Rates Are at a One Year High. Blame the Bond Market, Not the Fed.
The 30 year fixed mortgage rate touched 6.69 percent this week. That is the highest it has been in just over a year, and it marks the fifth straight week rates have climbed. If you are shopping for a home in Davie, Weston, or anywhere in Broward right now, you have probably felt the shift in your pre-approval number.
The instinct is to blame the Federal Reserve. I hear it from clients almost every week. The Fed raised rates again, right? Not this time. The Fed did not make a move. What actually happened sits in the bond market, and understanding it takes about fifteen seconds. It changes how you think about waiting.
Mortgage rates do not follow the Fed funds rate directly. They track the 10 year Treasury yield, the rate the government pays to borrow money over a decade. Lenders price your loan off that yield plus a spread for their own risk and profit. In late February, before the United States entered its conflict with Iran, that yield sat at 3.97 percent. It is 4.65 percent now. That 68 basis point move is almost the entire story behind your higher rate quote.
Oil prices spiked when the conflict began, and bond investors started pricing in the inflation that comes with expensive energy. Oil has eased back some since then, but bond yields have not fully followed it down. Investors are still nervous, and nervous money demands a higher return to sit in a 10 year bond. That nervousness is what is sitting on top of your mortgage rate today, not a Fed decision made in a boardroom in Washington.
There is a second data point worth noticing. The 15 year fixed rate actually slipped this week, down to 6.01 percent from 6.04. If this were a broad, across the board tightening, you would expect both to move the same direction. They did not. That split is more evidence this is a bond market story tied to a specific event, not a permanent shift in the cost of borrowing.
So what do you do with this if you are trying to buy a house right now. In 23 years of doing this, through four different rate cycles, I have watched buyers wait for the rate they read about six months ago to come back. Sometimes it does. Often it does not, and the house they wanted sells to someone who stopped waiting. Rates move on headlines nobody can predict, war, oil, inflation data, a jobs report that surprises in either direction. You cannot time that calendar with any real accuracy, and neither can I.
What you can control is the math in front of you today. If the payment on a specific house works for your budget at today's rate, that is worth acting on. If it does not, that is useful information too, and it might point you toward a different price range or a rate buydown conversation with your lender rather than an open ended wait. Either way, the decision should come from your numbers, not from a guess about where the bond market goes next.
If you want to run the actual numbers on a property you are watching, reach out. I am happy to walk through what today's rate does to your payment before you decide whether to move or wait. Talk to your lender about your specific rate lock and buydown options, since programs and pricing vary by borrower.
Roger Averbuj, Broker | Prestige Heritage Realty | (954) 663-8461
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