Where are Mortgage Rates Headed? Homebuyers Want to Know

Last Updated on March 22, 2022 by Luke Feldbrugge

The war in Ukraine has created some market volatility, but that’s not unusual. In uncertain times global investors will look to move their investments into areas they feel are safe from conflict. This can cause fluctuations in the prices of US Treasuries, and yes, even mortgage bonds – which in turn impacts mortgage interest rates.

Recent Trend for 30-Year Fixed Mortgage Rate

Here’s how the war has impacted the market so far:

  • At the onset of the conflict, mortgage rates dropped for the first time in 12 weeks.
  • The average rate on the 30-year fixed mortgage hit 4.19% and then fell to 3.90%. According to the Mortgage Bankers Association, that’s because the uncertainty in Europe drove an investor flight to quality. One week later the story changed.
  • The average on the 30-year fixed is now 4.27%, an entire percentage point higher than it was one year ago.
  • The MBA is forecasting the 30-year fixed mortgage rate to rise to around 4.5% this year.

Federal Reserve Effect on Mortgage Rate Volatility

One other factor driving mortgage rate volatility that goes beyond the Ukraine war is the Federal Reserve’s move to raise interest rates by a quarter percentage point from near zero in a bid to curb runaway inflation. The Fed’s move can have a spillover effect on your borrowing rates because banks look to pass on increased costs to consumers who take out big-ticket loans like mortgages.

Increased borrowing costs come as home prices are at an all-time high. Altos Research said that the median home price for the week starting March 14 was $399,000 and is likely to cross the $400,000 threshold soon. For homebuyers, that spells more headaches as they grapple with some challenging market conditions.

Is Existing Home Sale Inventory Increasing?

Here’s the good news: supply is inching back up. Altos research said that supply was up 3% from the week prior. That’s not a big jump, but a step in the right direction and indicators suggest that improving housing supply may become a trend. One silver lining to the increased mortgage rates is that it could push some buyers away and contribute to inventory increase.

Home Buyer Education Opportunities

If you are looking to buy a home but are concerned about increasing mortgage rates, you can take steps to make sure you qualify for the best possible financing. Counseling and financial literacy curriculums to understand how to build and maintain strong credit are good courses of action to help you reach your goal.

How Homes for Heroes Can Save You Money on a Home

If you’re ready to buy or sell a house, let us connect you with a Homes for Heroes real estate specialist. Even if you’re not sure right now is the time, you can start discussions with our knowledgeable specialists. Local Homes for Heroes real estate and mortgage specialists know how to read the real estate market where you’re looking to buy or sell, and can give you expert advice.

Be sure to download our Buying Guide or Selling Guide for insight on buying or selling your home this Spring.

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