the trend for mortgage rates is likely to be higher, so I expect mortgage rates to be not far from their current range, with the risk of moving higher,” says Hale. The next Fed meeting is July 27 and that has the potential to cause volatility in mortgage rates. “After the Fed’s June meeting, investors are expecting another big hike in July, so the bar is raised higher,” says Hale.